The chip maker's new MI350 series AI accelerators are competitive with Nvidia's Blackwell AI platform, according to HSBC - and their pricing hits a sweet spot
Advanced Micro Devices Inc.'s stock received an upgrade on Thursday from analysts who are bullish on the company's competitive position with its new series of artificial-intelligence accelerators - as well as the pricing for those chips.
Shares of AMD (AMD) were up more than 4% on Thursday after the team at HSBC moved to a buy rating from a hold rating on the stock, while doubling their price target to $200 - almost 40% above recent levels. The analysts are encouraged about AMD's ability to command higher prices than Wall Street expects for the company's MI350 graphics processing units.
In June, AMD unveiled its Instinct MI350 series accelerators and shared its roadmap for the following MI400 and MI450 series at its annual Advancing AI event. With its MI350 chips, AMD "catches up" to rival Nvidia Corp. (NVDA), the analysts said, adding that the accelerators are competitive with Nvidia's Blackwell AI platform currently shipping to customers. The upcoming MI400 series will "drive potential upside in 2026," the analysts added.
The HSBC team had downgraded AMD's stock in January on the view that the company would see weaker estimates for its AI revenue in fiscal-year 2026 "as the AI GPU roadmap seemed less competitive." The analysts said they underestimated the pricing premium for the MI350 series because of the limited specification upgrades from the previous-generation MI325 series accelerators.
With AMD's MI355 accelerators, which are part of the MI350 series, showing comparable performance to Nvidia's B200 chips, the analysts said they think the average selling price for the AMD chip can be $25,000 - $10,000 more than their previous estimate. Still, they calculate that to be a 30% discount to Nvidia's chips - one factor that the HSBC team sees helping AMD's MI350 series find success.
The analysts now see potential for "significant upside" to AMD's estimated fiscal 2026 AI revenue. Their new forecast for AI GPU revenue in 2026 calls for $15.1 billion, which is 57% higher than the $9.6 billion consensus view cited by the analysts. HSBC is encouraged by the pricing premium for the current MI350 series and the opportunities AMD will have with its MI400 rack-scale architecture, which will compete with Nvidia's next-generation Vera Rubin platform when both are released next year.
With the potential upside to next year's estimates, AMD could see its stock fetch a higher multiple by investors, the analysts noted. While the stock is already up 19% so far this year, factoring in Thursday's intraday gains, the $200 price target implies there's room for a nearly 40% rally from current levels.
