MW Why AMD's stock is this analyst's best idea for chip investors next year

By Britney Nguyen

AMD has some big product ramps coming up, and TD Cowen says investors should get in before those happen

TD Cowen named AMD, headed by Lisa Su, as one of its best ideas for 2026.

Advanced Micro Devices' stock "has unfairly borne the brunt of investor scrutiny" within the chip sector, and that could spell opportunity for investors, according to a TD Cowen analyst.

Some of Wall Street's concerns about the sustainability of heavy artificial-intelligence spending are valid, TD Cowen's Joshua Buchalter said in a note to clients. But heading into 2026, he sees a strong spending landscape and expects that AMD $(AMD)$ will be able to capitalize on it.

The stock is his top chip-sector pick for the new year.

AMD's hardware roadmap, advancements with its ROCm software and customer gains "have reinforced our confidence that it can create and capture value in AI compute," Buchalter said in a Tuesday note.

See more: AMD's stock is surging as these big numbers excite Wall Street

AMD's first rack-scale solution, Helios, and its MI450 series of AI accelerators, slated for the second half of 2026, "will mark a key inflection point" for the company's stock and earnings as it stares down "a very large" total addressable market, Buchalter said.

AMD CEO Lisa Su said at the company's analyst day in November that she expects the data-center TAM to reach $1 trillion by the end of the decade. That outlook goes beyond AI graphics processing units, as it also includes central processing units and networking.

Meanwhile, TD Cowen sees AMD working toward capturing a low- to mid-teens percentage share of that market by the end of the decade.

In Buchalter's view, "investors should own the stock ahead of the ramp" of Helios. The MI450 series, meanwhile, is AMD's "first real opportunity" to compete in the AI compute space, he said, and the following MI500 platform will be another upgrade for both its rack and chip products.

Buchalter went with AMD over larger names such as Broadcom $(AVGO)$ and Nvidia (NVDA), saying that "AMD has garnered more bearish sentiment than deserved and than peers."

Read: Nvidia's stock drops on Google fears. Are investors missing the point?

The chip maker is also "being unfairly punished for its OpenAI exposure" as investors become increasingly worried about whether or not the AI startup will be able to fulfill its commitments, Buchalter said. He anticipates that AMD will be able to diversify its revenue base further as other large customers such as Oracle $(ORCL)$ and Meta Platforms (META) prepare sizable deployments of its chips.

Meanwhile, AMD's server and client CPUs have not garnered much attention from investors, but Buchalter said CPUs are an essential part of AMD's business, as they offer "diversification and still-strong growth potential." AMD will continue to gain share of the CPU market, Buchalter said, and the AI buildout will also drive more demand for the chips to power inferencing and AI agents.

Buchalter sees tailwinds for AMD's gross margins as its CPU business grows and gains market share.

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-Britney Nguyen

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December 02, 2025 11:01 ET (16:01 GMT)

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