MW Here's where AMD can gain ground in the AI chip race next year
By Britney Nguyen
Wall Street will be watching to see if the chip maker's upcoming AI accelerators and first rack-scale offering will bring it closer in competition with Nvidia
Wall Street is looking forward to how AI accelerators from AMD, led by CEO Lisa Su, will compete with offerings from Nvidia.
Advanced Micro Devices has spent much of the artificial-intelligence boom being viewed as a distant second-place chip supplier to Nvidia, but some on Wall Street think 2026 could shift that narrative.
The chip maker is preparing to roll out its Instinct MI450 series of AI accelerators and first rack-scale solution, Helios, in the second half of 2026. TD Cowen analyst Joshua Buchalter thinks the launches "will mark a key inflection point" for both AMD's stock $(AMD)$ and its earnings as the company gains sight of "a very large" total addressable market for compute.
The company's hardware roadmap, improvements in its ROCm open-sourced AI software and growing customer interest "have reinforced our confidence that it can create and capture value in AI compute," Buchalter said in a note earlier this month, naming AMD as his top chip-sector pick for next year.
See more: Why AMD's stock is this analyst's best idea for chip investors next year
AMD's offerings are "not to be taken lightly, and Nvidia is not taking them lightly," Jed Ellerbroek, a portfolio manager at Argent Capital Management, told MarketWatch.
The upcoming MI450 series "is much more competitive" to Nvidia's (NVDA) offerings than AMD's previous products, Ted Mortonson, a managing director at Baird, told MarketWatch. However, AMD's answer to Nvidia's Compute Unified Device Architecture, or CUDA, parallel computing platform, the ROCm version 7, "still trails [Nvidia] functionality," he said in emailed comments.
On the other hand, Mortonson said he sees AMD's non-AI chips business continuing to take share from Intel $(INTC)$ in the market for traditional server chips. AMD's Genoa and Venice central processing units will help there, he said.
Buchalter said AMD's CPUs offer "diversification and still-strong growth potential," and that there will be more demand for the chips as the data-center buildout continues.
Although the company's stock "has unfairly borne the brunt of investor scrutiny" versus its chip peers, amid concerns over AI spending, Buchalter said he sees it as an opportunity for investors, as he thinks AMD will be able to capitalize on that spending. In November, AMD CEO Lisa Su said at the company's analyst day that she expects the total addressable market for data centers to reach $1 trillion by the end of the decade.
AMD's stock has rallied 78% in 2025 through Friday, but has dropped 19% since peaking at a record close of $264.33 on Oct. 29. Meanwhile, shares of Nvidia have gained 41.9% this year and Intel shares have advanced 80.6%, but have lost 8% and 12%, respectively, since Oct. 29.
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Investors should get in before AMD ramps its Helios solution, Buchalter said, and the MI450 series will be its "first real opportunity" to compete with Nvidia.
The drawdown in the market has hit many tech and data center infrastructure stocks hard, Ellerbroek said. While there are a lot of doubts in the market right now, "the underlying demand remains extremely strong," he said.
Looking at the Asian supply chains and recent earnings reports from Broadcom $(AVGO)$ and Micron Technology $(MU)$, Ellerbroek said "every data point remains overwhelmingly positive." He expects the AI trade to eventually make new highs as demand remains stronger than supply.
Read: Broadcom and these chip stocks make J.P. Morgan's list of top picks
-Britney Nguyen
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(END) Dow Jones Newswires
December 29, 2025 07:49 ET (12:49 GMT)
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