AMD Stock Is Rising. Its AI Chip Business Is ‘Underestimated:’ Analyst.

Advanced Micro Devices has a deal with OpenAI to roll out AI infrastructure. (David Paul Morris/Bloomberg)

Key Points

• Advanced Micro Devices stock rose 7.7% to $234.98 on Wednesday on increased optimism about its AI semiconductor market position.
• HSBC raised its price target for AMD to $310 from $185, citing a massive, underestimated AI revenue upside potential from the OpenAI deal.
• AMD secured a long-term deal to supply OpenAI with six gigawatts of GPUs, starting with one gigawatt in the second half of 2026.

Advanced Micro Devices stock is rallying as Wall Street is growing more optimistic about its position in the artificial-intelligence semiconductor market.

On Wednesday, HSBC analyst Frank Lee raised his price target for the AMD stock to $310 from $185 and reaffirmed his Buy rating.

“OpenAI deal implies massive AI revenue upside potential, which is still under-estimated by consensus,” he wrote. “We believe this deal gives enhanced visibility into AMD’s AI GPU revenue opportunity till 2030.”

Shares were up 7.7% at $234.98 in early afternoon trading Wednesday. The Nasdaq was up 0.6%.

Last week, AMD announced a long-term deal to become a key supplier to OpenAI’s AI infrastructure buildout. The agreement entails OpenAI deploying six gigawatts of AMD GPUs, starting with one gigawatt of rack-scale MI450 GPU servers in the second half of 2026.

OpenAI is the leader in AI technology with products such as ChatGPT, AI models for enterprises, and the recently released social video app Sora.

Lee predicts the AMD MI450 will be more competitive with Nvidia’s products when it is released late next year. He estimates the OpenAI partnership could generate $80 billion in chip revenue for AMD over the next five years.

On Tuesday, Oracle and AMD announced an expanded AI partnership, with Oracle deploying tens of thousands of AMD chips starting in the third quarter of 2026.

Write to Tae Kim at tae.kim@barrons.com