TLDR
- HSBC reduced AMD price target to $185 from $200 while maintaining Buy rating
- MI355 chip pricing estimate lowered to $23,000 from $25,000 per unit
- 2026 AI GPU revenue forecast dropped from $15.1B to $13.9B, still 20% above consensus
- Major cloud providers testing MI400 rack solution with results expected Q4 2025
- Wall Street consensus remains Moderate Buy with average target of $184.91
HSBC analyst Frank Lee trimmed his AMD stock price target to $185 from $200 while keeping his Buy rating. The revision reflects more conservative pricing assumptions for AMD’s artificial intelligence accelerator chips.
AMD has gained approximately 25% year-to-date and jumped 51% over six months. The chip maker currently holds a market capitalization of $245.7 billion.
Pricing Assumptions Drive Target Cut
Lee’s revised forecast centers on AMD’s MI355 GPU average selling price. The analyst now projects $23,000 per unit compared to his previous $25,000 estimate.
This change accounts for differential pricing across customers rather than uniform pricing. HSBC describes this as “a more prudent assumption given differential pricing for different customers.”
The pricing adjustment forced Lee to reduce his 2026 AI GPU revenue projection. His estimate fell from $15.1 billion to $13.9 billion for the year.
Despite the downward revision, Lee’s forecast exceeds Wall Street consensus by 20%. The analyst believes most competitors underestimate AMD’s pricing power in AI chips.
Lee upgraded AMD from Hold to Buy in July, citing the company’s return to competitive positioning in artificial intelligence with stronger product momentum.
Cloud Provider Testing Phase
Major cloud service providers are currently testing AMD’s MI400 rack solution. Meta, Microsoft, Oracle, and xAI participate in these evaluation programs.
Testing results could emerge by fourth quarter 2025 or early first quarter 2026. This timeline would provide clearer visibility into MI400 revenue potential by early 2026.
The testing phase represents a critical milestone for AMD’s next-generation AI infrastructure. Success with these hyperscale customers could accelerate adoption and revenue growth.
Lee expects improved order visibility by first quarter 2026. Enhanced clarity could establish the foundation for accelerated growth in AMD’s AI chip segment.
Market Sentiment Remains Positive
Wall Street maintains cautious optimism on AMD shares. The consensus rating stands at Moderate Buy based on 26 Buy recommendations and 11 Hold ratings.
The average analyst price target of $184.91 implies 22.13% upside potential from current levels. Price targets across the Street range from $125.10 to $230.00.
AMD management highlighted substantial improvements from the earlier MI325 chip to the new MI355 during recent earnings communications. This reinforces the value proposition of higher-tier products.
Recent corporate developments include a partnership with IBM for quantum-centric supercomputing architectures. The collaboration combines IBM’s quantum computing with AMD’s high-performance computing and AI accelerators.
Chief Accounting Officer Philip Carter resigned to become CFO at another company. AMD confirmed the departure was unrelated to accounting disputes or financial reporting disagreements.
HSBC’s revised projections still exceed consensus estimates, suggesting potential upside if AMD executes on its AI chip strategy with major cloud customers through 2026.
