AMD’s China Ambitions: A New Chapter in the AI Chip Race

The narrative surrounding Advanced Micro Devices (AMD) is gaining a significant new dimension, with reports emerging that the semiconductor firm is capturing serious attention from major Chinese technology conglomerates for its artificial intelligence processors. This development, centered on speculation of a substantial order from Alibaba, arrives alongside sustained analyst optimism and a favorable industry backdrop for AI hardware. For investors, the central question now revolves around the durability and potential of AMD's strategic push into the Chinese market.

Beyond the immediate rumors, AMD's medium-term outlook is bolstered by notable analyst support. On November 20, Raymond James upgraded the stock to "Outperform," assigning a price target of $337—a figure that remains among the most bullish on Wall Street. From current trading levels, this implies a theoretical upside potential exceeding 50%. The core of this argument hinges not on the precise target but on the conviction that AMD's AI roadmap, particularly its MI300 and MI308 platform series, is a catalyst for sustained revenue growth well beyond the U.S. market.

The broader sector is also providing tailwinds. A recent technical breakout by competitor Nvidia has spurred fresh capital inflows into semiconductor equities. During such phases, investors often seek out "catch-up" plays—stocks perceived as relatively undervalued or possessing untapped potential—a dynamic from which AMD stands to benefit.

The Alibaba Speculation: A Potential Validation

Recent media reports have placed a potential deal with Alibaba at the heart of AMD's China story. According to these accounts, the Chinese cloud and AI giant is in advanced talks to purchase between 40,000 and 50,000 units of AMD's MI308 AI accelerators. These are specialized chips designed to comply with the stringent U.S. Commerce Department export controls for shipments to China.

For AMD, these "China-compliant" models address a gap that has persisted for nearly two years. While Nvidia moved early to establish an adapted product line, such as its H20 chips, for the Chinese market, AMD's more limited access acted as a constraint. Should the reported order materialize, estimates suggest a transaction value in the high hundreds of millions of dollars. More significant than the single order's size, however, would be the signal it sends: the MI308 would be perceived as a credible, competitive option for hyperscalers like Alibaba, not merely a regulatory stopgap.

Key Details of the Reported Deal:
* Potential Client: Alibaba, a leading cloud and AI infrastructure provider in China.
* Product in Focus: The MI308 AI accelerator, engineered to meet U.S. export regulations.
* Projected Scale: 40,000–50,000 chips, representing a volume likely in the hundreds of millions of dollars.
* Strategic Implication: Validation of AMD's China strategy and an entry into a high-value niche previously dominated by Nvidia.

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

Technical Positioning and Trader Sentiment

AMD's shares demonstrated stability during the shortened Christmas trading week, largely maintaining their recent upward trajectory. The stock closed a recent session at €181.98, marking a gain of over 6% across the prior seven days. Despite a multi-month rally, the equity still trades notably below its 52-week high, leaving room for further speculative interest.

Activity in the options market has been conspicuous. Traders are increasingly positioning with call options betting on near-term breakouts, particularly at strike prices equivalent to approximately $220 and $230. Such positioning can fuel additional momentum if the stock decisively clears key technical resistance levels, as market makers adjust their hedges, creating incremental demand for the shares.

From a chart perspective, AMD is currently consolidating just below a significant resistance zone. A Relative Strength Index (RSI) reading of 42.4 indicates neither overbought nor oversold conditions, aligning more with the notion of a "pause within an uptrend" than an exhausted rally.

The Road Ahead: CES 2026 and Execution

The timeline for AMD's AI narrative is clearly defined in the coming weeks. In January, CEO Lisa Su is scheduled to deliver a keynote address at CES 2026. The market anticipates new details on the MI300/MI308 roadmap and potentially an official commentary on the China situation, including updates on export strategy and the customer pipeline.

Operationally, the first quarter of 2026 is coming into focus. Expectations are building that AMD can capture a double-digit market share in the AI accelerator business over the medium term. Consequently, forthcoming commentary on order intake, manufacturing capacity, and the execution of AI plans will be scrutinized closely.

Should the Alibaba rumors be substantiated and paired with concrete roadmap announcements at CES, the foundation could be laid for the next medium-term advance—both for the perception of AMD's China strategy and in the broader race for global AI chip market share.