Advanced Micro Devices (AMD) is making solid progress in the AI graphics processing unit market across major hyperscalers, with revenue seen growing about 30% in 2025 and likely doubling in 2026, RBC Capital Markets said in a note emailed Thursday as it initiated coverage of the stock.

The company obtaining a 10% to 20% market share in the long term is "not unreasonable" despite Nvidia's (NVDA) dominance and increasing competition from ASICs, the brokerage said.

A six-gigawatt deal with OpenAI could potentially bring in over $100 billion in revenue through 2030 and establish AMD as a gigawatt-scale GPU supplier, accelerating gains with other clients, the analysts said.

Primary risks for AMD are roadmap execution challenges given rack-scale complexity and increasing competition from in-house ASICs of key clients Meta Platforms (META), Microsoft (MSFT), and OpenAI, according to the note.

Despite their confidence in the company's execution, the analysts said they would rather wait for a better entry due to limited immediate catalysts until the MI450 volume ramps in Q4.

RBC initiated coverage of the stock at sector perform, with a price target of $230.

Shares of the company were up 5.5% in recent trading Thursday.

Price: 237.60, Change: +14.00, Percent Change: +6.26