With shares up by 312% over the past year, Advanced Micro Devices (NASDAQ:AMD) has been one of the market’s strongest performers.
However, not everyone has been convinced in the story. For example, Citi’s Atif Malik, an analyst ranked in 2nd spot among the thousands of Street stock experts, has kept a skeptical stance on the chipmaker until now.
But “until now” is the correct wording here given the 5-star analyst has now changed his tune. Based on “increased conviction in AMD’s GPU business and server CPU tailwinds,” Malik has upgraded his AMD rating from Neutral to Buy, while his price target goes from $460 to $575, implying the stock will gain 18% over the coming months. (To watch Malik’s track record, click here)
While Malik has been “constructive on the inflection in agentic AI led CPU demand” with AMD positioned as the primary beneficiary, he now views the company as a credible second source in the GPU market, with the company positioned to capture the “lion’s share” at Meta.
The analyst expects Meta to become a “significantly larger customer” of AMD’s AI products, particularly GPUs, than consensus expectations currently imply.
The analyst believes that deployment of custom MI450 GPUs is likely to result in lower TCO (total cost of ownership) for Meta vs. merchant GPU offerings. Recall, AMD announced a six-gigawatt, four-year Meta agreement involving 160 million common stock warrants for custom MI450 GPUs, with the first 1GW tranche set to ramp in 2H26 and 2027. The analyst reckons that each gigawatt corresponds to $15 billion of revenue for AMD. As such, Malik has raised his AI sales estimates and now forecasts $33 billion in 2027 (up 137% year-over-year) and $50.8 billion in 2028 (up 54% YoY).
Additionally, following Computex, Malik has raised his CPU 2030 TAM (total addressable market) model from $132 billion to $137 billion and still expects AMD to remain the “key beneficiary of the CPU renaissance,” driven by advantages in performance leadership, expanded core counts, the x86 instruction set architecture, a wider SKU range, and capabilities spanning both multithreaded and single-threaded workloads.
When comparing AMD’s upcoming Venice CPU to rival offerings from Nvidia (Vera), and Intel (Diamond Rapids), AMD’s product comes out on top.
The analyst expects AMD’s Venice to span roughly 8 to 256 cores, allowing for a “variety of workloads” while sustaining performance leadership and supporting diverse compute demands.
Intel is also expected to see success, but Malik sees its Diamond Rapids CPU as trailing Venice due to the absence of multithreading, lower core counts, and an anticipated overall “performance gap.” Intel’s follow-up Coral Rapids CPU is expected to reintroduce multithreading, though it is likely not due until 2028.
Nvidia should be competitive in reasoning server CPUs with Vera, which incorporates a proprietary spatial multithreading approach, but is limited to 88 cores compared with Venice scaling up to 256 cores and Diamond Rapids up to 192 cores, and is built on the ARM ISA. ARM-based systems can face legacy software compatibility constraints and can require application porting, although the analyst notes this issue is gradually diminishing.
Given Nvidia’s fabless model and fixed wafer allocations from foundry partners, Malik still expects the company to prioritize GPU shipments over standalone CPU volumes due to its “entrenched position” in the GPU market.
So, that’s the Citi view, but what does the rest of the Street have in mind for AMD? Based on an additional 27 Buys and 7 Holds, the stock claims a Strong Buy consensus rating. However, the $89 average price target implies the stock is fully valued. That likely reflects more the speed of the stock’s recent jump than any deterioration in conviction, implying that more upward revisions to price targets could follow shortly. (See AMD stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.