AMD Could Double From Here—Thanks to Its Blockbuster OpenAI Deal

Core Viewpoint - Advanced Micro Devices (AMD) is positioned to capitalize on the growing demand in the AI GPU market, particularly following its recent deal with OpenAI, which could potentially double its stock value [1][4][6]. Group 1: Market Dynamics - The AI arms race is intensifying, with AMD gaining traction in a market traditionally dominated by NVIDIA [1]. - Analysts at Wedbush estimate that demand for AI GPUs is outstripping supply by a factor of ten, indicating that both AMD and NVIDIA can coexist and thrive [1]. - The deal with OpenAI is expected to generate significant revenue, potentially amounting to 100% of AMD's fiscal 2026 earnings outlook [4][6]. Group 2: Revenue Growth Potential - OpenAI's demand for MI450 GPUs, which are specifically designed for AI workloads, is projected to be in the billions, creating a substantial market opportunity for AMD [2][4]. - Revenue growth is anticipated to exceed 100% year-over-year for at least the next four quarters, driven by large-scale orders from hyperscalers and other organizations needing advanced AI computing power [4][5]. - Analysts predict that the OpenAI deal could unlock up to $100 billion in revenue over the next four years, with some forecasts suggesting even higher figures [6]. Group 3: Analyst Sentiment and Stock Performance - The market response to the OpenAI deal has been overwhelmingly positive, with numerous price target increases and upgrades from analysts, including Jefferies raising its target to $300 [5][6]. - AMD's earnings growth is expected to accelerate, potentially mirroring NVIDIA's past performance, which saw revenue grow nearly 1000% over four years [9]. - AMD's stock price surged over 30% following the OpenAI announcement, indicating strong market confidence, although it may face resistance at its all-time high [10][11].