Why Citi now thinks AMD stock could rip another 25% because of Meta Muse

On Tuesday AMD’s shares nudged higher, breaking another record as Citi’s Atif Malik announced a fresh price target of $800, up from $575. The news pushed the stock about 2‑4 % in pre‑market and mid‑day trading, placing it near $654, a level not seen in the company’s history. Malik’s upgrade, which implies roughly a 27 % upside from the closing price, was tied directly to the debut of Meta’s personal AI assistant, Muse.

Malik’s argument rests on what Citi calls a “CPU renaissance.” After Muse went live, the firm raised its estimate for the total addressable market (TAM) for CPUs from $29 billion in 2025 to roughly $300 billion by 2030, a compound‑annual growth rate of about 60 %. In Citi’s view, the shift is not incremental; agentic AI workloads consume compute continuously, unlike chatbots that sit idle between prompts. That constant processing translates into orders‑of‑magnitude higher demand for server‑grade CPUs, and Citi believes AMD, with its EPYC line, will be the primary beneficiary while Intel remains a secondary player (E1).

The distinction between agentic AI and earlier chatbot models is more than semantics. Industry observers such as Signal65’s Ryan Shrout note that as the number of agents multiplies, the compute load will “shift the workload away from GPUs and onto CPUs” (E4).

In the second quarter the company posted record non‑GAAP earnings per share of $1.66 and revenue of $11.5 billion, with its data‑center segment—driven by EPYC CPUs and Instinct AI accelerators—more than doubling year‑over‑year to $6.7 billion. The firm also unveiled the sixth‑generation EPYC Venice CPUs and MI450 series GPUs, designed for its Helios rack‑scale AI systems. CEO Lisa Su, speaking from Taiwan, said AMD plans a substantial supply increase in 2027 to match the anticipated surge. The $8.2 billion acquisition of World Labs, a 3‑D AI model studio led by Dr Fei‑Fei Li, further signals AMD’s intent to embed itself deeper into the AI software stack (E1, E3).

AMD’s bullish trajectory is reinforced by other Wall Street voices. Mizuho’s Vijay Rakesh lifted his target to $705, and Stifel’s Ruben Roy nudged his to $700, both retaining a Buy rating. Across the analyst community, the consensus remains a Strong Buy with an average target around $662, suggesting modest upside beyond Citi’s more aggressive $800 projection. Yet the landscape is not monolithic.

The crux of the investment case, therefore, hinges on two uncertainties. First, Muse’s early popularity must translate into sustained, high‑intensity compute at Meta’s data centers; a slowdown or a shift to alternative hardware would blunt the projected demand surge. Second, supply constraints linger—AMD has warned that its 2026 CPU output is still limited, and the company’s ability to meet the forecasted 80 % year‑over‑year growth in the second half of the year will be tested. Meanwhile, emerging custom chips from Arm and Nvidia could erode AMD’s advantage in the agentic AI niche. Investors who accept these risks may find the upside that Citi envisions compelling, while those who remain skeptical will likely wait for the next earnings beat (E5).