This Is Why Advanced Micro Devices (NASDAQ: AMD) Is up 26% Today

Advanced Micro Devices (AMD) shares surged approximately 25% to $207.44 following the announcement of a long-term deal to become a key supplier for OpenAI's AI infrastructure program. This partnership involves OpenAI deploying 6 gigawatts of AMD Instinct GPUs, commencing with 1 gigawatt in the second half of 2026, and is projected to generate billions in annual revenue for AMD, contributing over $100 billion in total chip revenue over the next few years. Analysts reacted positively, with Barclays raising AMD's price target by $100 to $300, underscoring the deal's significance in the accelerating AI chip spending cycle and solidifying AMD's position in the AI market.

Analysis

Investing This Is Why Advanced Micro Devices (NASDAQ: AMD) Is up 26% Today By Ian Cooper Oct 6, 2025 | Updated 11:49 AM ET This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them. Key Points - Shares of Advanced Micro Devices are up about 25%, or by $42.77 per share, to $207.44. - All after AMD announced a long-term deal to become a key supplier to OpenAI’s AI infrastructure program. - Are you ahead, or behind on retirement? SmartAsset’s free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don’t waste another minute; learn more here.(Sponsor) Advanced Micro Devices (NASDAQ: AMD) is up about 25%, or by $42.77 per share, to $207.44. Intraday volume is up to 136.4 million, as compared to its daily average volume of 53.4 million. All after AMD announced a long-term deal to become a key supplier to OpenAI’s AI infrastructure program. “OpenAI plans to deploy 6 gigawatts worth of AMD Instinct graphics processing units, or GPUs, over the course of the partnership. The first 1 gigawatt deployment will begin in the second half of 2026, the companies said. For context, one nuclear reactor can typically generate one gigawatt of electricity, as reported by Barron’s. AMD added that the new partnership will allow it to generate billions of dollars in annual revenue. It will also allow it to generate over $100 billion in total revenue from chips over the next few years. Analysts Just Raised Their Price Target on AMD by $100 Even better, analysts at Barclays just raised their price target on AMD by $100 to $300. “The price target increase follows AMD’s partnership deal with OpenAI, which Barclays describes as ‘designed to be mutually beneficial to OpenAI and AMD, and more pointedly drive the stock higher,’” added Investing.com. Plus, according to analysts at Wedbush, the latest deal is a “major movement in AI revolution.” “This is yet another validation sign that the AI Arms Race is heating up among Big Tech firms with AMD now joining the AI party as this 1996 Moment for the tech world accelerates. With a 10% stake in AMD this quickly brings Lisa Su and AMD right into the core of the AI chip spending cycle and is a huge vote of confidence from OpenAI and Altman,” said the analysts, as quoted by Seeking Alpha. “Any lingering fears around AMD should now be thrown out the window as this gives them a major platform to monetize the AI Revolution.” Recent Earnings Weren’t Too Shabby In addition, in its most recent quarter, AMD’s revenue of $7.69 billion beat expectations for $7.43 billion. Adjusted EPS of 48 cents missed by a penny. Its data center segment revenue was $3.2 billion, up 14% year-over-year. Its client and gaming segment revenue was $3.6 billion, up 69% year-over-year. We’ll get another look at AMD earnings when the company reports again on Tuesday, November 4, 2025. “We delivered strong revenue growth in the second quarter, led by record server and PC processor sales,” said Dr. Lisa Su, AMD Chair and CEO, as quoted in AMD’s earnings release. “We are seeing robust demand across our computing and AI product portfolio and are well positioned to deliver significant growth in the second half of the year, driven by the ramp of our AMD Instinct MI350 series accelerators and ongoing EPYC and Ryzen processor share gains.” AI Demand Is Still Exploding According to Grand View Research, the global AI boom could grow from about $137 billion in 2022 to more than $1.81 trillion by 2030. All of which will have a substantial impact on AMD moving forward. According to the Marketing AI Institute, “Artificial intelligence will, on average, boost rates of profitability by 38% and provide an economic boost of $14 trillion in additional gross value by 2035, according to research by Accenture. Even MIT Technology Review once said, “Artificial intelligence is changing the world and doing it at breakneck speed…. The experts go on to predict a 50 percent chance that AI will be better than humans at more or less everything in about 45 years.” Yet, this is only the start – and its potential impact on your portfolio could be significant. The image featured for this article is © JHVEPhoto / iStock Editorial via Getty Images Latest Podcast Episode AI Companies Entering A Game of Chips More Wild Than Westeros 62 min Advanced Micro Devices (AMD) has secured a pivotal long-term partnership with OpenAI, triggering a roughly 25% surge in its stock price to $207.44 on significantly elevated volume of 136.4 million shares. The deal establishes AMD as a key supplier for OpenAI's AI infrastructure, involving the deployment of 6 gigawatts worth of AMD Instinct GPUs, with the initial phase commencing in the second half of 2026. This agreement is projected to generate billions in annual revenue and over $100 billion in total chip revenue over the next few years, providing a material and durable revenue stream that validates the company's AI strategy. The market's positive reception is reinforced by analyst actions, notably Barclays raising its price target by $100 to $300. This development builds upon a solid fundamental backdrop, where AMD's most recent quarter featured a 14% year-over-year increase in Data Center revenue to $3.2 billion and a CEO outlook highlighting robust demand for its AI-focused MI350 series accelerators. The OpenAI contract serves as a major validation of AMD's technology, positioning it as a credible high-performance competitor in the lucrative AI accelerator market.

Key Decisions for Investors

• The OpenAI partnership fundamentally de-risks AMD's AI revenue outlook and solidifies its position as a key player in the AI chip market, warranting a re-evaluation of its long-term growth potential within diversified technology portfolios.
• Investors should monitor AMD's execution on its product roadmap and supply chain capacity leading up to the H2 2026 deployment, as the realization of the projected revenue is dependent on a successful large-scale ramp of its Instinct GPU series.
• Given the stock's 25% appreciation, the immediate upside may be partially priced in; however, the analyst price target of $300 suggests further potential, and investors should watch for announcements of similar deals with other hyperscalers as a sign of broadening market share gains.