Bank of America believes that the core investment thesis for AMD should focus on a significant growth inflection point in the second half of 2026. With the launch of the rack-level MI400X product and the implementation of the OpenAI collaboration project, the company's earnings per share are expected to more than double. At next week’s Analyst Day, AMD is anticipated to raise its forecast for the addressable AI market size from the previously projected USD 500 billion by 2028 to over USD 1 trillion by 2030. This adjustment will provide stronger support for the company’s long-term growth prospects.
Company analysts recently reiterated that Bank of America Securities maintained a$Advanced Micro Devices (AMD.US)$Buy rating, emphasizing that the core investment thesis for the company should focus on a significant growth inflection point in the second half of 2026.
According to information from the Chase Wind Trading Desk, BofA analysts stated in a report on November 5 that AMD is expected to raise its addressable market size for AI at the upcoming Analyst Day on November 11, from the previously forecast $500 billion by 2028 to over $1 trillion by 2030. This adjustment will provide stronger support for the company's long-term growth prospects.
With the release of the rack-level MI400X product and the implementation of collaboration projects with OpenAI,$Advanced Micro Devices (AMD.US)$earnings per share are expected to surge from less than USD 4 in 2025 to approximately USD 10 in 2027, representing more than a doubling of growth. If the OpenAI project is fully implemented, data center GPU (MI) sales could skyrocket from USD 6.2-6.4 billion in the current year to approximately USD 30 billion by 2027, achieving nearly a fivefold increase.
Data Center GPU Business Enters Explosive Growth Phase
In the previous Q3 earnings report, data center GPUs emerged as the biggest growth highlight for AMD. The MI355X quickly gained recognition from multiple customers in Q3 and rapidly ramped up production, driving GPU revenue to achieve an approximate 150% quarter-over-quarter growth in the second half, excluding the impact of MI308.
More importantly, AMD’s supply chain preparations for MI450/Helios in the second half of 2026 and beyond are proceeding smoothly. Customer interest has significantly increased: a 6GW capacity agreement signed with OpenAI, OCI committing to deploy at least 50,000 MI450 GPUs starting from Q3 2026, and Meta showcasing a custom rack system based on MI450 Helios at the OCP conference.
JPMorgan believes that these developments lay the groundwork for$Advanced Micro Devices (AMD.US)$achieving the previously reiterated target of "data center GPU revenue reaching tens of billions of dollars by 2027."
Rack-Level Architecture and OpenAI Collaboration
AMD expressed optimism about progress in rack-level MI400X products, customer diversification, supply chain coordination, and the ROCm software platform, all of which are preparations for the launch of the OpenAI project in the second half of 2026.
Bank of America analysts estimate that if AMD can fulfill OpenAI's entire 6GW order, the long-term earnings per share potential could exceed $15.
The analysts emphasized that, currently,$Advanced Micro Devices (AMD.US)$holding a market share of approximately 3-4% in the rapidly growing AI market, the company’s true growth trajectory will depend on its execution in rack-level architecture and expansion of market share. The data center GPU business is projected to grow from around USD 6.4 billion in the current year to USD 26.771 billion by 2027.
Gross Margin Pressure and Intense Competition
However, Bank of America also highlighted that investors need to focus on several key risks.
First, the company's competition with $NVIDIA (NVDA.US)$and$Broadcom (AVGO.US)$ and other larger-scale competitors is not easy.
$Advanced Micro Devices (AMD.US)$R&D expenditure has significantly increased as the company integrated recent acquisitions. Spending is expected to remain high, with AMD continuing to prioritize market share growth over profit margin maximization in the short to medium term.
There may be pressure on gross margins as the product mix shifts towards rack-level systems, which have higher input costs (wafers, HBM).
At the Analyst Day, the gross margin may be guided to a level slightly above 50%. Additionally, some investors may remain on the sidelines until there is more evidence of AMD’s execution capabilities and customer diversification for rack-level products, especially outside of OpenAI, which is already served by other large competitors.
Editor/melody