TLDR
- Bank of America maintains Buy rating on AMD with $250 price target after investor call discussing OpenAI partnership details.
- OpenAI’s 1-gigawatt deployment using AMD MI450 Series racks worth $15-20 billion per gigawatt ships in late 2026.
- AMD provides GPUs, CPUs, and DPUs directly to cloud providers, with six gigawatt potential before October 2030.
- Q3 2025 revenue forecast at $8.73 billion, up 28% year-over-year, with earnings projected at $1.17 per share.
- Stock trades at 52 times forward earnings after 24% jump, exceeding Nvidia’s valuation multiple despite slower growth.
Bank of America Securities analyst Vivek Arya reaffirmed his Buy rating on AMD stock after hosting an investor call with CFO Jean Hu and VP Matthew Ramsay. His $250 price target suggests over 7% upside from current trading levels.
The investor call generated strong interest as executives provided more clarity on the OpenAI partnership. Confidence in AMD’s artificial intelligence strategy increased following the discussion.
OpenAI plans to deploy its first 1-gigawatt AI infrastructure in the second half of 2026. The bulk of shipments will occur in Q4 using AMD’s MI450 Series racks.
Multi-Billion Dollar Revenue Opportunity
AMD will provide GPUs, CPUs, and DPUs for the deployment. The total content per gigawatt is valued between $15 billion and $20 billion.
Warrants included in the deal represent less than 5% impact. The agreement may expand as component prices increase and networking hardware gets added.
Direct sales to cloud service providers represent a new channel for AMD. This could lead to additional AMD-based projects across the industry.
OpenAI aims to complete all six gigawatts before October 2030 when warrants expire. The full warrant package could reach up to 10% of AMD’s equity value.
At AMD’s current market capitalization, that represents roughly $33 billion in potential value. However, vesting occurs in stages based on actual capacity deployment.
Arya emphasized UALink, AMD’s new interconnect technology based on Infinity Fabric architecture. The technology helps AMD compete in the rapidly expanding AI infrastructure market.
Financial Performance and Expectations
AMD reports Q3 2025 earnings next month. Analyst consensus projects revenue of $8.73 billion, representing 28% year-over-year growth.
Earnings per share are forecast at $1.17, up 27% from the prior year period. Investors will focus on data center demand trends and AI partnership updates during the earnings call.
Wall Street’s consensus rating stands at Moderate Buy based on 27 Buy ratings and 10 Hold ratings. The average analyst price target sits at $237.59, implying roughly 2% upside potential.
AMD shares jumped 24% after the OpenAI partnership announcement. The stock now approaches its early 2024 all-time high.
Valuation Questions Emerge
AMD currently trades at 52 times forward earnings. This valuation exceeds both Nvidia and Broadcom despite AMD’s slower growth trajectory.
The premium pricing stems largely from the single OpenAI agreement. AMD has not yet proven itself as a complete Nvidia alternative in AI computing.
Broadcom recently secured a $10 billion order for custom AI accelerator chips linked to OpenAI. That represented an actual purchase order rather than a staged warrant structure.
Nvidia’s investment partnership with Intel creates additional competitive pressure. Intel could regain CPU market share with Nvidia’s support, potentially limiting AMD’s growth in integrated AI systems.
AMD stock has gained nearly 40% since the start of 2024. Nvidia shares have surged approximately 280% over the same period.
