Citi has upgraded Advanced Micro Devices (AMD) from Neutral to Buy, and simultaneously raised its price target to $575 from $460. The bank says AMD's growing position as a "legit second source in the GPU market" is not yet reflected in the equity's valuation.
Analyst Atif Malik told clients that many investors continue to view AMD mainly as a CPU-focused company. Citi calculates the market currently prices in roughly a 60% probability that AMD will surpass $50 billion in GPU sales by 2028.
A central pillar of Citi's bullish view is the firm's expectation that AMD is "poised to win lion's share" of GPU workload wins at Meta. Citi highlights AMD's custom MI450 chips as likely to give Meta a lower total cost of ownership compared with merchant GPU offerings.
Citi pointed to AMD's previously disclosed deal with Meta covering six gigawatts over four years, a transaction that involved a 160 million share common stock warrant. The bank noted the first one-gigawatt tranche of that arrangement is expected to ramp in the second half of 2026 and continue into 2027.
The firm uses an estimate that each gigawatt equates to roughly $15 billion in revenue for AMD. Based on that and other inputs, Citi now forecasts AI-related sales of $33.0 billion in 2027 - a rise of 137% year-over-year - and $50.8 billion in 2028, up 54% from the prior year.
On the CPU front, Citi increased its total addressable market estimate for 2030 to $136.7 billion, up from $131.5 billion following Computex. Citi's view implies a 36% compound annual growth rate from $29.3 billion in 2025 and sits above AMD's own $120 billion forecast.
Reflecting these adjustments, Citi's revised earnings-per-share estimates for 2026 through 2028 are about 12% to 13% higher than current Street consensus. The bank's $575 price objective derives from a sum-of-the-parts valuation that assigns $281 per share to the data center GPU business and $204 per share to the CPU business, with additional value attributed to client, gaming and embedded segments plus approximately $35 per share in net cash.
What this means
Citi's upgrade and valuation changes rest on three interlocking observations present in its report: improved odds that AMD will take substantial GPU business from incumbents at major cloud and hyperscaler customers, the financial magnitude of the Meta multi-gigawatt agreement, and a larger-than-previously-estimated CPU market opportunity. The bank's model lifts near-term earnings and assigns explicit per-share values to AMD's core data center franchises.
Market reaction and context
The research note indicates Citi sees meaningful upside to consensus estimates if AMD captures the scale assumed in its forecasts. The bank's approach combines product-specific revenue assumptions with a sum-of-the-parts valuation to reach its new target.
Summary of forecasts and valuation inputs cited by Citi
- Price target raised to $575 from $460.
- Market-implied probability of AMD exceeding $50 billion in GPU sales by 2028 estimated at roughly 60%.
- Meta deal: six-gigawatt, four-year agreement with a 160 million share common stock warrant; first one-gigawatt tranche ramps in H2 2026 into 2027.
- Each gigawatt estimated to correspond to about $15 billion in revenue.
- AI revenue forecasts: $33.0 billion in 2027 (up 137% YoY) and $50.8 billion in 2028 (up 54%).
- 2030 CPU total addressable market raised to $136.7 billion from $131.5 billion; implies a 36% CAGR from $29.3 billion in 2025.
- 2026-2028 EPS estimates placed 12% to 13% above Street consensus.
- Sum-of-the-parts valuation: $281 per share for data center GPU business, $204 per share for CPU business, plus client/gaming/embedded contributions and roughly $35 per share in net cash.