AMD (NASDAQ: AMD ) recently announced a major commitment by OpenAI to buy a truckload of its Instinct GPUs. The economics of the deal are somewhat unclear as of now. I’ll work through them as wellBram de Haas brings 15 years of investing experience to the table and has over 5 years of experience managing a Euro hedge fund. He is also a former professional poker player and utilizes his bundle of risk management skills to uncover lucrative investments based on special situations.Analyst’s Disclosure:I/we have ...

Shares of Advanced Micro Devices (AMD) have rallied over 85% year-to-date. AMD stock got a significant boost from its recently announced strategic partnership with OpenAI. The deal, valued in the billions, is likely to reshape AMD’s technology roadmap, accelerate its revenue trajectory, and boost its earnings potential. Under this agreement, AMD will supply OpenAI with up to six gigawatts of Instinct GPUs, starting in the second half of 2026. The deployment of these next-generation MI450 accelerators will ...

After AMD and OpenAI announced an expanded partnership on Monday, the chatter immediately turned to the unusual way OpenAI would pay for its AMD purchases. It will use AMD’s own stock to do so. To recap: OpenAI has agreed to help AMD refine its line of Nvidia competitor chips, the Instinct GPUs, as well as to purchase and deploy 6 gigawatts of compute capacity from AMD over multiple years. AMD said this deal is worth billions in revenue. But OpenAI isn’t paying for this out of its own revenues. Instead  ...

Core Insights - OpenAI has entered into a partnership with AMD to refine AMD's Instinct GPUs and will purchase 6 gigawatts of compute capacity, with the deal valued at billions in revenue for AMD [1][2] - OpenAI will pay for this deal using AMD stock warrants, potentially up to 160 million shares, which will vest based on stock price milestones [2][3] - If OpenAI holds onto the AMD shares until the end of the deal, the stock could be worth approximately $100 billion, contingent on AMD reaching a market cap of around $1 trillion [3][4] AMD's Strategic Positioning - The partnership is seen as a way for AMD to finance OpenAI's GPU purchases while gaining significant market share, estimated at 30%, in the next-generation data center build-out [9] - The validation from OpenAI regarding AMD's AI GPUs is expected to enhance AMD's adoption momentum among other customers, particularly cloud service providers [5][9] - Although the deal is considered "arguably less attractive" than Nvidia's investments in OpenAI, it is viewed as a major validation of AMD's roadmap [9]

Core Viewpoint - AMD has entered a multibillion-dollar partnership with OpenAI, enhancing its credibility and market share in the AI sector, while also securing long-term compute capacity for OpenAI [1][5]. Partnership Details - OpenAI will utilize up to 6 gigawatts of AMD's Instinct GPUs starting in the second half of 2026 for its AI infrastructure, including future ChatGPT versions and model training [3]. - AMD issued OpenAI a warrant for up to $160 million shares, potentially granting OpenAI a 10% stake in AMD if milestones are achieved [4]. Financial Projections - AMD anticipates the deal will generate tens of billions in revenue over the next five years, significantly impacting its position in the AI data center GPU market [5]. - Total sales for AMD are projected to increase by 27% in fiscal 2025 to $32.81 billion, with further growth of 19% expected in FY26 to $39.1 billion [6]. - Annual earnings are expected to rise by 19% in FY25 and soar by 50% in FY26 to $5.90 per share [6]. Stock Performance and Valuation - AMD stock has surged over 30% since the partnership announcement and is up more than 70% year-to-date, outperforming broader indexes [2]. - Currently, AMD trades at 51.6X forward earnings, a premium compared to Nvidia and Broadcom, but has a more reasonable price-to-forward-sales multiple of 10.1X [8]. Analyst Reactions - Following the partnership announcement, several Wall Street analysts have raised their price targets for AMD, with new highs reaching $300 from firms like Jeffries and Barclays [11]. - AMD's current average price target is $188.53, indicating potential upside [12].

U.S. equities experienced a broad pullback on Tuesday, October 7, 2025, as investors digested ongoing concerns about the government shutdown and a notable dip in the technology sector. After a strong run of gains, major market indexes closed lower, signaling a cautious mood on Wall Street. The S&P 500 Index declined by 0.4%, marking its first drop in eight sessions. The tech-heavy Nasdaq Composite fell 0.7%, while the Dow Jones Industrial Average slipped 105 points, or 0.2%. This retracement comes after bot ...

Group 1 - Advanced Micro Devices (AMD) shares increased by 23.7% to close at $203.71, with notable trading volume compared to typical sessions, and a 9% gain over the past four weeks [1] - AMD's focus on high-performance computing, particularly through its EPYC processors and Instinct GPUs, along with a multi-year 6 GW GPU deal with OpenAI, positions the company for significant growth in AI and data center markets [2] - The expected quarterly earnings for AMD are $1.17 per share, reflecting a year-over-year increase of 27.2%, with revenues projected at $8.71 billion, up 27.8% from the previous year [2] Group 2 - The consensus EPS estimate for AMD has been revised marginally lower over the last 30 days, indicating a negative trend in earnings estimate revisions, which typically does not lead to price appreciation [4] - AMD holds a Zacks Rank of 3 (Hold), indicating a neutral outlook, while another stock in the same industry, Agilysys, closed 3.7% higher at $108.77, but has returned -5.2% over the past month [4] - Agilysys' consensus EPS estimate remains unchanged at $0.39, representing a year-over-year change of +14.7%, and it also holds a Zacks Rank of 3 (Hold) [5]

