AMD Allocates 15% of AI GPU Sales in China to U.S. Government, Analyst Sees Negligible Financial Impact
Brief news summary
Advanced Micro Devices (AMD) agreed to allocate 15% of its AI GPU sales in China to the U.S. government to obtain export licenses, attracting attention. However, Citi analyst Christopher Danely considers this impact minimal for AMD’s overall profitability, as it mainly concerns low-margin products like the MI308X. Meanwhile, AMD’s more profitable mainstream AI GPUs, including the MI355 and MI400, are driving strong sales growth, with revenues projected at $6.2 billion in 2025 (up 23%) and $9.9 billion in 2026 (up 58%). Major clients such as Amazon, Oracle, Meta, and OpenAI support this growth. Despite the export deal’s implications, Danely assigns AMD stock a Neutral rating with a $180 price target, noting it trades slightly above historical valuations. Competitor Nvidia has entered a similar Chinese export agreement. Overall, Wall Street maintains a Moderate Buy stance on AMD, expecting roughly 5% upside. Investors should also heed six warning signs highlighted by GuruFocus.On August 13, Advanced Micro Devices (NASDAQ: AMD) attracted attention following reports that the chipmaker agreed to allocate 15% of its AI GPU sales in China to the U. S. government in exchange for export licenses. Although this may seem significant, Citi analyst Christopher Danely considers the impact on AMD’s financial performance to be largely negligible. Danely highlights that the agreement primarily affects lower-margin products like the MI308X, which are substantially less profitable compared to AMD’s overall corporate average margin of nearly 54%. The company’s main growth remains driven by its mainstream AI GPUs, the MI355 and MI400, which are expected to generate AI sales of $6. 2 billion in 2025 (a 23% increase) and $9. 9 billion in 2026 (a 58% increase).
Key customers contributing to this expansion include Amazon (NASDAQ: AMZN), Oracle (NYSE: ORCL), Meta Platforms (NASDAQ: META), and OpenAI. Caution: GuruFocus has identified 6 Warning Signs for AMD. Danely maintains a Neutral rating on AMD with a price target of $180, noting that the stock currently trades at a valuation slightly above its historical average. Competitor Nvidia (NASDAQ: NVDA) has also entered into a similar export agreement involving China. Presently, Wall Street holds a Moderate Buy rating on AMD, with analysts projecting approximately 5% upside potential from current levels.
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AMD Allocates 15% of AI GPU Sales in China to U.S. Government, Analyst Sees Negligible Financial Impact
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