AMD (AMD) Rallies 30.5% After Securing Landmark OpenAI Multi-Year AI Chip Partnership – Has the Narrative Shifted?

• In early October 2025, OpenAI announced a multi-year agreement with Advanced Micro Devices (AMD) to deploy 6 gigawatts of AMD Instinct GPUs for next-generation AI infrastructure, with a 1 gigawatt rollout of MI450 GPUs beginning in the second half of 2026 and a potential equity stake for OpenAI.
• This landmark partnership not only solidifies AMD’s presence in large-scale AI compute but also deepens its hardware and software collaboration with a leading innovator in generative AI.
• With AMD becoming a core supplier for OpenAI’s ambitious AI growth plans, we’ll explore how this major AI chip deal could reshape AMD’s investment narrative and industry positioning.

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Advanced Micro Devices Investment Narrative Recap

To believe in AMD over the long term, you need confidence that its momentum in AI and data center markets can translate to durable revenue and margin growth, even as competition mounts and the cost of innovation remains high. The recent OpenAI mega-deal is a true near-term catalyst, with the potential to accelerate new revenue streams and validate AMD’s technology at hyperscale. The biggest risk is whether AMD can continue capturing share without compressing margins as rivals and costs scale up fast.

Looking back to just days before this AI partnership, AMD and IBM’s announcement to power Zyphra’s open-source AI models with MI300X GPUs had already shown how AMD is pushing into enterprise AI. This further supported investor focus on hyperscaler wins as critical to near-term growth and highlighted both opportunities and possible execution risks tied to large deployments and rapid scaling.

But on the other hand, investors should closely monitor how rising costs and margin pressure could…

Read the full narrative on Advanced Micro Devices (it's free!)

Advanced Micro Devices' narrative projects $46.2 billion in revenue and $9.0 billion in earnings by 2028. This requires 18.5% annual revenue growth and a $6.8 billion increase in earnings from $2.2 billion today.

Uncover how Advanced Micro Devices' forecasts yield a $213.93 fair value, in line with its current price.

Exploring Other Perspectives

Some of the highest estimates on Wall Street saw AMD’s annual revenue potentially reaching US$59.8 billion by 2028, underpinned by full-stack AI partnerships and early deployments. These optimistic analysts focus on massive operational leverage and a faster ramp from new AI architectures, believing AMD’s earnings could more than quadruple. Yet, as this new OpenAI deal shakes up the industry, it is worth exploring how expectations from even the most bullish forecasts could shift alongside rapidly expanding risks and catalysts.

Explore 114 other fair value estimates on Advanced Micro Devices - why the stock might be worth as much as 35% more than the current price!

Build Your Own Advanced Micro Devices Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Advanced Micro Devices research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free Advanced Micro Devices research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Advanced Micro Devices' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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