Group 1: Strategic Partnership - Advanced Micro Devices (AMD) and OpenAI signed a multi-billion dollar strategic partnership on October 6, 2025, involving OpenAI deploying 6 gigawatts (GW) of computing power using AMD's Instinct GPUs and a warrant for OpenAI to acquire up to 10% stake in AMD [1]. Group 2: Market Reaction - Following the announcement, AMD's share price surged nearly 24% in the last trading session, which also positively impacted ETFs with significant AMD holdings [2]. Group 3: AI Sector Growth - The AI sector is experiencing rapid growth due to its transformative potential across various industries, including healthcare, autonomous vehicles, and financial services, driven by the demand for generative AI applications [3]. Group 4: Hardware Demand - The increasing pressure on global computing infrastructure, combined with advancements in GPU technology, has led to historic collaborations between AI companies and chipmakers like AMD and Nvidia, resulting in multi-billion dollar deals [4]. Group 5: Investment Opportunities - The current environment presents a favorable opportunity for tech investors to gain exposure to the AI revolution through AI-heavy ETFs, which can mitigate risks associated with investing in individual stocks [5]. Group 6: AMD-Heavy ETFs - Several AI-focused Technology ETFs with significant AMD weightage have shown price appreciation recently and delivered strong year-to-date performance [6]. Group 7: iShares Semiconductor ETF (SOXX) - SOXX provides exposure to U.S. semiconductor companies, with AMD holding 6.96%. It gained 3% in the last trading session and 33.9% year-to-date, charging 34 basis points in fees [7]. Group 8: Invesco PHLX Semiconductor ETF (SOXQ) - SOXQ focuses on the largest U.S.-listed semiconductor companies, with AMD at 6.91%. It rose 2.9% in the last trading session and 36% year-to-date, with fees of 19 basis points [8]. Group 9: Invesco AI and Next Gen Software ETF (IGPT) - IGPT targets companies contributing to future software development, with AMD at 7.42%. It increased by 2.6% in the last trading session and 26% year-to-date, charging 56 basis points in fees [9].

Core Viewpoint - IREN Ltd. (NASDAQ:IREN) has experienced significant stock performance due to increased investor interest in artificial intelligence (AI) stocks, particularly following a supply deal between OpenAI and Advanced Micro Devices Inc. (AMD) [1][2][4]. Group 1: Stock Performance - IREN Ltd. reached a record high of $58.28 during intra-day trading, ultimately closing up 14.45% at $57.75 [2]. - The stock's surge is attributed to the broader trend of investment in AI, driven by aggressive deal-making in the sector [1][4]. Group 2: Strategic Developments - AMD announced a definitive agreement to supply OpenAI with 6 gigawatts of Instinct GPUs, with the first gigawatt expected to be deployed in the second half of 2026 [3]. - OpenAI's expansion efforts have created optimism for companies like IREN Ltd., which is transitioning from Bitcoin mining to AI services by expanding its cloud business [4]. Group 3: Analyst Ratings - IREN Ltd. received an "overweight" rating and a new price target of $75 from Bernstein, representing a 275% increase from the previous target of $20 [4][5]. - The upgrade highlights IREN's unique approach in developing its own AI infrastructure, contrasting with competitors that are pursuing capital-light co-location deals [5].

Core Insights - Advanced Micro Devices (AMD) is experiencing significant growth in the AI infrastructure market, supported by its advanced product offerings and strategic investments in AI hardware and software [1][2]. Financial Performance - In Q2 2025, AMD reported record revenues of $7.7 billion, marking a 32% year-over-year increase, driven by strong demand for its EPYC and Ryzen processors, as well as the ramp-up of its MI350 series GPUs [2][10]. - The consensus estimate for AMD's 2025 earnings is $3.95 per share, reflecting a 19.34% year-over-year growth [13]. Product Development and Partnerships - AMD has expanded its product portfolio with the launch of the Instinct MI350 Series GPUs and open rack-scale AI infrastructure, showcasing advancements in AI performance and energy efficiency [3][10]. - The company has formed strategic partnerships, including a collaboration with Oracle to build a 27,000-node AI cluster and an expanded partnership with Cohere to integrate AI services [3][4]. Competitive Landscape - AMD faces stiff competition from NVIDIA and Intel, both of which are also expanding their presence in the AI infrastructure market [5]. - NVIDIA reported a 56% year-over-year increase in data center revenues, reaching $41.1 billion in Q2 2026, while Intel is gaining traction with its Xeon 6 Processors being adopted by major industry players [6][7]. Stock Performance and Valuation - AMD shares have increased by 33.1% year to date, outperforming the broader Zacks Computer & Technology sector's return of 21.7%, but underperforming the Zacks Computer-Integrated Systems industry's increase of 41.3% [8][10]. - The stock is trading at a premium with a forward 12-month Price/Sales ratio of 7.01X compared to the industry average of 3.92X, indicating a Value Score of F [11].