HSBC Analyst Predicts 45% Surge for AMD Amid AI Chip Competition

In a significant upgrade for Advanced Micro Devices (AMD), HSBC analyst Frank Lee has raised the company's stock recommendation from 'hold' to 'buy,' setting a new price target of $200. This adjustment implies a potential upside of approximately 44.5%, a sharp increase from the previous target of $100, reflecting growing confidence in AMD’s competitive positioning within the artificial intelligence (AI) hardware market.

The revision comes on the heels of AMD's recent launch of its MI350 series chips, which Lee asserts have the capability to rival Nvidia's latest offerings. Specifically, he notes that the MI350 series, which includes the MI350X and MI355X models, boasts significant performance enhancements that can compete with Nvidia's Blackwell line, particularly the HGX B200 AI graphics processing unit. According to Lee, the pricing dynamics of AMD's new chips could lead to a surprise in the AI GPU market, with the average selling price (ASP) for the MI355 potentially reaching $25,000, compared to the earlier estimate of $15,000.

Lee anticipates that AMD's pricing strategy and the performance of the MI350 series will significantly influence the company's fiscal year 2026 AI revenue, suggesting that the market has not fully accounted for this potential growth. He stated, "We are turning bullish as we think the AI GPU pipeline will surprise with higher-than-expected MI350 pricing premium." This optimism follows the recent 14% rally in AMD's share price after its AI-focused event on June 12, 2025.

The MI350 series chips are designed to be compatible with existing data center infrastructure, making them appealing to enterprises looking to upgrade their AI capabilities without overhauling their current systems. This strategic advantage is expected to further bolster AMD's position against Nvidia, which has long dominated the AI chip market.

AMD's CEO, Lisa Su, has previously indicated that the company is also set to release its Helios AI rack in 2026, which will be built on the next-generation Instinct MI400 series GPUs. This forthcoming product aims to expand AMD’s capabilities in the AI sector, further intensifying competition with Nvidia.

As of the recent upgrade, AMD's stock has already shown positive momentum, increasing by 2% following the news, reflecting investor optimism. Since the beginning of the year, AMD's shares have gained approximately 14.6%. This bullish outlook from HSBC aligns with broader market trends, where demand for AI processing capabilities is surging, pushing companies to invest heavily in advanced chip technologies.

Industry experts suggest that AMD’s aggressive pricing and performance strategies could reshape the competitive landscape of the AI hardware market. Dr. Michael Thompson, a Professor of Computer Engineering at Stanford University, emphasized this potential, stating, "The advancements in AMD's product line indicate a serious challenge to Nvidia's longstanding market leadership. If AMD can deliver on its promises, we may see a significant shift in market dynamics."

In contrast, some analysts express caution, noting that Nvidia has a well-established ecosystem and significant R&D resources that may still afford it an edge in the rapidly evolving AI chips sector. Jane Roberts, a technology analyst at Gartner, remarked, "While AMD's improvements are noteworthy, Nvidia's robust supply chain and brand loyalty cannot be underestimated. The competition will be fierce."

In conclusion, the upgrade from HSBC marks a pivotal moment for AMD, as it seeks to capitalize on the growing AI market. With its new MI350 series chips, the company positions itself as a formidable competitor in an industry that is witnessing unprecedented growth. The coming months will be critical as AMD aims to translate this potential into tangible market success, especially as it prepares for the launch of its next-generation products slated for 2026. Investors and analysts alike will be closely monitoring AMD's performance in the AI sector, as any further advancements could lead to a significant re-rating of its stock in the marketplace.