Nvidia gets rating upgrade, while AMD sees bullish views at HSBC

[Nvidia headquarters in Silicon Valley]
Sundry Photography

HSBC upgraded Nvidia's (NASDAQ:NVDA [https://seekingalpha.com/symbol/NVDA]) stock rating to Buy from Hold noting that it expects the AI graphics processing unit total addressable market to keep increasing beyond hyperscalers, leading to continuous earnings growth.

The firm increased the price target on Nvidia's stock to $320 from $200.

Analysts led by Frank Lee said they upgraded the stock on the back of increasing fiscal 2027 estimate for GPU TAM relative to their previous expectations, leading to an upward revision in their fiscal 20207 data center revenue estimate to $351B, which remains 36% above consensus forecast of $258B.

"We also see potential easing of China GPU uncertainties following the potential US-China trade deal that could enable NVIDIA to see a demand recovery in the Chinese market," said the analysts.

Lee and his team said they have raised Nvidia's fiscal 2027 estimate for Chip on Wafer on Substrate, or CoWoS, allocation to 700K (from 480K) which implies year-over-year growth of 140% as they are seeing renewed CoWoS wafer allocation momentum resuming for the first time since the fourth quarter of 2025.

The analysts believe Nvidia's aggressive fiscal 2027 estimate for CoWoS wafer forecasts at Taiwan Semiconductor Manufacturing (TSM [https://seekingalpha.com/symbol/TSM]) will not only lead to upward revision in fiscal 2027 datacenter revenues that should exceed consensus forecasts, but also re-affirm their thesis of ever-increasing AI GPU TAM beyond reliance on traditional cloud service providers, or CSP, capital expenditure.

The analysts noted that they see significant potential AI GPU TAM upside from recent gigawatt commitments.

ADVANCED MICRO DEVICES (NASDAQ:AMD [https://seekingalpha.com/symbol/AMD])

HSBC increased the price target on AMD's stock to $310 from $185 while maintaining its Buy rating on the shares.

Lee and his team said AMD's OpenAI deal implies massive AI revenue upside potential, which is still underestimated by consensus. The analysts believe this deal gives enhanced visibility into AMD’s AI GPU revenue opportunity till 2030.

Last week, the companies inked an agreement for OpenAI to deploy six gigawatts of AMD GPUs over multiple years. The first 1 gigawatt deployment of AMD Instinct MI450 GPUs is set to start in the second half of 2026.

"Since the deployment is set to begin with the MI450 series, we used the power consumption of MI450 as the base. We believe that the total revenue opportunity for AMD from this OpenAI deal isaround USD80bn – more than 10x its 2025e AI GPU revenue of USD7.3bn," said the analysts.

The analysts raised their 2026 estimates for AI GPU revenue estimates to $19.8B from $13.9B mainly driven by their expectation of 0.5GW deployment for OpenAI in the second half of 2026.

"We believe AMD has also increased its CoWoS allocation to 70k-80k wafers for 2026e. With constant capacity expansion and increased visibility, we believe AMD should be able to continue expanding its CoWoS allocation into 2027e as well," said Lee and his team.

Shares of Nvidia rose about 2%, while AMD stock jumped about 3% on Wednesday.

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