What Happened?
Shares of computer processor maker AMD (NASDAQ: AMD) jumped 9.7% in the afternoon session after the stock maintained its strong momentum following the announcement of a significant, multi-year partnership with OpenAI.
This move continued a surge from earlier in the week when the deal was first revealed. The agreement positioned AMD as a key challenger to Nvidia in the AI chip market. Under the partnership, AMD agreed to supply its upcoming GPUs, including the MI450, to power OpenAI's growing data center needs, a deal potentially unlocking over $100 billion in revenue. To align interests, AMD also issued warrants allowing OpenAI to purchase up to 160 million company shares. The news prompted a wave of positive coverage from Wall Street, with Jefferies upgrading the stock from “Hold” to “Buy” and numerous other firms, including Morgan Stanley and Wells Fargo, raising their price targets.
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What Is The Market Telling Us
AMD’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 4.1% as investors continued to react positively to its landmark strategic partnership with OpenAI, extending gains from the previous trading session.
The chipmaker announced a multi-year, multi-billion dollar deal to supply up to 6 gigawatts of its Instinct GPUs to power OpenAI's next-generation AI infrastructure. This monumental agreement was projected to generate tens of billions in revenue for AMD. The partnership was viewed as a significant move that positioned AMD to challenge its main rival in the AI hardware market. Following the news, Wall Street analysts responded favorably. For instance, Jefferies upgraded the stock to a buy and raised its price target to $300, which became the new high on the Street.
AMD is up 93.4% since the beginning of the year, and at $233.29 per share, has set a new 52-week high. Investors who bought $1,000 worth of AMD’s shares 5 years ago would now be looking at an investment worth $2,697.
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