AMD’s Strategic Pivot: The China Data Center Opportunity

Advanced Micro Devices (AMD) is concluding the year with significant attention focused on a potential strategic expansion into China. Reports indicate that Alibaba is considering a substantial purchase of tens of thousands of AI accelerators from the chipmaker. This move represents more than a single transaction; it signals a potential breakthrough for AMD in establishing itself as a viable alternative to Nvidia within the politically sensitive and highly regulated Chinese data center market.

According to a December 22 report from the information service MLex, Alibaba is evaluating the acquisition of 40,000 to 50,000 MI308 AI accelerators. This news emerged shortly after AMD CEO Lisa Su's visit to China on December 18, where she engaged in meetings with officials from the Ministry of Commerce. The timing suggests a coordinated strategic push into this carefully governed market.

Analyst estimates project that an order of this magnitude could generate revenue in the high hundreds of millions of dollars. Crucially, the MI308 chip is specifically designed to comply with stringent U.S. export controls. This allows AMD to supply Chinese hyperscalers, including Alibaba, without violating sanctions. For these licensed exports, a reported 15% fee payable to the U.S. government is factored into the final pricing.

Securing this contract would deliver a prestige victory against primary rival Nvidia. While Nvidia plans to begin shipments of its own sanctions-compliant H200 chips to China by mid-February 2026, AMD is positioned to address immediate demand. The company is targeting a double-digit market share in China's rapidly expanding AI data center sector over the medium term. Several market observers note that the full financial impact of such an achievement is not yet fully reflected in current revenue and profit estimates.

Data Center Division Emerges as Core Growth Engine

A confirmed Alibaba order would accelerate a trend already visible in AMD's 2025 financial results: the Data Center segment has become the company's central pillar of growth. For the first nine months of 2025, AMD's total corporate revenue increased by 36% year-over-year. Within this, the Data Center business grew by 29% and now constitutes approximately 46% of total revenue, demonstrating the clear success of its strategic focus on enterprise and AI applications.

The company's valuation, however, reflects high expectations. AMD shares currently trade at a price-to-earnings ratio of about 112.6, significantly above Nvidia's multiple of approximately 45. This premium valuation underscores market anticipation for substantial future profit growth, driven largely by the MI300 series and the planned MI450 generation.

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

Despite Nvidia's dominant estimated 80% share of the AI accelerator market, AMD is establishing itself as the only realistic second-source supplier for major clients. Its commitment to open standards, partnerships with hyperscalers like Microsoft Azure and Oracle Cloud, and the potential addition of Alibaba as a key customer reinforce this strategic position. For enterprise customers, this "second-source" availability is a critical risk mitigation strategy against supply chain dependencies.

Market Performance and Technical Perspective

Following a robust performance throughout the year, AMD's share price has recently retreated from its peak. The stock closed yesterday at €182.90. While this places the price roughly 19% below its 52-week high from late October, it remains more than 55% above its level at the start of the year. This indicates that the broader upward trajectory remains intact despite a period of consolidation.

From a chart analysis perspective, the stock maintains a strong overarching position. The current price trades well above the 200-day moving average (€142.73), confirming a long-term uptrend. The 14-day Relative Strength Index (RSI) reading of 42.4 sits in neutral territory, suggesting the stock is neither overbought nor oversold.

Key Technical and Fundamental Data:
* Year-to-Date Performance: +55.55%
* 12-Month Performance: +52.72%
* Distance from 200-Day Moving Average: +28.14%
* Distance from 52-Week High: -19.48%
* Volatility (30-day, annualized): 45.41%

The 2026 Outlook

The next significant milestone is the quarterly earnings report scheduled for February 3, 2026. This update should provide greater clarity on whether discussions with Alibaba have translated into firm contracts and to what extent AMD's 2026 guidance will be bolstered by its China business. A central focus will be on the company's ability to accelerate the expansion of its Data Center segment, thereby justifying its elevated market valuation.