AMD Stock Jumps After Upgrade. The Case to Buy Following OpenAI Deal.

Advanced Micro Devices stock was upgraded to Buy from Hold at Jefferies analysts with a raised $300 price target, up from $170. (David Paul Morris/Bloomberg)

Key Points

• Advanced Micro Devices stock rose 6.2% after announcing a long-term deal with OpenAI to power 6 gigawatts of AI infrastructure.
• Analysts upgraded Advanced Micro Devices, with Jefferies raising its price target to $300 and Citi to $215, citing significant revenue potential.
• The OpenAI partnership is seen as a strong endorsement, positioning Advanced Micro Devices as a key player in the data center GPU market.

Advanced Micro Devices stock jumped on Tuesday, building on a 24% gain in the previous session after the chip maker unveiled a long-term deal with OpenAI. The partnership “changes the narrative,” analysts said.

Jefferies analysts led by Blayne Curtis upgraded AMD to Buy from Hold on Tuesday with a $300 price target, up from $170. The firm hiked its price target on the shares last week “following positive server checks but couldn’t triangulate the AI ramp.” Now, the announcement of a deal with OpenAI “materially changes that outlook,” analysts wrote.

AMD stock climbed 6.2% to $210.77 on Tuesday after ending the previous session up 24%. The S&P 500 and tech-heavy Nasdaq Composite were up slightly.

On Monday, the chip maker unveiled a deal with OpenAI to power 6 gigawatts of AI infrastructure with its graphics processing units (GPUs). Jefferies noted that OpenAI “has been on a spending spree,” securing partnerships with other big names including Nvidia and Oracle .

“While none of these deals are binding, they highlight how large OAI views the need for AI compute,” analysts wrote, describing efforts to snag computing power and data center capacity as “a land grab.”

While Citi Research analysts maintained a Neutral rating following the deal announcement, they boosted their price target on the stock to $215 from $180.

In addition to the $100 billion revenue opportunity tied to the agreement, AMD made it clear “they expect their AI business to reach tens of billions of dollars by 2027,” analysts wrote.

Citi estimates each gigawatt of AI translates to roughly $15 billion in sales and $1 in earnings per share, with the OpenAI deal potentially boosting AMD’s 2027 earnings by as much as 32%.

Piper Sandler analysts joined the deafening chorus of support as they reiterated an Overweight rating on AMD shares and raised their price target to $240 from $190.

The latest partnership “will likely lead to significant traction with other players down the line,” analysts asserted. Revenue from the deal is expected to materialize over the longer term, starting in the second half of 2026 “with significant revenue coming in 2027.”

At its core, the deal highlights the shifting narratives around AMD’s role in the data-center ecosystem, Truist Securities analysts noted on Tuesday.

“While AMD was previously cited as a ‘price check’ to Nvidia, it is now cited as a true potential partner,” analysts continued.

In their eyes, OpenAI’s commitment to deploy 6 gigawatts of AMD graphics processing units “is a ringing endorsement of AMD” that signals its growing footprint in the market for data center GPUs.

The firm rates AMD Buy with a $273 price target, up from $217.

Attitudes on Wall Street are overwhelmingly bullish—of 56 analysts tracked by FactSet, 39 rate AMD Buy or Overweight, while 17 rate it Hold.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com