Why AMD Stock Is Surging Today

Key Points

• AMD is jumping today after HSBC raised its rating on the stock from hold to buy.

• HSBC also raised its one-year price target on AMD from $100 per share to $200 per share.

• 10 stocks we like better than Advanced Micro Devices ›

Advanced Micro Devices (NASDAQ: AMD) stock is seeing significant bullish momentum Thursday. The semiconductor company's share price was up 3.8% as of 3:30 p.m. ET amid the backdrop of a 0.3% gain for the S&P 500 (SNPINDEX: ^GSPC) and a 0.2% gain for the Nasdaq Composite (NASDAQINDEX: ^IXIC). The stock had been up as much as 5.4% earlier in the day's trading.

AMD's valuation is climbing today following bullish coverage from HSBC. The bank's investment branch issued new coverage on the stock this morning, and other investors are buying up shares in conjunction with the latest research note.

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AMD stock gets another boost thanks to bullish analyst coverage

In a note published before the market opened today, HSBC upgraded its rating on AMD stock from hold to buy. The firm also raised its one-year price target on the stock from $100 per share to $200 per share. As of this writing, HSBC's new price target suggests additional upside of roughly 39%.

HSBC pointed to an improving demand outlook for AMD's graphics processing units (GPUs) for artificial intelligence (AI) as a key factor in its ratings upgrade and big price target hike. The firm's analysts think that the company's MI350 GPUs for AI compare favorably with Nvidia's high-end Blackwell processors, and that next year's MI400 processors could further strengthen AMD's position in the data-center processing space.

What's next for AMD?

Thus far, AMD has trailed far behind Nvidia when it comes to the high-value data-center processor market -- but there are signs that dynamics may be starting to shift in the smaller company's favor. There's still a lot of guesswork involved when it comes to charting the business's performance outlook in advanced AI processors, but it seems to be making progress in the crucial artificial intelligence training space. Even better, AMD could see strong demand for hardware used to power AI inference applications, even if its high-end processors continue to trail behind Nvidia's for artificial intelligence training purposes.

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HSBC Holdings is an advertising partner of Motley Fool Money. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends HSBC Holdings. The Motley Fool has a disclosure policy.