Citi's upgrade of AMD reflects a growing confidence in the company's potential to capitalize on the increasing demand for graphic processing units (GPUs). The bank raised its price target for AMD to $575, suggesting a potential upside of over 17% from its recent closing price.
Analyst Atif Malik highlighted that AMD is expected to exceed its earnings goal of more than $20 per share by 2028, largely due to anticipated sales from Meta, which is expected to become a major customer for AMD's AI products.
This follows a multiyear agreement between Meta and AMD to deploy up to 6 gigawatts of GPUs, with Citi estimating that each gigawatt could translate to $15 billion in revenue for AMD. Despite Nvidia's current dominance in the GPU market, Citi's analysis indicates that AMD is emerging as a serious contender, particularly as demand for CPUs also rises with the popularity of artificial intelligence.
The firm has increased its AI sales estimates for AMD, projecting revenues of $33 billion in 2027 and $50.8 billion in 2028, marking substantial year-over-year growth. AMD's stock has already seen significant gains this year, more than doubling, and remains favored by analysts, with 43 out of 53 covering it rating the shares as a buy or strong buy