Advanced Micro Devices (AMD) stock made headlines recently after reports suggested the company would give the U.S. government 15% of its AI GPU sales in China in exchange for export licenses. But Citi Top analyst Christopher Danely’s commentary raises an important question: how much does this actually matter for AMD’s earnings and stock? According to Danley, the deal affects only low-margin products and is unlikely to materially impact AMD’s overall profitability.
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What Really Drives AMD’s Earnings and Stock?
According to Citi, the 15% cut only applies to lower-margin products like the MI308X, whose profitability is far below AMD’s corporate average of nearly 54%. “Given the low margins and the risk that these GPUs could be banned in China again, this deal is largely immaterial,” the analyst noted.
Instead, Citi points to AMD’s mainstream AI GPUs, the MI355 and MI400, as the real drivers of the company’s earnings and stock performance. These products are expected to fuel AI sales growth of 23% in 2025 to $6.2 billion and an even faster 58% in 2026 to $9.9 billion, thanks to ramps at major customers like Amazon (AMZN), Oracle (ORCL), Meta (META), and OpenAI.
The analyst maintained a Neutral rating on AMD with a price target of $180, reflecting a 37x multiple on 2026 EPS. While growth remains strong, the valuation is slightly above AMD’s historical average, making the stock appear expensive relative to expected near-term gains.
Is AMD a Buy, Sell, or Hold?
Overall, analysts have a Moderate Buy consensus rating on AMD stock based on 26 Buys, 12 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMD price target of $181.36 per share implies 5.27% upside potential.
