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AMD’s rumored 70% price jump for its Instinct MI350 AI chips—from $15,000 to around $25,000—is a real-time signal that AMD is evolving from being just a chip supplier to a full-scale AI compute platform player. This shift lines up with several of the core arguments in our thesis and adds weight to the idea that AMD is stepping into a more strategic position in the AI stack.

If true, the move could mark a turning point. Instead of chasing Nvidia (NVDA), AMD now looks like it’s trying to lead on pricing and system-level execution. That’s a major departure from its previous role as the cheaper alternative. If AMD can sustain this kind of pricing power, it could seriously shift investor sentiment and potentially start to close the gap on valuation multiples with Nvidia and Broadcom.

Why This Pricing Move Matters
 

First, there’s the pricing signal itself. A jump from $15K to $25K, while still under Nvidia’s Blackwell B200 pricing (which ranges between $30K and $40K), means that AMD feels confident in the MI350’s performance and demand. Pricing power in semiconductors, especially in high-end AI accelerators, isn’t given—it’s earned. And this shift implies a few big things:

The MI350 is getting close enough to Nvidia’s performance that AMD can finally charge something closer to a premium. This chip isn’t just a budget-friendly alternative anymore—it’s being used in real-world, mission-critical AI workloads. Most importantly, this is exactly the kind of “early inflection point” that signals a change in competitive dynamics, which you’ve been watching for.

Revenue and Margin Upside Is Real
 

At a higher average selling price, AMD doesn’t need to sell a ton more units to see meaningful upside. Even a relatively modest volume of MI350 sales at $25K could lift Q3 and Q4 results, especially since those quarters will be compared to a period that included a big China export hit. The margin story improves too: shifting more of the GPU mix toward higher-end SKUs would help close AMD’s profitability gap with Nvidia and Broadcom, something that’s still keeping a lid on the stock’s multiple.

Street estimates already have AMD’s Q3 GPU revenue around $1.65 billion. If the MI355X ramps up in the second half as expected, and if it follows this same pricing trajectory, there’s potential for upward revisions.

Big Customers Are Likely Behind the Move
 

AMD wouldn’t push prices this aggressively unless major cloud providers (Meta, Oracle) were on board. There’s growing evidence that those customers are no longer just “interested” in AMD’s GPUs, they’re actually deploying them meaningfully. We saw early signs of this on the Q1 earnings call and in filings. Customers seem to be buying into AMD’s full AI platform, including ROCm, system integration, and long-term support.

AMD vs. Nvidia: Pricing Gap Is Narrowing
 

Even at $25K, the MI350 undercuts Nvidia’s B200, which makes AMD a very compelling option for workloads like inference, particularly among enterprises and second-tier cloud providers that can’t justify Nvidia’s pricing. That creates a “value-performance” sweet spot where AMD is helping set the pace in certain segments. That’s a big shift in the competitive landscape.

Still Risks, But the Narrative Is Changing
 

There are still headwinds. The China export restrictions could shave around $800 million off H2 2025 revenue, and it’s unclear if or when licensing will resume. The MI355X needs to launch cleanly and build on the MI350’s momentum, any hiccups on the software or systems side would be closely scrutinized. ROCm still lags CUDA in developer adoption, but it’s improving: there’s now day-one support for LLaMA 4 and more than 2 million models on Hugging Face optimized for AMD GPUs.

The Big Picture
 

This is a sign that AMD is turning a corner strategically. It supports our broader argument that the company is no longer stuck in the role of low-cost alternative, but is stepping into a leadership position in the AI compute space. If these pricing trends hold—and especially if they trigger even moderate beat-and-raise cycles—the market may start revaluing AMD less like a legacy chipmaker and more like a platform company. And as those fundamentals strengthen, the technical breakout we’ve seen in AMD, especially relative to Nvidia, could start to gain real staying power.

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