HSBC Sees Strong AI Upside for AMD
HSBC is leaning bullish on Advanced Micro Devices, Inc. (NASDAQ: AMD), arguing that the company’s opportunity in artificial intelligence (AI) revenue is larger than the market gives it credit for. The firm’s analysts say demand for AI hardware keeps building, and they don’t think investors have fully priced in AMD’s capabilities yet.
AMD’s Position in the AI Race
According to HSBC, AMD sits at an important moment in the AI GPU market. While Nvidia (NASDAQ: NVDA) leads today, HSBC expects AMD to close some of the gap by fiscal year 2025. That setup, they argue, creates a compelling risk/reward profile for investors who are focused on the pace of AI adoption and the hardware arms race behind it.
AI Revenue Outlook and Valuation
HSBC reiterates a Buy rating on AMD and sets a $200 price target—about 43% above current levels by their math. The call rests on a revenue ramp driven by AI: $6 billion in 2024 and $12.3 billion in 2025. Those figures sit above prevailing market estimates, which stand at $5.1 billion for 2024 and $9.6 billion for 2025. In short, HSBC’s model assumes stronger traction for AMD’s AI portfolio than consensus expects.
Why Upcoming GPUs Matter
A key piece of the thesis is AMD’s MI325X GPU, slated for the second half of 2024. HSBC expects this processor to go toe to toe with Nvidia’s H200, a matchup that, if it lands well with customers, could accelerate AMD’s share gains and AI-related revenue. The product cadence—and how it translates into real deployments—sits at the center of their optimism.
Market Shifts That May Favor AMD
HSBC also points to a timing shift at Nvidia: several AI GPU platforms are now expected later, with launches pushed to late 2025. That pause could give AMD room to narrow the competitive gap. In parallel, HSBC notes AMD’s strategic acquisition of ZT Systems, which they expect to strengthen AMD’s rack-scale infrastructure capabilities and further sharpen its positioning in large-scale AI builds.
What HSBC’s Scenarios Suggest
To frame the range of outcomes, HSBC runs a scenario analysis on AMD’s AI business. In a best-case case, they see AI GPU earnings reaching $15.1 billion by 2025—about 58% above where the market is currently modeling. That scenario assumes a notable step-up in demand and strong execution across product, supply, and customer wins.
The Road Ahead
The AI landscape is moving quickly, and HSBC’s view is that AMD is well placed for the next leg. With new products arriving and targeted strategic moves, the company could capture a larger slice of the expanding AI pie. Historically, AMD has trailed Nvidia, but HSBC’s analysis suggests the gap can narrow as early as fiscal year 2025—if plans meet the moment.
Frequently Asked Questions
Why is HSBC optimistic about AMD now?
HSBC believes the market underestimates AMD’s AI potential. Their Buy rating reflects forecasts that put AMD’s AI revenue ahead of current consensus, supported by a stronger product lineup and growing demand.
How does HSBC value AMD shares?
HSBC sets a $200 price target, implying roughly 43% upside. That target is tied to their AI revenue outlook of $6 billion in 2024 and $12.3 billion in 2025, which exceeds market estimates.
What role does the MI325X GPU play?
The MI325X, expected in the second half of 2024, is central to HSBC’s thesis. It’s anticipated to compete closely with Nvidia’s H200, potentially accelerating AMD’s adoption and revenue in AI workloads.
How do Nvidia’s timing changes figure into this?
Nvidia has delayed several AI GPU platform launches until late 2025. HSBC sees that shift as opening a window for AMD to reduce the competitive gap.
What’s the upper bound of HSBC’s AI outlook for AMD?
In a best-case scenario, HSBC estimates AI GPU earnings could reach $15.1 billion in 2025—about 58% above current market expectations—assuming stronger-than-expected demand and execution.
