TLDR
- HSBC lowered AMD price target to $185 from $200 while maintaining Buy rating
- Analyst reduced MI355 chip pricing estimate to $23,000 from $25,000 per unit due to differential customer pricing
- 2026 AI GPU revenue forecast cut from $15.1 billion to $13.9 billion, still 20% above consensus
- Major cloud providers including Meta, Microsoft, Oracle, and xAI testing MI400 rack solution
- Results from MI400 testing expected by Q4 2025 or early Q1 2026
HSBC analyst Frank Lee reduced his price target on AMD stock to $185 from $200 while keeping his Buy rating intact. The adjustment reflects more cautious assumptions about pricing for AMD’s AI accelerator chips.
The semiconductor company has gained about 25% in 2025 and surged 51% over the past six months. AMD currently trades with a market value of $245.7 billion.
Lee’s price target cut stems from revised expectations for AMD’s MI355 GPU average selling price. The analyst now estimates the chip will sell for $23,000 per unit instead of his previous $25,000 forecast.
The pricing adjustment reflects what HSBC calls “a more prudent assumption given differential pricing for different customers.” This suggests AMD will offer varying price points depending on which company buys the chips.
Revenue Projections Take a Hit
The lower pricing assumption forced Lee to reduce his 2026 AI GPU revenue estimate for AMD. His forecast dropped from $15.1 billion to $13.9 billion for that year.
Despite the downward revision, Lee’s projection still sits 20% above Wall Street consensus estimates. The analyst believes most market observers continue to underestimate AMD’s pricing power in the AI chip space.
Lee had previously upgraded AMD from Hold to Buy in July. At that time, he argued the company was back in the AI race with stronger product momentum.
The analyst acknowledges AMD’s MI355 GPU retains pricing power that could surprise investors. Company management highlighted a substantial upgrade from the earlier MI325 chip during the latest earnings call.
Testing Phase for Next-Generation Solution
Major cloud service providers are now testing AMD’s upcoming MI400 rack solution. Meta, Microsoft, Oracle, and xAI are among the companies participating in these trials.
Early results from the testing phase could arrive by the fourth quarter of 2025 or early first quarter of 2026. This timeline would provide better visibility into MI400 revenue potential by early 2026.
The testing represents a crucial step for AMD’s next-generation AI infrastructure. Success with these major customers could drive stronger adoption and revenue growth.
Lee expects clearer order visibility by the first quarter of 2026. This improved clarity could set the stage for accelerated growth in AMD’s AI chip business.
Wall Street maintains a cautiously optimistic stance on AMD stock. The consensus rating stands at Moderate Buy based on 26 Buy ratings and 11 Hold ratings.
The average analyst price target of $184.91 suggests 22.13% upside potential from current trading levels. Analyst price targets range from $125.10 to $230.00 across the Street.
AMD recently announced a partnership with IBM to develop quantum-centric supercomputing architectures. The collaboration combines IBM’s quantum computers with AMD’s high-performance computing and AI accelerators.
The company also saw its Chief Accounting Officer Philip Carter resign to become CFO at another firm. AMD clarified the departure was not related to any accounting disputes or disagreements.
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