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AMD shares were jumping again on Tuesday a day after its market-moving partnership with OpenAI was announced as Jefferies ratcheted up the chipmaker’s stock price target by a whopping 82% and upgraded the shares to boot. Jefferies upgraded AMD to “buy” from “hold” and raised its price target to $300 from $170. The new target represents nearly a 50% gain from Monday’s close. AMD shares rallied 24% on Monday to $203.71. The stock is up another 4% in premarket trading following the Jefferies call. OpenAI hatched a partnership with AMD to give Sam Altman’s company up to a 10% stake while the chipmaker rolls out a series of GPUs over multiple years for the ChatGPT AI leader. The deal calls for AMD to deploy 6 gigawatts of AMD’s Instinct graphics processing units over several years. “AMD will still have to hit milestones, but this is a strong validation of AMD’s AI roadmap and the level of AI demand in general,” wrote analyst Blayne Curtis in a note to clients Monday evening. Curtis called the OpenAI deal a “multi-generational opportunity” and forced his hand at upgrading the stock even after the big surge Monday. OpenAI “has been on a spending spree cutting deals with NVDA, ORCL, and Hynix/Samsung,” stated the note. “While none of these deals are binding, they highlight how large OAI views the need for AI compute. This is a land grab for compute as well as GWs of data center capacity to house those GPUs. Lots of details will need to be sorted out but what is clear is that AI spending is accelerating even from here.” AMD shares boosted the Nasdaq Composite to a new all-time high Monday. In a bit of a role reversal Monday, AMD’s main competitor and the favorite AI play of the market, Nvidia, fell as AMD’s shares soared. Jefferies also included an upside scenario of $400 a share that would entail an even bigger acceleration in the AI server market and AMD stealing even more market share from Nvidia. That upside scenario would mean AMD shares nearly double from here.
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