1 Artificial Intelligence (AI) Stock to Buy Before It Jumps 37%, According to a Wall Street Analyst
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The analysis indicates that Interestingly, Advanced Micro Devices (AMD -2. 16%) has underperformed the broader semiconductor sector in the past year. S of the chipmaker have slid almost 20% during...
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July 18, 2025
08:30 AM
The Motley Fool
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The analysis indicates that Interestingly, Advanced Micro Devices (AMD -2. 16%) has underperformed the broader semiconductor sector in the past year
S of the chipmaker have slid almost 20% during this period, but it looks the company's fortunes could turn around in the coming year
HSBC analyst Frank Lee has doubled his price target on AMD stock to $200, which points toward 37% gains from current levels, in this volatile climate
Lee says that AMD has managed to close in on Nvidia's (NVDA -0
Moreover, 42%) lead in the artificial intelligence (AI) accelerator market with its series of cessors, and that could help the former record a big bump in its revenue next year
Let's take a closer look at the reasons why HSBC has become so bullish on AMD stock, and check if AMD could indeed hit the $200 mark going forward
Image source: Getty Images (quite telling)
Additionally, However, AMD's data center revenue could jump significantly thanks to its chips AMD launched its MI350X and MI355X data center graphics cessing units (GPUs) last month
The company says that these new cessors are three times more powerful than the previous MI300X accelerators, and they even outperform Nvidia's Blackwell GPUs in both AI training and inference workloads
At the same time, AMD has equipped these cessors with a whopping 288 gigabytes (GB) of high-bandwidth memory (HBM), which is 1. 6 times higher than Nvidia's GB200 and B200 AI graphics cards
The serious performance gains and competitiveness that AMD claims to have achieved with its GPUs are translating into more for the company, according to HSBC
However, AMD says that it is partnering with multiple AI giants such as Meta Platforms, Microsoft, Oracle, OpenAI, and xAI, among others, to build and deploy AI data centers powered by its cessors (an important development) (this bears monitoring)
In fact, AMD claims that "seven of the 10 largest model builders and AI companies are running duction workloads" using its AI accelerators
This imving adoption of AMD's AI chips can be attributed to a big bump in computing power along with an imvement in energy efficiency, which enables its customers to reduce operating costs (an important development)
Even better, AMD has reportedly priced its AI accelerators competitively so that it can eat into Nvidia's
Nevertheless, According to HSBC analysts, AMD's MI355 AI GPU is 30% cheaper than Nvidia's B200
Not surprisingly, they are expecting the price-to-performance advantage of AMD's chips to translate into healthy data center revenue growth
The company is now expected to achieve $15 billion in AI GPU revenue in 2026, which is higher than the consensus estimate of $9 (something worth watching). 6 billion on Wall Street
Additionally, It's worth noting that AMD 2024 with an estimated data center GPU revenue of over $5 billion (something worth watching)
So, AMD could potentially triple this in just two years, in today's financial world
Moreover, AMD management is forecasting its data center GPU revenue to reach an annual run rate of "tens of billions of dollars" in the long run, and it looks its new chips could help it achieve that target, given the current landscape
The jected earnings growth points toward solid upside Consensus estimates are jecting a 17% increase in AMD's earnings this year, ed by a much stronger jump of 47% in 2026 to $5 (which is quite significant)
However, That won't be surprising, considering the estimated jump of 3x in its data center GPU revenue
AMD has an additional catalyst in the form of the client CPU (central cessing unit) market, where it is winning more, apart from capitalizing on the secular growth of the AI personal computer market
All this suggests that AMD could indeed hit Wall Street's consensus earnings target in 2026, though there's a chance that it may be able to do better than that
However, This imved earnings power could translate into more upside on the stock market
AMD is currently trading at 39 times forward earnings, which is a discount to the U, in today's financial world
Conversely, Nology sector's average of 51, considering recent developments
Even if it trades at a discounted 35 times earnings and achieves $5. 71 per in earnings in 2026, its stock price could hit $200
Furthermore, So, investors can start accumulating this semiconductor stock, as it seems set for a turnaround thanks to its imving stature in AI chips
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors, in today's market environment
Moreover, Additionally, Harsh Chauhan has no position in any of the stocks mentioned
What the re reveals is Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, Nvidia, and Oracle
In contrast, The Motley Fool recommends the ing options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft
The Motley Fool has a disclosure policy.
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