Citigroup upgraded Advanced Micro Devices (AMD) to a Buy rating from Neutral on June 12, 2024 [1].
The move signals a shift in Wall Street's confidence regarding AMD's ability to challenge the dominant AI chip market. By highlighting the company's potential for massive GPU sales, Citi suggests that the hardware landscape for artificial intelligence is becoming more competitive.
Analyst Atif Malik and the Citi research team raised the price target for AMD to $575 [2]. This is a significant increase from the previous target of $460 [3]. The upgrade reflects a bullish outlook on the company's strategic positioning within the AI ecosystem.
Citi identifies a major opportunity for AMD in AI-related GPU sales, specifically through a partnership with Meta [5]. The research team also expects strong growth in the AI CPU market. According to Citi's projections, the AI CPU market size is expected to grow to $131.5 billion by 2030, up from $29.3 billion [6].
Market reaction to the upgrade was immediate. AMD stock rose approximately five percent on June 12 [4]. The momentum continued into the following week, with the stock price increasing approximately seven percent on June 15 [5].
The financial outlook for the company remains aggressive. Analysts said that investors are currently pricing in a probability of approximately 60% that AMD will generate more than $50 billion in GPU revenue by 2028 [7]. This projection underscores the scale of the growth Citi expects as AI integration accelerates across the tech industry.
“Citi upgraded Advanced Micro Devices (AMD) to a Buy rating from Neutral.”
This upgrade indicates that institutional investors are looking beyond the current market leader in AI chips to find growth. By linking AMD's success to Meta's infrastructure needs, Citi is highlighting a trend where big tech firms seek to diversify their hardware suppliers to avoid reliance on a single vendor. If AMD captures this projected market share, it could shift the pricing power and supply dynamics of the entire AI hardware industry.
