AMD Shares Find Support in Major Chinese AI Chip Agreement

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A substantial order from a key Chinese technology firm and updated commentary from Wall Street have returned Advanced Micro Devices (AMD) to the forefront of investor attention. The company's strategic positioning in the geopolitically sensitive data center market is being highlighted by these developments, supported further by robust quarterly earnings and institutional buying activity.

The foundation for the current narrative is built on solid financial results. AMD reported third-quarter revenue of $9.25 billion, representing a year-over-year increase of 35.6%. The chipmaker also surpassed profit expectations, with adjusted earnings per share reaching $1.20 against a consensus analyst forecast of $1.17. This performance was primarily fueled by significant demand within the data center segment for both Instinct AI accelerators and EPYC server processors. For many shareholders, this high-margin business unit remains central to the investment case.

Alibaba Order Signals Strategic Success

A reported major procurement deal from Chinese e-commerce and cloud giant Alibaba Group provides a significant catalyst. According to current market information, Alibaba intends to purchase between 40,000 and 50,000 units of AMD's latest-generation MI308 AI GPUs.

This MI308 series is specifically designed to comply with U.S. export regulations while still delivering the high performance required for advanced AI workloads. The order is estimated to be worth approximately $600 to $675 million.

This deal serves as a clear indicator for AMD: it demonstrates the company's ability to secure growth within the crucial Chinese data center market without violating trade restrictions. Furthermore, it validates AMD's strategy of offering a compliant, high-performance alternative to products like Nvidia's H20. With an estimated unit price of around $12,000, the MI308 also appears to be gaining traction among major cloud and internet companies due to its favorable cost-to-performance ratio.

Analyst Maintains Constructive Stance

In a related development, Truist Financial updated its valuation model. On December 19, 2025, analyst William Stein modestly adjusted his price target for AMD shares downward from $279 to $277, while reaffirming his Buy recommendation.

Should investors sell immediately? Or is it worth buying AMD?

The bank indicated that this slight reduction primarily reflects industry-wide headwinds, including the substantial power, infrastructure, and financing requirements for continued AI data center expansion. This does not, however, alter the fundamental thesis. Truist continues to view AMD as a primary beneficiary of the global build-out of AI infrastructure, especially as the new target price remains well above the recent trading level of approximately $215.

Institutional Investor Confidence

Additional backing for the stock comes from the institutional investment community. IMS Investment Management Services Ltd. substantially increased its stake in AMD during the third quarter, boosting its holdings by 85.4% to approximately 19,542 shares. This position is valued at over $3.1 million.

Such expansions by major investors suggest continued belief in the long-term growth potential, even following periods of significant share price movement. Within the volatile AI sector, this serves as an important signal regarding the market's perception of the company's prospects.

Price Action and Forward View

AMD shares closed the most recent session at $215.57. This places the stock about 83% above its level at the start of the year and roughly 5% below its 52-week high of $227.15. Trading near recent peaks, the share price reflects the intense market demand for AI hardware.

The critical question for the coming months is whether the Alibaba agreement will lead to follow-on orders from other large Chinese technology corporations and if AMD can maintain its growth trajectory within the data center segment. The current combination of confirmed major customer interest, strong quarterly fundamentals, and a persistently positive analyst outlook provides a solid foundation for this continued growth.