Buy AMD shares as graphics chip sales boost earnings, says Citi
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Advanced Micro Devices may be emerging as the second source for graphic processing units, GPUs, behind Nvidia , according to Citi. The bank upgraded the chipmaker to buy from neutral. It also raised its price target to $575, which represents a more than 17% gain from Thursday's close. Citi thinks AMD will likely surpass its goal of earnings greater than $20 per share by 2028. That's due to increasing demand for its GPUs, coming in particular from one key hyperscaler. "We believe Meta will be a significantly larger customer of AMD's AI products, especially GPUs, than the street is expecting," wrote analyst Atif Malik in a Friday note. "We believe the use of custom MI450 GPUs is likely to provide Meta lower TCO vs merchant GPU products." In February, Meta and AMD announced a multiyear deal to deploy up to 6 gigawatts of its GPUs to power data centers. Citi estimates each gigawatt is equivalent to $15 billion for AMD. Nvidia dominates the GPU market, and days before Meta's deal with AMD it also announced a deal with Nvidia for its GPUs. However, AMD looking like a more serious player in the space, while simultaneously the demand for CPUs — where AMD is a bigger player — rise as agentic artificial intelligence becomes more popular, Citi sees the outlook for the company improving. "We increase our AI sales estimates and now expect $33 billion in 2027 (up 137% YoY) and $50.8 billion in 2028 (up 54% YoY)," Malik wrote. AMD YTD mountain AMD year-to-date. AMD shares were up more than 1.5% in premarket trading Friday. Year to date, the stock has more than doubled. Most analysts are bullish AMD. Of the 53 who cover it, 43 rate shares a buy or strong buy, LSEG data shows.