TLDR
- AMD secured multi-year AI deals with OpenAI and Oracle projected to generate tens of billions in annual revenue
- Stock surged 34% in single trading day on October 6, adding roughly $80 billion in market value
- Shares have gained 90% year-to-date, reaching $235 with analyst price targets now at $250-$310
- AI-related products now account for 21% of total revenue, up from prior quarters
- Wall Street shows 29 Buy ratings and 10 Hold ratings with consensus target of $249.92
Advanced Micro Devices stock jumped 34% on October 6 following news of major AI partnerships. The single-day gain marked the company’s largest since 2016.
Advanced Micro Devices, Inc., AMD
The rally came after AMD announced deals with OpenAI and Oracle Cloud. The OpenAI agreement covers GPU supply powering 6 gigawatts of compute capacity. Oracle will deploy 50,000 of AMD’s next-generation Instinct GPUs.
These contracts are projected to generate tens of billions in annual revenue. Cumulative new sales could exceed $100 billion according to company statements.
AMD’s market capitalization now stands at approximately $380 billion. This puts the chipmaker roughly on par with Intel’s valuation.
The stock briefly hit all-time highs around $238 per share in mid-October. Shares settled near $235 by October 23.
Year-to-date performance shows gains of 80-95%. This far outpaces the Philadelphia Semiconductor Index, which rose only 32% in 2025.
Intel shares trade near $38, up 85% year-to-date. Nvidia remains at roughly $180 with a $4 trillion market cap.
Analyst Targets Climb to $300 Range
Wall Street has grown more bullish on AMD following the AI announcements. Bank of America analyst Vivek Arya raised his 12-month target to $300.
Jefferies and Wolfe Research each set targets at $300. HSBC went higher with a $310 price target.
Rosenblatt Securities maintained a Buy rating with a $250 target ahead of Q3 earnings. Analyst Kevin Cassidy expects the company to beat estimates based on steady server and PC chip demand.
About 60-65% of analysts now rate AMD as a Buy. This compares to roughly 50% earlier in the year.
Morgan Stanley raised its 2027 revenue forecast to $51.2 billion from $44.2 billion. The increase reflects an improving datacenter outlook.
Wedbush boosted its price target to $270 citing the AI deal thesis. The firm estimates each gigawatt of AI capacity could mean roughly $20 billion in AMD sales.
Goldman Sachs and Citigroup maintain neutral ratings with targets near $210. These firms cite high expectations already priced into shares.
The company reported Q2 2025 revenue of $7.69 billion, up 32% year-over-year. Adjusted earnings per share came in at $0.48.
CEO Lisa Su noted product rollouts have contributed to growth. The company guided Q3 2025 revenue to approximately $8.7 billion, representing 20% year-over-year growth.
Full-year 2025 sales targets now sit near $33 billion. CFO Jean Hu said the OpenAI agreement should deliver tens of billions in revenue and be highly accretive to future earnings.
U.S. export restrictions will limit some growth. AMD expects a $1.5 billion hit to 2025 sales from curbs on AI chip shipments to China.
Competition from Nvidia and Intel Heats Up
Nvidia commands 90-94% of the data-center GPU market. The company’s most recent quarter showed datacenter revenue jumping 73% to $39.1 billion.
AMD’s datacenter revenue hit $3.2 billion with 14% growth in the same period. The gap remains substantial between the two chipmakers.
Nvidia CEO Jensen Huang called the AMD-OpenAI deal “imaginative” and “surprising.” He commented that giving up 10% of AMD through an OpenAI warrant was “clever, I guess.”
Huang still praised AMD as “a really good company” that Nvidia takes “very seriously.” The comments suggest Nvidia will watch AMD’s execution closely.
Intel unveiled a new Crescent Island datacenter AI chip for 2026 in mid-October. The company secured major CHIPS Act funding plus $7 billion from Nvidia and SoftBank.
AMD is positioning its GPUs, EPYC CPUs and new Helios AI server racks as an open alternative to Nvidia’s proprietary systems. This approach targets customers seeking flexible infrastructure options.
AI-related products now represent 21% of AMD’s total revenue. This percentage reflects growing datacenter investments in AI computing infrastructure.
Leaked BIOS code on Thursday revealed upcoming Strix Point APU development. These chips combine CPU and GPU capabilities in one package for laptops and budget desktops.
Industry speculation suggests a Q4 2025 release window. Some sources indicate Zen 5 architecture on the AM5 platform while others suggest Zen 4 refresh technology.
Shares gained 0.44% Thursday on the leak news. The stock extended its 90% year-to-date rally and 50% gain over the trailing 12 months.
AMD now trades around 40x expected 2026 earnings. The trailing price-to-earnings ratio exceeds 100x, rich compared to Nvidia’s roughly 30x multiple.
Analysts warn that much of the growth is already priced in. Simply Wall St notes downside risk if growth projections prove too bullish or competition and regulatory challenges weigh on performance.
The elevated valuation leaves little room for error. Any disappointment in orders or product performance could trigger profit-taking.
AMD reports Q3 earnings shortly, with an Analyst Day scheduled for November 11. The event will provide details about the company’s 2026 product roadmap and strategy.