AMD to report Q3 earnings following massive OpenAI, Oracle chip deals

Core Viewpoint - Advanced Micro Devices (AMD) is poised to report its fiscal third quarter earnings, following significant AI chip agreements with OpenAI and Oracle, which are expected to enhance its market position in the AI sector [1][2]. Group 1: Recent Deals and Partnerships - AMD has signed a deal with OpenAI to supply up to 6 gigawatts of GPUs for AI data centers, with OpenAI agreeing to purchase approximately 160 million shares of AMD, representing about 10% of the company [1]. - A partnership with Oracle involves deploying up to 50,000 GPUs across Oracle's data centers, further solidifying AMD's presence in the cloud computing space [2]. - AMD is also supplying chips for two supercomputers at the Department of Energy's Oak Ridge National Laboratory, which will involve a $1 billion investment [2]. Group 2: Stock Performance - AMD's stock has surged by 57% over the past month, with a year-to-date increase of 114% and an 83% rise over the past 12 months [2]. - Despite the recent gains, AMD's stock fell by 2% before the earnings report [2]. Group 3: Market Position and Earnings Expectations - AMD's market capitalization stands at $418 billion, significantly lower than Nvidia's, which recently surpassed $5 trillion [3]. - For the upcoming quarter, AMD is projected to report earnings per share (EPS) of $1.17 on revenue of $8.7 billion, an increase from $0.92 EPS and $6.8 billion revenue in Q3 2024 [3]. Group 4: Future Outlook - Analysts do not expect immediate impacts from AMD's recent deals in Q3, suggesting that benefits will materialize in subsequent quarters as the next-generation MI450 GPUs will not be deployed until the second half of 2026 [4]. - There is a sentiment among analysts that customers may be delaying purchases of current models in anticipation of the MI450 line, which could influence AMD's short-term performance [5]. - The MI450 chips and rack-scale products are viewed as critical to AMD's future growth strategy, with expectations for significant contributions starting next year [6][7].