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

As the AI arms race accelerates, Advanced Micro Devices (NASDAQ: AMD) is gaining ground in a market long dominated by NVIDIA. Its recent deal with OpenAI adds weight to the view that AMD stock could still double in value. But this isn’t about taking share from NVIDIA (NASDAQ: NVDA)—analysts at Wedbush estimate demand is outstripping supply by ten to one, creating room for both companies to thrive. AMD’s opportunity lies in meeting a massive unmet need in the AI GPU market.

The critical takeaway is that OpenAI wants billions, tens of billions to be more precise, worth of MI450 GPUs. This is important because the MI450 lineup is explicitly tailored for AI workloads, features superior memory capacity suitable for inference, is more efficient, and is available at scale. 

It is the scale that matters, as hyperscalers will drive revenue growth. Now that AMD’s products are on the verge of launching and have been endorsed by OpenAI, investors may expect to see other leading hyperscalers follow suit. Companies ranging from Amazon (NASDAQ: AMZN) to Alphabet (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT), and Oracle (NYSE: ORCL) will line up to buy chips in this scenario, driving a boom similar to NVIDIA's for Advanced Micro Devices. 

Advanced Micro Devices Revenue Outlook Ballooned on OpenAI Deal

The impact on revenue growth will be enormous. The deal with OpenAI alone is worth an estimated 100% of the fiscal 2026 earnings outlook and is likely to be the first of many large-scale orders. Not only will hyperscalers that provide public-facing services be clients, but so will any business, organization, or country in need of advanced AI computing power. The takeaway is that Advanced Micro Devices' revenue will begin to skyrocket as soon as the first quarter of availability, likely to exceed 100% year-over-year each quarter for at least the following four and potentially for longer. 

The impact on analysts' sentiment is also bullish for the market. Not only should investors expect to see analysts lifting their revenue and earnings targets, but outperformance is likely relative to the consensus and will drive market euphoria. The initial response is very bullish, including numerous price target increases and at least one upgrade within the first 24 hours of the release. 

The upgrade is from Jefferies, which also lifted its price target to $300, the highest on Wall Street. Analysts at the firm believe the OpenAI deal could unlock up to $100 billion in revenue over the next four years. Analysts at Piper Sandler agreed, calling the agreement highly accretive and forecasting well over $100 billion through October 2030. Assuming that AMD maintains its strength relative to forecasts, as NVIDIA has done, the trend in analyst sentiment is likely to continue driving this market, potentially pushing it well above $300. 

Advanced Micro Devices Offers a Deep Value at $200

Advanced Micro Devices' earnings growth is also a factor in the share price outlook. The company’s earnings are likely to grow at an accelerated pace, similar to NVIDIA's, outpacing the forecasts that already imply significant value, even when trading at $210. The forecast following the release has AMD stock in the low double-digit P/E range as of 20230 and may be cautious, suggesting its stock price could increase by 100% to 200% within the next few years. 

If NVIDIA is to be used as a guide, its revenue and earnings forecasts have been blossoming for over two years, and it continues to outperform and provide robust guidance. Its revenue has grown by nearly 1000% in the four-year stack, with earnings increasing at an accelerated pace, a figure that AMD may easily surpass. The demand for inferencing is tied to the application of AI, which is expected to be a far larger industry than the infrastructure industry. 

The Technical Outlook: Advanced Micro Devices Is at an Inflection Point

AMD's share price surged more than 30% following the OpenAI deal, only to hit resistance at the all-time high. The stock surge may pause at this level, but is likely to continue higher before the end of the year due to the improved and still improving outlook, as well as its impact on analysts' sentiment. The critical resistance point is the existing high at $227.30; a move above that will signal a significant shift in market dynamics. The market for AMD stock could advance as much as $130 in a matter of months in this scenario, topping out near $360 sometime in early to mid-2026. 

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The article "AMD Could Double From Here—Thanks to Its Blockbuster OpenAI Deal" first appeared on MarketBeat.