Advanced Micro Devices (AMD) and Nvidia (NVDA) have reached a deal with the U.S. government that would allow them to resume selling certain AI chips to China in exchange for a 15% fee to the U.S. government. Analysts at Bank of America, led by five-star-rated Vivek Arya, see the move as a small but positive step, and note that both companies have the pricing power to offset some of the penalty while recovering value from inventory they had previously written off. They also say resuming shipments helps maintain ties with China’s AI ecosystem and could keep rivals like Huawei from gaining market share.
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Citi analysts, however, led by five-star-rated Christopher Danely, view the deal as less important for AMD because the MI308 and similar chips carry lower profit margins and could still face future bans. They believe that AMD’s real growth will come from its upcoming MI355 and MI400 products, which they expect will drive AI revenue up 23% year-over-year to $6.2 billion in 2025 and up 58% to $9.9 billion in 2026. As a result, Citi kept its Neutral rating on AMD with a $180 price target, while Bank of America maintained Buy ratings on both AMD and Nvidia.
It is also worth noting that even with the potential benefits, Bank of America warns that China may not be a reliable source of long-term growth. It highlights uncertainty over whether export approvals will continue next year, the possibility of eight-to-nine-month delays in restarting supply chains, and the risk that shifting AI trends could lower demand from Chinese customers. Still, industry discussions suggest that both companies will work to recover recent write-downs—around $4.5 billion for Nvidia and $800 million for AMD—despite the 15% penalty.
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 4.4% upside potential.
