Investors should buy AMD's stock now: This analyst explains why he changed his mind

By Britney Nguyen

The chip maker is almost sold out of server CPUs, while demand for its AI chips should support up to $15 billion in revenue, KeyBanc says

Shares of AMD, led by CEO Lisa Su, have been upgraded by KeyBanc.

Wall Street may be waiting for Advanced Micro Devices' first rack-scale offering later this year, but KeyBanc said it's now time to buy the chip maker's stock, as previous worries about a possible "air pocket" in demand have eased.

KeyBanc analyst John Vinh wrote in a late Monday note that AMD (AMD) is close to "being completely sold out" of its server central processing units due to a "recent surge" in demand from hyperscalers building data centers. On that, AMD is considering raising prices for its server CPUs by 10% to 15% in the first quarter, he added.

Vinh sees AMD's server CPU business growing at least 50% in 2026 due to the intense demand. He upgraded the stock to overweight and raised his price target to $270, which represents 30% upside from the stock's closing price of $207.69 on Monday.

AMD's stock surged 6.4% on Tuesday.

The upgrade comes after Vinh had downgraded AMD's stock to sector weight in April, when he wrote that he was "increasingly concerned there would be an air pocket in demand" in between the chip maker's Instinct MI355 series of artificial-intelligence accelerators and the following MI455 series. The MI355 accelerators were launched in June, and AMD said it expected to roll out MI455 with its first rack-scale offering, Helios, in the second half of this year.

Since that downgrade, the stock has rallied 166%.

See more: AMD just showed signs of progress. But can it really take on Nvidia?

Based on the demand for MI355 series accelerators that Vinh is seeing in the first half of this year and the "significant ramp" in supply of MI455s he sees slated for the latter half of the year, Vinh expects AMD's AI revenue to reach between $14 billion and $15 billion in 2026. He added that 290,000 to 300,000 of the MI455 GPUs are expected to be used in Helios.

Meanwhile, Vinh expects AMD's personal-computer chips to underperform, as memory prices continue rising due to shortages from AI demand. However, he sees it as a "favorable [gross margin] mix" for the company.

Read: Here's where AMD can gain ground in the AI chip race next year.

-Britney Nguyen

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01-13-26 1859ET