TLDR
- AMD stock climbed 2.8% after announcing a quantum computing partnership with IBM to develop hybrid quantum-classical computing platforms
- Truist analyst William Stein upgraded AMD from Hold to Buy with a $213 price target, citing hyperscale customers now treating AMD as a genuine partner rather than just a “price check” against Nvidia
- Stein believes AMD could capture 10% of the datacenter GPU market over time, comparing it to AMD’s successful CPU comeback against Intel
- The partnership will integrate AMD’s CPUs, GPUs, and FPGAs with IBM’s quantum computers to tackle complex computational problems
- AMD currently powers the world’s two fastest supercomputers and has grown server CPU market share to approximately 21%
Advanced Micro Devices stock jumped 2.8% on Monday following two major developments that could reshape the company’s competitive position in high-performance computing markets.
The chipmaker announced a partnership with IBM to develop next-generation quantum-centric supercomputing architectures. The collaboration will combine IBM’s quantum computers with AMD’s high-performance computing and AI accelerators.
The partnership aims to create scalable, open-source platforms using a hybrid approach. Different components of complex problems will be handled by whichever computing paradigm works best for that specific task.
Under the agreement, the companies will explore integrating AMD’s CPUs, GPUs, and FPGAs with IBM’s quantum systems. The goal is to accelerate emerging algorithms that require both classical and quantum computing power.
Teams from both companies plan to demonstrate the hybrid quantum-classical workflows later this year. The initial showcase will show how IBM quantum computers can work alongside AMD technologies.
“Quantum computing will simulate the natural world and represent information in an entirely new way,” said IBM Chairman and CEO Arvind Krishna. The executive highlighted how the partnership could push past traditional computing limits.
Analyst Sees Datacenter GPU Breakthrough
The stock received additional support from a Truist upgrade earlier Monday. Analyst William Stein moved AMD from Hold to Buy and raised his price target from $173 to $213.
Stein’s upgrade represents a major shift in thinking about AMD’s datacenter prospects. The analyst had previously been skeptical about AMD’s ability to compete with Nvidia in AI chips.
For years, Stein argued that Nvidia’s CUDA software ecosystem created an unbreakable advantage. He believed hyperscale customers only engaged with AMD to keep Nvidia’s pricing competitive.
Recent feedback from the field has changed that view entirely. Hyperscale customers are now working with AMD as a potential partner rather than simply using it for price negotiations.
“This change in messaging from the field is the basis of our upgrade,” Stein explained. The analyst now sees parallels to AMD’s successful CPU comeback against Intel.
A decade ago, AMD held less than 1% of the datacenter CPU market. Intel’s manufacturing and design problems created an opening that AMD seized with its Rome CPU launch in 2019.
Market Share Expectations Rise
AMD’s server CPU share has since climbed to approximately 21% of the market. Stein believes a similar breakthrough could happen in datacenter GPUs.
The analyst expects AMD’s MI355 chip, which began shipping in late June, could be the company’s “Rome moment” for GPUs. Early customer adoption is already shaping third-quarter revenue expectations.
Stein now projects AMD could capture 10% of the datacenter GPU market over time. This represents a dramatic increase from his previous near-zero expectations.
The quantum partnership could provide additional momentum for AMD’s high-performance computing business. IBM’s vision includes delivering fault-tolerant quantum computers by the decade’s end.
AMD technologies could potentially provide real-time error correction capabilities for these advanced quantum systems. The collaboration supports IBM’s broader quantum computing roadmap.
AMD currently powers the world’s two fastest supercomputers according to the TOP500 rankings. Frontier operates at Oak Ridge National Laboratory while El Capitan runs at Lawrence Livermore National Laboratory.
The consensus rating for AMD stands at Moderate Buy with 24 bullish analysts and 10 neutral ratings. The average price target sits at $183.45, projecting approximately 11% upside from current levels.
IBM shares also gained 0.9% on the quantum partnership announcement, reflecting investor optimism about the collaboration’s potential.
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