TradingKey - On July 14, Eastern Time, AMD ( AMD) resumed its rally, rising 6.05% to $566.73 as of press time.

According to people familiar with the matter, a subsidiary of Chinese telecom equipment maker ZTE, along with Kingsoft Cloud, have received approval to purchase Nvidia ( NVDA) and AMD's AI chips, further expanding the list of Chinese companies known to have obtained US licenses.

Meanwhile, Bank of America raised its price target on AMD from $550 to $620 and reiterated its "Buy" rating in its latest research report, citing "exceptionally strong" demand for server processors.

The bank's analyst Vivek Arya stated that AMD is expected to deliver beat-and-raise results, benefiting from the continuous growth of EPYC processor market share, strong cloud demand, and a stable supply outlook.

The firm noted that the company's third-quarter guidance may factor in shipments of the first batch of MI455X 'Helios' rack-mount servers, with shipment volumes ramping up significantly in the fourth quarter (with quarterly revenue expected to exceed $6 billion to $7 billion by the end of the fourth quarter). Given that AMD has the broadest AI CPU portfolio, its sixth-generation EPYC Venice processor will also be launched alongside Helios in the third quarter, and management may further emphasize that agentic AI will be a tailwind for the CPU business. Management estimated the server CPU market size at $120 billion in May, and they may raise this figure again.

The firm added that near-term licensing revenue is primarily driven by handset shipments, while smartphone sales may decline by more than 10-15% year-on-year in 2026, and a material recovery is unlikely in 2027. The dividend from architecture upgrades on the mobile side (iterating from the v8 architecture to v9 and CSS architectures) has largely been realized; major server CPU orders, such as Google's Axion and Microsoft's Cobalt, may not contribute to financial performance until the second half of 2026 to 2027. The medium- to long-term supply-demand gap for artificial general intelligence (AGI) CPUs could become a key variable: company management expects market demand to reach $2 billion in fiscal 2027-2028, but supply is only $1 billion, and overall AI CPU demand continues to trend positive.

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