AMD shares surged following a new partnership with OpenAI, which grants OpenAI up to a 10% stake and commits AMD to deploy 6 gigawatts of Instinct GPUs over several years. This development prompted Jefferies to upgrade AMD to Buy from Hold and raise its price target to $300 from $170, citing the deal as a strong validation of AMD's AI roadmap and accelerating demand for AI compute. The analyst views this as a "multi-generational opportunity," contributing to AMD's 24% rally on Monday and pushing the Nasdaq to a new all-time high, while competitor Nvidia saw a decline.
AMD shares were jumping again on Tuesday, a day after its market-moving partnership with OpenAI was announced, as Jefferies ratcheted up the chipmaker's stock price target and upgraded it to boot. Jefferies upgraded AMD to buy from hold and raised its price target to $300 from $170. The new target represents nearly a 50% gain from Monday's close. AMD shares rallied 24% on Monday to $203.71. The stock is up another 4% in premarket trading following the Jefferies call. OpenAI hatched a partnership with AMD to give Sam Altman's company up to a 10% stake while the chipmaker rolls out a series of GPUs over multiple years for the ChatGPT AI leader. The deal calls for AMD to deploy 6 gigawatts of AMD's Instinct graphics processing units over several years. "AMD will still have to hit milestones, but this is a strong validation of AMD's AI roadmap and the level of AI demand in general," wrote analyst Blayne Curtis in a note to clients Monday evening. Curtis called the OpenAI deal a "multi-generational opportunity" and forced his hand at upgrading the stock even after the big surge Monday. OpenAI "has been on a spending spree cutting deals with NVDA, ORCL, and Hynix/Samsung," stated the note. "While none of these deals are binding, they highlight how large OAI views the need for AI compute. This is a land grab for compute as well as GWs of data center capacity to house those GPUs. Lots of details will need to be sorted out but what is clear is that AI spending is accelerating even from here." AMD shares boosted the Nasdaq Composite to a new all-time high Monday. In a bit of a role reversal Monday, AMD's main competitor and the favorite AI play of the market, Nvidia, fell as AMD's shares soared. Jefferies also included an upside scenario of $400 a share that would entail an even bigger acceleration in the AI server market and AMD stealing even more market share from Nvidia. That upside scenario would mean AMD shares nearly double from here. AMD shares surged following its announced partnership with OpenAI, which involves AMD deploying 6 gigawatts of Instinct GPUs over several years and granting OpenAI up to a 10% equity stake. This significantly positive news led to AMD's stock rallying 24% on Monday to $203.71, with an additional 4% gain in premarket trading. The immediate market response reflects strong investor confidence in AMD's strategic positioning within the burgeoning AI sector. Jefferies notably upgraded AMD to Buy from Hold, simultaneously elevating its price target from $170 to $300, projecting a nearly 50% upside from Monday's close. Analyst Blayne Curtis described the OpenAI deal as a "multi-generational opportunity" and a robust validation of AMD's AI roadmap, underscoring accelerating demand for AI compute. A more aggressive upside scenario of $400 per share was also presented, premised on further AI server market acceleration and AMD gaining market share. This development propelled the Nasdaq Composite to a new all-time high, while concurrently seeing a decline in competitor Nvidia's shares, highlighting a potential re-evaluation of market leadership in AI. OpenAI's broader "spending spree" for compute infrastructure, involving various vendors, reinforces the industry-wide "land grab for compute" and signals an intensified period of AI spending.
AI-powered research, real-time alerts, and portfolio analytics for institutional investors.
Request a DemoOverall Sentiment
extremely positive
Sentiment Score
0.90
Ticker Sentiment
