AMD: Raising Fair Value Estimate as Ban on Firm’s Sales into China Will Be Reversed

Key Morningstar Metrics for Advanced Micro Devices

• Fair Value Estimate: $140.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Very High

AMD Stock Update

Advanced Micro Devices AMD has learned that the United States will reverse course and approve the sale of its MI308X graphics processors into China for artificial intelligence workloads. Sales of the MI308X were banned 90 days ago, causing AMD to incur an $800 million writeoff.

Why it matters: We’re pleasantly surprised by the reversal, as both AMD and rival Nvidia NVDA can now support AI aspirations in China. The MI308X is not AMD’s most advanced product, but it presents another potential customer base for AMD’s budding AI aspirations versus Nvidia.

• We assume the reversal stays in place, although we are not wholly optimistic about the latest restrictions. If retained, we still view Nvidia as the dominant AI supplier into China, but we’re encouraged that AMD will have chances to compete.

The bottom line: We raise our fair value estimate for to $140 per share from $120. This raise is the inverse of our cut in April, when the ban was implemented. We maintain our Very High Uncertainty Rating for AMD.

• Shares appear modestly overvalued, as we think the firm’s AI prospects might be a tad overestimated by the market. We view Nvidia as the bigger winner from the reversal, as its H20 products are vital to China’s AI buildouts, and companies there may rush to buy more H20s than ever before.
• We are reinserting $1.2 billion of revenue in 2025 and $2.8 billion to our 2029 AI GPU estimates for AMD. We also boost our near-term gross margin estimates, as we assume much of the prior writeoff will be reversed.

The long view: This may signal a change in overall AI policy toward China. While blocking the sale of US AI accelerators into China could encourage AI firms there to support vendors like Huawei, this reversal might mean the companies remain dependent on the hardware, software, and networking provided by US firms—predominantly Nvidia, but perhaps AMD as well.