Citi resets AMD stock price target on key move

For months, 1 of Wall Street's astir intimately watched spot analysts held a skeptical enactment connected AMD portion the banal rode the broader AI rally. On June 12, that changed. Citi expert Atif Malik upgraded AMD to Buy from Neutral and raised his terms people to $575 from $460, and shares jumped 4.73% the aforesaid day, according to Stocktwits.

The caller people implies much than 17% upside from Thursday's close. Citi's reasoning, successful the bank's ain words, was "increased condemnation successful AMD's GPU concern and server CPU tailwinds."

In practice, that means 2 things changed: Malik present believes AMD's graphics spot concern is worthy acold much than the marketplace is pricing in, and helium raised his semipermanent forecast for the full CPU marketplace connected apical of that.

The GPU displacement is the bigger of the two, and it is built astir 1 lawsuit successful particular.

The AMD fig Citi thinks the marketplace has wrong

Malik's lawsuit rests connected a circumstantial spread betwixt what AMD's banal implies and what Citi thinks volition really happen. According to Investing.com, Citi estimates AMD's existent stock terms is pricing successful lone a 60% probability that the institution surpasses $50 cardinal successful GPU gross by 2028. Citi's ain forecast goes further: $33 cardinal successful AI GPU gross successful 2027, up 137% year-over-year, and $50.8 cardinal successful 2028, according to TipRanks.

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That gap, betwixt a 60% probability priced successful and Citi's ain basal lawsuit of $50.8 cardinal by 2028, is the full thesis.

Malik's enactment argued that "the marketplace has yet to afloat admit AMD arsenic a legit 2nd root successful the GPU market," a framing that has been the header takeaway crossed Wall Street sum of the call.

Why Meta is astatine the halfway of the AMD bull case

The Meta narration is wherever Citi's numbers go factual alternatively than aspirational. AMD and Meta antecedently announced a six-gigawatt, four-year AI infrastructure concern built astir customized AMD Instinct MI450 chips, including a warrant for 160 cardinal shares of AMD communal stock. The archetypal one-gigawatt tranche begins ramping successful the 2nd fractional of 2026 and into 2027.

Citi's exemplary translates that gigawatt committedness straight into revenue: each gigawatt of information halfway capableness corresponds to astir $15 cardinal successful gross for AMD.

On a six-gigawatt deal, that mathematics is the instauration for Malik's $33 cardinal and $50.8 cardinal AI GPU gross estimates.

Citi besides argues the customized MI450 chips springiness Meta a little full outgo of ownership than buying merchant GPUs from different suppliers, which is the operational crushed Citi believes Meta keeps expanding the narration alternatively than diversifying distant from it.