Citi's analyst recently upgraded AMD's stock from Neutral to Buy with an ambitious price target increase from $460 to $575. This upgrade is based on the expectation that the CPU market will see significant growth in the coming years. Citi forecasts this market will expand from $29.3 billion in 2025 to $131.5 billion by 2030, demonstrating a compound annual growth rate of 35%.
AMD is not just a traditional CPU producer. The focus is shifting towards agentic CPUs, which are specialized for autonomous AI systems rather than simple reactive tasks. The demand for these advanced processors is projected to reach $59.4 billion, accounting for nearly half of the expected CPU market by 2030.
Citi had previously raised AMD's price target from $358 to $460 in a note around mid-May, anticipating rapid expansion in the CPU market. The latest upgrade not only reinforces this but also reflects a more optimistic outlook on AMD’s graphics processing unit (GPU) division. The valuation breakdown provided by Citi estimates $281 per share for AMD’s GPU business and $204 per share for its CPU division.
Expectations for market share and earnings are substantial. By 2030, AMD is projected to achieve a 34% share of the CPU market, leaving Intel with 47% and the remainder for ARM-based competitors. On the earnings front, Citi's revised projections indicate that AMD's earnings estimates for 2026 to 2028 are about 12 to 13% higher than the current consensus on Wall Street.
For investors interested in the AI hardware sector, the broader implications of the CPU market's projected growth are significant. This anticipated 35% CAGR marks a stark turnaround from the sluggish growth rates observed throughout the past decade. However, the risks are notable. The success of Citi's model hinges on the rapid emergence of the agentic AI market. If the adoption of autonomous AI is slower than anticipated or if workloads prioritize GPUs over CPUs, the forecast for agentic CPUs could be overly optimistic. Furthermore, AMD must navigate the challenge of securing a substantial market share in a domain still dominated by Intel.