AMD Faces Earnings Test After Penning OpenAI, ORCL Partnerships

Core Viewpoint - AMD's stock has surged over 50% in the last month, trading just below its all-time high, largely due to a strategic partnership with OpenAI for computing power [1][4]. Financial Performance - AMD shares have increased more than 110% year-to-date, with expectations for the upcoming earnings report indicating an EPS of $1.17 and revenue of $8.72 billion, up from $0.92 and $6.8 billion in the same quarter last year [2][4]. - The company has experienced a significant run-up in stock price, with a 112% increase year-to-date and an 82% increase over the last 12 months [8]. Strategic Partnerships - AMD's partnership with OpenAI involves supplying six gigawatts of GPUs for data centers, with OpenAI purchasing over 160 million shares of AMD, representing about 10% of the company [5]. - Another deal with Oracle aims to deploy up to 50,000 GPUs across Oracle's cloud data centers, although the financial impact of these deals is expected to be felt in future quarters rather than the current one [6][9]. Market Position - Despite AMD's impressive stock performance, it still trails behind Nvidia, which holds a majority market share in the AI sector and recently saw its market cap exceed $5 trillion, while AMD's market cap is just below $418 billion [8][9]. Analyst Sentiment - Analysts express caution regarding AMD's ability to maintain its stock price momentum, suggesting that the current valuation may be unsustainable given the high expectations set by recent stock performance [11][15].