TLDR
- AMD stock surged 128% over the past six months to $215.18 per share, driven by strong quarterly results and revenue growth of 31.1% annually over five years.
- Mizuho raised AMD’s price target from $205 to $275 following a multibillion-dollar supply deal with OpenAI worth over $90 billion through 2030.
- The OpenAI agreement covers six tranches of chip supply totaling 6 gigawatts of compute power from late 2026 through 2030, potentially generating $22 billion in annual revenue by decade’s end.
- The deal includes 160 million warrant shares tied to AMD’s stock price and deployment milestones, which could dilute margins by over 300 basis points.
- Wall Street analysts project AMD’s revenue to grow 22.9% over the next 12 months, with earnings per share potentially doubling by 2027-28.
Advanced Micro Devices shares climbed roughly 2% on Monday after Mizuho raised its price target on the chipmaker to $275 from $205. The upgrade follows news of a massive supply agreement with OpenAI that could reshape AMD’s revenue picture through the end of the decade.
The OpenAI deal covers six tranches of chip supply totaling 6 gigawatts of compute power. Deliveries are scheduled to begin in late 2026 and continue through 2030.
Mizuho analysts estimated the contract’s total value at more than $90 billion through 2030. By the end of the decade, the deal could generate as much as $22 billion in annual revenue for AMD.
The agreement includes about 160 million warrant shares. These warrants are tied to both AMD’s stock price and deployment milestones.
While the warrants could dilute margins by more than 300 basis points, Mizuho still expects strong earnings growth. The firm forecasts AMD’s earnings per share could double by 2027-28.
AMD stock has been on a tear recently. Over the past six months, shares have rocketed 128% to $215.18 per share.
The company’s revenue grew at a 31.1% compounded annual growth rate over the last five years. That performance outpaced the average semiconductor company.
OpenAI’s Compute Needs Drive Deal
Wall Street analysts project AMD’s revenue to rise 22.9% over the next 12 months. This represents an improvement over historical growth rates for a company of its size.
OpenAI may require as much as $700 billion in compute investment to meet its 2030 revenue target of $200 billion. That leaves what Mizuho sees as a $130 billion funding gap.
Concerns about “circularity” in AI spending remain. Revenue growth in this sector depends heavily on continued capital expenditure. If spending slows, growth could stall quickly.
AMD’s AI accelerator business still lags behind Nvidia’s CUDA software ecosystem. Analysts expect limited new wins for AMD’s MI355 chips through 2026.
Competitive Landscape Heats Up
At current levels, AMD trades at about 30 times projected 2027 earnings. The stock’s forward P/E ratio stands at 42.6×.
Mizuho also raised its Nvidia price target modestly to $225. The firm kept Broadcom’s target at $410.
Broadcom struck its own deal with OpenAI on Monday to develop and deploy 10 gigawatts of custom AI accelerators. Broadcom shares jumped 12% on the news.
Mizuho analysts stated they continue to see Broadcom and Nvidia as best-positioned in the AI chip space. However, AMD’s OpenAI deal suggests upside potential for the company.
AMD maintained per-share profitability as it expanded over the past five years. The company’s earnings per share grew at a 32% annual rate during that period.
Despite near-term traction in traditional servers, AMD faces challenges in catching up to Nvidia’s market position. The company plans to outline its strategy at an analyst day scheduled for November 11.
The OpenAI contract marks a major validation of AMD’s AI chip technology. Deliveries starting in late 2026 give the company time to scale production and refine its offerings.
