Citi said Advanced Micro Devices could emerge as the second-largest supplier of graphics processing units (GPUs) after Nvidia. The bank upgraded the chipmaker from neutral to buy. It also raised its price target to $575, which would represent an increase of more than 17% from Thursday’s closing price. Citi believes AMD is likely to meet its goal of achieving earnings of more than $20 per share by 2028. This is due to increased demand for GPUs, especially from major hyperscalers. “We believe Meta will become a much larger customer for AMD’s AI products, especially GPUs, than the public expects,” analyst Atif Malik said in a note Friday. “We believe that using custom MI450 GPUs will likely result in significantly lower TCO compared to off-the-shelf GPU products.” In February, Meta and AMD announced a multi-year agreement to deploy up to 6 gigawatts of GPUs to power data centers. Citi estimates that 1 gigawatt is worth $15 billion to AMD. Nvidia dominates the GPU market, and days before Meta’s deal with AMD, Meta also announced a deal with Nvidia for its GPUs. However, Citi sees the company’s prospects improving as AMD looks like a more serious player in this space, and demand for CPUs (of which AMD is a bigger player) is increasing as agent-based artificial intelligence grows in popularity. “We are increasing our AI revenue forecasts and expect it to reach $33 billion in 2027 (up 137% year-over-year) and $50.8 billion in 2028 (up 54% year-over-year),” Malik wrote. AMD YTD Mountain AMD’s year-to-date total. AMD stock rose more than 1.5% in premarket trading Friday. Inventory has more than doubled since the beginning of the year. Most analysts are bullish on AMD. Of the 53 companies it covers, 43 interest rate stocks are rated buys or strong buys, according to LSEG data.
