TLDR
- Sanmina (SANM) stock jumped over 30% after AMD announced a partnership with OpenAI to deploy 6 gigawatts of AMD GPUs.
- OpenAI committed to purchase AMD’s chips starting with the MI450 chip next year, with the potential for OpenAI to acquire up to 10% stake in AMD through warrants.
- Sanmina is acquiring ZT Systems’ data center infrastructure manufacturing business from AMD for $2.55 billion in a deal expected to close by end of 2025.
- Under the ZT Systems acquisition, Sanmina becomes AMD’s preferred U.S.-based manufacturing partner for AI rack and cluster-scale systems.
- BofA Securities views the AMD-OpenAI partnership as positive for Sanmina, showing AMD’s chips are gaining market traction.
Sanmina Corporation stock climbed more than 30% on Monday. The move came after AMD and OpenAI revealed their new partnership.
The rally happened despite no direct news from Sanmina itself. No press releases or SEC filings explained the jump.
AMD announced a deal with ChatGPT maker OpenAI for up to 6 gigawatts of GPUs. OpenAI signed this agreement to meet its growing AI chip needs.
The partnership includes warrants that could grant OpenAI up to a 10% stake in AMD if exercised. AMD stock rose more than 25% in pre-market trading following the announcement.
OpenAI plans to start purchasing AMD’s MI450 chip next year. The 6 gigawatt commitment represents a substantial order for AMD.
Sanmina’s Connection to AMD
Investors pushed Sanmina shares higher due to the company’s existing ties with AMD. Earlier this year, Sanmina agreed to buy ZT Systems’ data center infrastructure manufacturing business from AMD.
The acquisition price stands at $2.55 billion. The deal is set to close by the end of 2025.
As part of this agreement, AMD designated Sanmina as its preferred manufacturing partner. Sanmina will handle new product introduction manufacturing for AMD’s AI rack and cluster-scale systems.
The company will serve as AMD’s U.S.-based manufacturing partner for cloud customers. This positions Sanmina to potentially benefit from AMD’s expanding AI infrastructure deals.
Market Reaction and Analyst Views
BofA Securities analyst Ruplu Bhattacharya weighed in on the news. He called the AMD-OpenAI partnership positive for Sanmina overall.
The analyst noted that the deal shows AMD’s chips are gaining market traction. This validation could lead to more opportunities for Sanmina.
The exact financial impact on Sanmina remains unclear. The company could benefit if OpenAI or its partners commission Sanmina to build racks with AMD GPUs.
Sanmina stock saw gains of 59.29% in pre-market trading on Monday. This followed a 2.28% decline on Friday.
The shares have rallied 50.76% year-to-date. Over the past 12 months, the stock has climbed 69.81%.
Wall Street analysts maintain a Moderate Buy rating on Sanmina. The consensus includes one Buy rating and one Sell rating from the past three months.
The average price target sits at $135. This represents a potential 18.34% upside from current levels.
The ZT Systems acquisition will make Sanmina a key player in AMD’s AI infrastructure manufacturing. With OpenAI committing to 6 gigawatts of AMD GPUs starting next year, Sanmina could see increased manufacturing demand through its partnership with AMD.
