Morgan Stanley has reiterated its bullish stance on Advanced Micro Devices (AMD), describing the chipmaker as a 'core AI winner' and the 'close #2' behind Nvidia in the race for artificial intelligence dominance. The investment bank's note, published this week, has reignited interest in the semiconductor sector, with AMD shares climbing over 3% in pre-market trading on Friday.
The endorsement comes as the FTSE 100 edged up 0.4% to 8,215 points, with technology and mining stocks leading the charge. London-listed chip designer Arm Holdings rose 1.8%, while other AI-adjacent names such as Sage Group and Darktrace also saw modest gains. The broader Stoxx 600 technology index added 0.6%, supported by positive sentiment from Wall Street.
Analysts at Morgan Stanley highlighted AMD's growing market share in data centre GPUs and its expanding Instinct MI300 series, which competes directly with Nvidia's H100 and Blackwell chips. 'AMD is well positioned to capture incremental AI spending as enterprises diversify away from a single supplier,' the note stated, though it cautioned that Nvidia still commands an estimated 80-90% of the AI chip market.
For UK investors and pension holders, the rally in tech stocks provides a welcome lift after a volatile start to the year. Many UK pension funds hold exposure to global tech equities through tracker funds or multi-asset strategies. However, analysts at Hargreaves Lansdown warned that concentration risk remains high, with Nvidia and AMD together accounting for a significant portion of AI-related market capitalisation.
The semiconductor sector has been a key driver of global equity markets in 2026, with AI-related capital expenditure by Big Tech firms expected to exceed £150bn this year. While AMD's valuation remains elevated at around 35 times forward earnings, Morgan Stanley believes the company's execution in the AI space justifies the premium. 'AMD is not just a follower; it's a structural beneficiary of the AI build-out,' the note concluded.