AMD Gains on China AI Chip Prospects

December 22, 2025 at 19:38 UTC

4 min read

AMD stock price rises on China AI chip demand and Alibaba order prospects

Key Points

Alibaba is weighing a 40,000–50,000 unit order of AMD’s MI308 AI chips
AMD shares have climbed on renewed China demand and a broader tech rally
New U.S. rules allow limited GPU exports to China, with a 15% fee on AMD sales
Analysts see strong upside for AMD as its data‑center AI business accelerates

Alibaba’s Potential MI308 Order Lifts AMD Shares

Advanced Micro Devices is drawing fresh investor attention after multiple reports that Alibaba Group is considering a large purchase of its latest artificial intelligence accelerators. According to MLex, the Chinese technology giant is weighing an order of between 40,000 and 50,000 units of AMD’s MI308 AI accelerators. Separate reports describe the potential deal as involving “tens of thousands” of MI308 chips for Alibaba’s data centers, which support AI workloads. The news pushed AMD shares higher on Monday, with moves cited at about 1% in early trading and 3% in premarket activity, while Alibaba stock also edged up. The prospective order would be one of AMD’s largest single AI chip deals in China since U.S. export controls were tightened, and could generate hundreds of millions of dollars in revenue depending on final pricing, according to one analysis.

Regulatory Shift Reopens a Key AI Market

The Alibaba talks come shortly after President Trump approved limited GPU sales to China, allowing companies such as Nvidia, Intel, and AMD to resume exports under new trade conditions. For more than two years, progressively tighter U.S. export restrictions had severely constrained AMD and Nvidia from selling their most advanced AI accelerators into China, leading to lost sales, inventory write-downs, and weaker growth expectations in one of the world’s largest AI markets. AMD designed the MI308 specifically to comply with current U.S. export rules for China and has already secured some export licenses for the chip. The company is prepared to pay a 15% fee to the U.S. government on approved sales to Chinese customers. The MI308 is described as a China-specific AI chip that still offers substantial performance for large-scale AI training and inference workloads, and other major Chinese cloud and internet companies are also evaluating it.

AMD’s AI Strategy and Position Versus Nvidia

The reported Alibaba interest underscores AMD’s broader push to expand in data-center AI. AMD has prioritized accelerators for AI in recent years, building on its Instinct GPU line first introduced for data centers in 2016. While Nvidia remains the market leader and its GPUs are widely regarded as the fastest option, AMD’s accelerators are described as very powerful with competitive pricing, helping drive strong revenue growth. In a recent quarter, AMD’s total revenue rose 36% to $9.2 billion, fueled by demand for AI processors and accelerators. Its data-center segment alone generated a record $4.3 billion in third-quarter revenue, up 22% year over year, with analysts crediting robust MI300 sales and early MI400 adoption. The MI308 is seen as a competitive alternative to Nvidia’s data-center GPUs, and the scale of Alibaba’s potential order is cited as validating the chip as a commercially viable option in high-stakes AI compute markets.

Wall Street Turns More Bullish on AMD’s AI Outlook

Analysts are increasingly positive on AMD’s prospects as AI momentum builds into 2026. One report notes that AMD shares have risen more than 200% this year, with Wall Street now seeing roughly 40% additional upside. The company holds a Strong Buy consensus based on 29 Buy and 9 Hold ratings over the past three months, with an average price target of about $282. Bank of America recently maintained a Buy rating while trimming its AMD price target to $260 from $300, characterizing 2026 as the midpoint of a decade-long transition toward AI-optimized IT infrastructure. The firm acknowledged potential near-term volatility as investors scrutinize AI returns and hyperscaler spending, but expects this to be offset by the expansion of AI factories and large language model development. Other analysts highlight growing traction for AMD’s Helios rack-level AI systems and its ROCm software ecosystem, as well as multiyear AI deals that could be worth up to $15 billion in 2026.

China Engagement and Broader Market Sentiment

AMD’s engagement with Chinese authorities has also drawn notice. CEO Lisa Su met with China’s Commerce Minister Wang Wentao last week to discuss the company’s operations and cooperation in the region, though no specific outcomes were disclosed. AMD had excluded China revenue from its recent guidance due to export uncertainty, and one assessment suggests that a confirmed Alibaba order would likely prompt upward forecast revisions. The Alibaba reports arrive amid a broader rebound in semiconductor sentiment, helped by strong earnings from peers and easing fears about an AI spending slowdown. AMD shares have climbed more than 18% since a tech rally began on Thursday, and the company has indicated it has secured orders for memory chips for its MI300 and MI350 accelerators for the next few years. Commentators note that, despite recent concerns over China’s drive for semiconductor self-sufficiency, a substantial Alibaba order would signal continued near-term reliance on Western AI chips.

Key Takeaways

A potential 40,000–50,000 unit MI308 order from Alibaba would mark one of AMD’s largest China AI chip deals since export curbs tightened, with revenue in the hundreds of millions.
Recent U.S. policy changes enabling limited GPU exports, combined with AMD’s China-compliant MI308 design and 15% export fee, are reopening a strategically important AI market.
AMD’s accelerating data-center AI revenue, expanding product roadmap, and strong analyst support position it as a key challenger to Nvidia in high-performance AI compute.
If finalized, the Alibaba transaction could force AMD to revise guidance that currently excludes China, while also easing investor concerns about demand durability and China decoupling.