By Steve Goldstein
AMD Chair and CEO Lisa Su presided over a huge surge in its stock price on Monday.
It’s likely the first of many – analysts at Jefferies upgraded Advanced Micro Devices to a buy, after the chipmaker’s stock surged on a pact with ChatGPT maker OpenAI.
The note reads as much like an apology as a changed investment thesis.
“We rarely do this,” said analysts led by Blayne Curtis. “We raised estimates and our [price target] last week following positive server checks but couldn’t triangulate the AI ramp.”
That came on OpenAI’s decision to purchase up to 6 gigawatts of AMD (AMD) chips – what Jefferies says has the potential to fuel “well over $100 billion” worth of revenue. AMD has stated that each gigawatt would represent double-digit billions of dollars.
OpenAI, the analysts note, has been on a spending spree, not just with AMD but also Nvidia, Oracle, Hynix and Samsung.
“While none of these deals are binding, they highlight how large OpenAI views the need for AI compute. This is a land grab for compute as well as GWs of data center capacity to house those GPUs. Lots of details will need to be sorted out but what is clear is that AI spending is accelerating even from here,” the analysts said.
Jefferies’ new price target, of $300 vs. $170 previously, now becomes the Wall Street high, according to FactSet data.
More humbling sell-side notes are likely to come through.
Goldman Sachs, for instance, has a price target of $150, so half of Jefferies. Deutsche Bank and Wedbush also have price targets below Monday’s close of $203.71.
The 23.7% surge for AMD was a more than 6 standard deviation move, according to MarketWatch calculations, though it wasn’t even the biggest percentage move all year – that came when it surged 23.8% on April 9.
In opening trade on Tuesday, AMD stock tacked on another 6%, to trade at $216.20.
-Steve Goldstein
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10-07-25 0938ET
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