The stock of Advanced Micro Devices Inc. was upgraded to a hold recommendation by analysts at HSBC Global Research on Tuesday, noting the company’s planned artificial-intelligence processors and the possibility of future upside due to a new agreement between the United States and Saudi Arabia.
The Trump administration stated earlier this month that Saudi Arabia would spend $600 billion in a number of U.S. businesses, including defense and technology. Despite describing the purchase as “appealing in terms of long-term TAM (total addressable market) opportunity,” the analysts stated that it is still uncertain whether there will be any upside in 2025.
In order to deploy up to 500 megawatts of AI processing capacity over the next five years, AMD (AMD) announced a $10 billion deal with the Saudi AI company Humain at the same time. “It’s too early to quantify the timing of revenue generation as well as potential upside” from the purchase, HSBC reaffirmed.
The agreement was previously referred to as a “positive” for AMD by analysts at Rosenblatt Securities, who stated that it should assist the business and rival Nvidia Corp. (NVDA), which also has an agreement with Humain, in “partially offsetting the impact from the recent U.S. export restrictions to China.” AMD previously stated that it anticipates a $1.5 billion revenue loss in 2025 as a result of U.S. export limitations on its MI308 processors.
Read more: AMD and Nvidia maintain stock increases. Why the trade in AI is booming again.
“Nevertheless, we do recognise that the tariff de-escalation and the potential of the Saudi AI deal has already led to a rerating of AMD shares, despite a limited or quantifiable earnings impact,” the HSBC analysts said as they ditched their prior “reduce” call on the stock.
The chip maker’s stock has increased 7% since the U.S. and China agreed on May 12 to halt reciprocal tariffs for 90 days, and its price-to-earnings ratio for the entire year has improved to 29x, according to HSBC. As a result, HSBC increased its target P/E ratio from 20x to 26x.
Based on their “expectation of around a 15% increase in CoWoS (chip on wafer on substrate) allocation” for the firm, which would benefit its Instinct MI350 chip series, the analysts increased their 2026 revenue forecasts for AMD’s graphics processing units from $6.6 billion to $7.8 billion. That “should come with a pricing premium and help improve the product mix,” according to the analysts.
Although the analysts pointed out that it’s “too early to quantify the revenue potential” there, AMD is also anticipated to introduce its Instinct MI400 series next year.
“Hence, our 2025/2026 data-center revenue estimates remain 5%/6% lower than consensus estimates,” stated HSBC.
As AMD “is in a good position to fend off competition from Intel” and increase its market share, the analysts said they are “more optimistic” about the company’s client business. At first, HSBC thought Intel Corp. (INTC) would put more pressure on AMD’s prices in an effort to reclaim market share. According to the experts, the plan ultimately had no significant effect because AMD already offers competitive pricing and cutting-edge central processing units to enhance the appeal of its product selection.
HSBC stated that because of a robust first quarter, the second half of the year “could be subseasonal.” As a result, experts anticipate that client revenue will be constant in 2025’s first and second halves.
See more: Bank of America feels AMD’s stock is worth a new look
Last week, analysts at Bank of America said AMD has “sufficient room” in the market for AI accelerators, despite expectations for Nvidia and custom chips to dominate. Vivek Arya, a research analyst at BofA, said AMD could see “a credible 3%-4% share” of the market for hardware that optimizes the speed of AI applications.
“Many customers have significant internal workloads and compute requirements for internal teams where AMD can play an important role,” Arya stated. “Its recent acquisitions across rack-scale systems and improving software position it well.”
AMD unveiled its Radeon AI Pro R9700 GPUs and Threadripper 9000 series of processors along with other chips at Computex 2025 last week. The GPU is designed to speed up local AI inferencing, model fine-tuning and other AI workloads, the company said.
