AMD (AMD) Stock Is Up, What You Need To Know

What Happened?

Shares of computer processor maker AMD (NASDAQ:AMD) jumped 4.1% in the afternoon session after investors continued to react positively to its landmark strategic partnership with OpenAI, extending gains from the previous trading session. 

The chipmaker announced a multi-year, multi-billion dollar deal to supply up to 6 gigawatts of its Instinct GPUs to power OpenAI's next-generation AI infrastructure. This monumental agreement was projected to generate tens of billions in revenue for AMD. The partnership was viewed as a significant move that positioned AMD to challenge its main rival in the AI hardware market. Following the news, Wall Street analysts responded favorably. For instance, Jefferies upgraded the stock to a buy and raised its price target to $300, which became the new high on the Street.

After the initial pop the shares cooled down to $211.15, up 3.7% from previous close.

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What Is The Market Telling Us

AMD’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 1 day ago when the stock gained 26.8% on the news that the company announced a massive, multi-year strategic partnership with OpenAI (the creator of ChatGPT) to supply its Graphics Processing Units (GPUs) for the AI company's next-generation infrastructure. 

The agreement commits OpenAI to deploying up to 6 gigawatts of AMD's Instinct GPUs, starting with the AMD Instinct MI450 Series. The initial rollout of one gigawatt is scheduled for the second half of 2026. This scale signifies a long-term, multi-billion-dollar revenue stream for AMD, with some analysts projecting the deal could generate tens of billions of dollars in total revenue over its lifespan. 

To align interests, AMD issued OpenAI a warrant for up to 160 million shares of AMD common stock. These shares are structured to vest as specific milestones are achieved, including the initial deployment and subsequent scaling up to the full 6 gigawatts. This equity position signals a deep, long-term commitment and strong belief in AMD's technology and future on the part of one of the world's most influential AI companies. 

For investors, this deal does three things: 1) It validates the performance and readiness of AMD's Instinct GPU line for the most demanding AI workloads; 2) It secures a massive, long-term revenue commitment from a flagship client in the AI sector; and 3) It establishes AMD as an essential player in the global AI supply chain.

AMD is up 74.5% since the beginning of the year, and at $211.15 per share, has set a new 52-week high. Investors who bought $1,000 worth of AMD’s shares 5 years ago would now be looking at an investment worth $2,428.

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