Advanced Micro Devices Inc (NASDAQ:AMD) stock rose 5.85% (As on October 8, 11:22:30 AM UTC-4, Source: Google Finance) after Jefferies analyst Blayne Curtis upgraded the company from Hold to Buy and raised the price target from $170 to $300 following AMD’s announcement of a partnership with OpenAI. The upgrade comes after OpenAI revealed plans to purchase 6 gigawatts of AMD equipment, representing a potential $80-100 billion deal for the chipmaker, according to Jefferies. The research firm noted that while AMD will still need to meet certain milestones, the OpenAI agreement provides “strong validation of AMD’s AI roadmap and the level of AI demand in general.”Jefferies had previously raised its estimates and price target last week based on positive server checks, but indicated it “couldn’t triangulate the AI ramp” at that time. The firm characterized its quick position change as unusual, stating “We rarely do this but are upgrading AMD post their announcement with OpenAI this am.”
In other recent news, AMD has announced significant developments that are capturing the attention of investors. The company has entered into a strategic agreement with OpenAI, which is expected to generate substantial revenue in the coming years. This deal involves supplying AI chips and a commitment to deliver 6 gigawatts of computing capacity by 2030, with a notable deployment starting in 2026. Analysts from firms such as Stifel, Truist Securities, and BofA Securities have responded positively, raising their price targets for AMD to $240, $273, and $250, respectively, while maintaining a Buy rating. These analysts see the partnership as a reinforcement of AMD’s strategic positioning in the AI market.
Additionally, the deal includes OpenAI receiving warrants for up to 160 million AMD shares, which could represent about 10% of the company’s pro-forma float. Analyst Ming Chi-Kuo from TF International Securities noted that AMD’s wafer orders remain consistent, indicating stable production plans for the upcoming years. The White House AI czar, David Sacks, also mentioned the AMD-OpenAI partnership as a critical step in maintaining US dominance in the global AI market. These recent developments highlight AMD’s growing influence and strategic maneuvers in the competitive AI sector.
Meanwhile, AMD has reported net income during its fiscal second quarter of $872 million, or 54 cents per share, increasing from $265 million, or 16 cents per share in the year-ago period. AMD’s adjusted gross margin during the quarter was 43%. The company said it would have been 54% if not for export control costs.