Banking giant Citi has named chipmaker Advanced Micro Devices (NASDAQ: AMD) better positioned to challenge industry leader Nvidia (NASDAQ: NVDA) following recent strategic developments.
In an investor note on May 20, Citi analyst Christopher Danely reaffirmed his ‘Neutral’ rating on AMD, maintaining a price target of $100, implying a 12.9% downside from the current trading price of $114.74.
Although valuation concerns temper near-term enthusiasm, the bank identified the restructured acquisition of ZT Systems as a critical move in AMD’s evolving strategy that could enhance its long-term competitiveness against Nvidia.
Originally planned as a $4.6 billion full acquisition in August 2023, AMD has now opted to divest ZT’s manufacturing operations to Sanmina for $3 billion, while retaining ZT’s 1,200-person engineering team.
The cost of preserving this engineering talent is estimated at $1.6 billion, or approximately $1.33 million per engineer.
Citi praised the decision as a strategic reorientation, stating it “allows AMD to focus on R&D and engineering talent to better compete with Nvidia.”
According to the analyst, AMD is embracing a capital-light model more suited to the AI and high-performance computing landscape by offloading capital-intensive manufacturing assets while retaining core innovation capabilities.
Wall Street turns bullish on AMD stock
Adding to the positive sentiment, Wells Fargo also weighed in on AMD the same day, reiterating its ‘Overweight’ rating and maintaining a $120 price target. The firm cited ongoing momentum in rack-scale AI infrastructure as a key driver.
Notably, Wells Fargo analyst Aaron Rakers reaffirmed his outlook following Sanmina’s acquisition of ZT Systems’ manufacturing operations. He emphasized that the move bolsters AMD’s rack-scale strategy ahead of the anticipated launch of its MI400-series GPUs in the second half of 2026.
Furthermore, Wells Fargo highlighted AMD’s recent $6 billion share buyback and stressed the importance of clarifying its networking roadmap, particularly in comparison to Nvidia’s NVLink Fusion technology.
On May 19, Mizuho analyst Vijay Rakesh reaffirmed his bullish stance on the semiconductor firm and raised the price target to $135 with a ‘Buy’ rating. The upgrade follows AMD’s multi-year AI infrastructure deal with Saudi-based startup Humain, valued at $10 billion.
Rakesh believes the agreement could significantly accelerate AMD’s data center segment growth. The segment generated $3.7 billion in Q1, up 57% year over year and surpassing expectations.
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