Advanced Micro Devices (NASDAQ: AMD) is once again at the center of a major global technology and trade story—one that could shape the company’s growth outlook well into 2026.
After years of export restrictions, regulatory uncertainty, and fierce competition from Nvidia, AMD appears to be positioning itself for a meaningful return to China’s fast-growing artificial intelligence (AI) market. Reports suggesting that Alibaba is considering a large order of AMD’s China-compliant MI308 AI chips have put the spotlight firmly on AMD stock.
At the same time, Nvidia has received U.S. approval to resume sales of its H200 AI chips to China, intensifying competition and raising questions about which chipmaker stands to gain the most if China’s AI market reopens.
So what does all of this mean for AMD investors? Is this a short-term headline boost, or the early stages of a longer-term growth shift?
Let’s break it down.
The Big Headline: Alibaba and AMD’s MI308 Chips
Reports indicate that Chinese tech giant Alibaba is considering ordering between 40,000 and 50,000 units of AMD’s MI308 AI accelerators, a version of AMD’s data-center chips designed to comply with U.S. export rules.
If the deal materializes, analysts estimate it could generate $600 million to $1.25 billion in revenue for AMD, depending on pricing, configurations, and delivery schedules. For context, that would represent a meaningful contribution to AMD’s data-center business, which has become one of the company’s most important growth engines.
Even more importantly, such an order would signal that AMD is becoming a serious alternative to Nvidia in China—one of the world’s largest and most strategically important AI markets.
However, investors should note that this is still a report, not a confirmed contract. No official purchase order has been announced, and regulatory approval remains uncertain.
Why China Matters So Much for AMD
China is not just another market. It is a critical battleground for AI infrastructure, cloud computing, and advanced semiconductors.
Chinese companies like Alibaba, Tencent, and Baidu are spending heavily to build AI systems for cloud services, e-commerce, logistics, and consumer applications. Even under export restrictions, demand for AI computing power has continued to grow.
For AMD, access to China could mean:
- A larger customer base for its AI accelerators
- Reduced dependence on U.S. hyperscalers alone
- Stronger long-term revenue diversification
Nvidia has historically dominated this space, but export controls have disrupted its ability to fully serve Chinese customers. AMD’s MI308 is designed to fit within these rules, giving the company a potential opening.
The Regulatory Reality: Why Approval Is Not Guaranteed
Despite the excitement, investors need to be realistic.
While the U.S. government has approved Nvidia’s H200 chips for China under a licensing framework, Chinese regulators have not yet given final clearance. This matters because any AMD shipment would still need to clear both U.S. and Chinese regulatory hurdles.
AMD CEO Lisa Su has stated that the company is willing to pay a 15% fee tied to licensing requirements in order to ship MI308 chips to China. That willingness shows commitment, but it also reduces margins.
In short, the opportunity is real—but so is the risk of delays or outright rejection.
Competition From Alibaba’s Own Chips
Another important factor often overlooked in headline coverage is that Alibaba is itself a chipmaker.
Alibaba designs custom chips tailored to its own cloud and AI workloads. These chips are typically application-specific, meaning they are optimized for particular tasks rather than general use.
AMD’s MI308 chips, by contrast, are general-purpose AI accelerators, which makes them more flexible across a wide range of workloads.
This difference matters because it suggests that Alibaba may not be choosing between “AMD or its own chips,” but rather using both depending on the task. That increases AMD’s chances of securing at least part of Alibaba’s AI spending—but it also limits how dominant AMD could become within Alibaba’s ecosystem.
Nvidia’s Shadow Looms Large
Any discussion of AMD’s AI prospects must include Nvidia.
Nvidia CEO Jensen Huang recently received U.S. approval for the H200 AI chips to return to China, with shipments reportedly fast-tracked for early 2026. Nvidia’s ecosystem, software tools, and brand recognition remain extremely strong.
For AMD, this means:
- Winning deals in China will not be easy
- Pricing pressure could increase
- AMD will need to prove reliability and performance at scale
However, competition is not necessarily bad. In fact, as China seeks to reduce reliance on any single supplier, AMD could benefit from being seen as a credible second option.
AMD Stock Heading Into Late December 2025
As U.S. markets reopen fully on December 26 following the Christmas holiday, AMD stock is entering a potentially volatile period.
Holiday trading tends to have lighter volume, which can amplify price swings caused by news headlines—especially for high-profile technology stocks like AMD.
Recent price action shows AMD trading in a wide range, roughly between $200 and $220, highlighting how sensitive the stock has become to AI-related developments.
This context matters because China-related headlines could trigger sharp short-term moves, even if the long-term impact remains uncertain.
Beyond China: Why AI Demand Still Supports AMD
Even without China, AMD’s AI story remains intact.
Vultr’s $1 Billion AI Cluster
Cloud provider Vultr has announced a $1 billion investment in AI infrastructure using AMD Instinct GPUs. This project targets customers who want AI computing power without relying on major hyperscalers.
This is important because it shows that AMD’s AI chips are gaining traction beyond just the biggest tech companies.
HPE and Rack-Scale AI
AMD has also expanded its partnership with Hewlett Packard Enterprise, focusing on rack-scale AI systems designed for large-scale deployments starting in 2026.
These efforts point to a broader trend: AMD is positioning itself as a long-term player in AI infrastructure, not just a short-term challenger to Nvidia.
What Could This Mean for AMD Stock?
Bull Case
If AMD secures regulatory approval and the Alibaba order moves forward, the stock could benefit in several ways:
- Increased AI revenue visibility for 2026
- Stronger credibility in global AI markets
- Improved investor confidence in AMD’s competitive position
In this scenario, AMD stock could see sustained upside, especially if AI demand remains strong globally.
Bear Case
On the downside, risks include:
- Regulatory delays or rejection in China
- Nvidia reclaiming market share faster than expected
- Margin pressure from licensing fees and pricing competition
If expectations run too far ahead of reality, AMD stock could see pullbacks after headline-driven rallies.
Should Investors Buy AMD Now?
For long-term investors, AMD remains a company with strong fundamentals, a credible AI strategy, and multiple growth drivers beyond China.
However, near-term price moves are likely to be driven more by headlines than confirmed earnings impact.
That means:
- Long-term investors may view pullbacks as opportunities
- Short-term traders should expect volatility
- Patience will likely be required
AMD’s potential MI308 deal with Alibaba highlights just how important China could be to the next phase of the global AI buildout.
While nothing is guaranteed, the fact that AMD is even being considered for large-scale AI deployments by Chinese tech giants marks a significant shift from where the company stood just a few years ago.
For investors, the key takeaway is simple: AMD is no longer just chasing Nvidia—it is building its own path in AI, one that could pay off meaningfully if regulatory and competitive pieces fall into place.
As 2026 approaches, AMD’s China strategy may prove to be one of the most closely watched stories in the semiconductor sector—and one that could have lasting implications for the stock.
