AMD’s Stock Worth Reassessing as AI Market Opportunities Expand
Advanced Micro Devices Inc. (AMD) has found itself in a challenging position within the competitive landscape of artificial intelligence (AI) chips, but a recent analysis from Bank of America suggests that the company still has significant potential in this burgeoning market. While AMD’s stock has experienced a rough start to 2025—down 7% year-to-date and 32% over the past year—analysts at Bank of America believe that there is “sufficient room” for AMD to capture a meaningful share of the AI chip market.
AI Chip Market Overview
According to Bank of America research analyst Vivek Arya, Nvidia Corp. (NVDA) is predicted to dominate the AI accelerator market, maintaining over 80% market share. This segment includes hardware that plays a critical role in powering AI applications. Arya anticipates that customized chips from various tech firms could represent an additional 10% to 15% of market share. Despite these significant figures highlighting Nvidia’s substantial lead, Arya remains optimistic about AMD’s place in the market, forecasting that the company could achieve a “credible 3%-4% share.”
The Potential for Growth
The total addressable market for AI accelerators is projected to exceed $400 billion, presenting ample opportunity for companies like AMD. Arya notes that many businesses have substantial internal workloads and computing requirements—areas where AMD could play a pivotal role. With recent acquisitions focused on rack-scale systems and software improvements, AMD’s positioning appears favorable.
New Developments from AMD
AMD recently showcased its latest innovations during Computex 2025 in Taipei, Taiwan, introducing the Radeon RX 9060 XT and Radeon AI Pro R9700 graphics cards, alongside the Threadripper 9000 Series of processors. The company touted that these new products are “engineered to address the toughest workloads in gaming, content creation, professional industries, and AI development.” The Radeon AI Pro R9700 GPUs are specifically designed to enhance local AI inferencing, model finetuning, and other AI workloads, positioning AMD to capture more business in these high-demand sectors.
Strategic Partnerships
In a strategic move, AMD has expanded its collaboration with Taiwanese electronics manufacturer ASUSTeK Computer Inc. on the Expert P Series Copilot+ PCs powered by its Ryzen AI Pro 300 Series chips. Additionally, AMD announced a significant $10 billion partnership with Saudi Arabian AI startup Humain to develop the company’s AI infrastructure over the next five years. Analysts at Rosenblatt Securities have labeled this deal a “positive” for AMD and are optimistic about its potential to partially mitigate the impacts of recent U.S. export restrictions to China. Arya commented on the implications of these partnerships, estimating that each deal could be valued between $3 billion and $5 billion annually—translating to potential revenues of $15 billion to $20 billion over five years.
Challenges Ahead
Despite the optimism surrounding AMD’s market prospects, Arya cautioned that the company must navigate “geopolitical uncertainty,” especially concerning potential tariffs under the new administration—particularly regarding consumer PCs, gaming, and enterprise demand. Additionally, the competitive landscape is also adapting, as rival Intel Corp. (INTC) may regain ground under new management, posing a further challenge to AMD. Following the recent market activity, AMD’s shares concluded Wednesday down by 1.3%.
Conclusion
While AMD faces stiff competition—most notably from Nvidia—it remains a significant player in the AI accelerator market. With the potential for meaningful growth and strategic partnerships on the horizon, Bank of America’s analysis suggests that AMD’s stock warrants a closer look from investors. Significant developments expected at the upcoming AMD Advancing AI event in June may provide additional insights into the company’s long-term strategy and capabilities in this rapidly evolving sector.
