AMD Gets Some Respect

Advanced Micro Devices (AMD) is positioned as a premier growth story in the global semiconductor and AI acceleration industries. AMD’s 2025 surge -- over 100% stock appreciation YTD -- reflects its expanding dominance in high-value markets, propelled by robust data center revenue, state-of-the-art AI accelerators (MI300/MI350/MI450), and strategic wins with hyperscale customers like OpenAI and Oracle (ORCL). AMD’s recent 6-gigawatt multi-year GPU partnership with OpenAI marks one of the largest AI compute deployments on record, while next-generation GPU ramp plans have captured sovereign and hyperscale projects worldwide.??? The deal would also give the ChatGPT creator the option to buy up to roughly 10% of the chipmaker.AMD is gaining share against entrenched rivals, leveraging chiplet architectures, heterogenous compute platforms, and the Xilinx acquisition to blend CPU, GPU, and adaptive silicon into cohesive solutions essential for next-gen AI and HPC workloads. Its CPU and gaming units—anchored by Ryzen chips and custom SoCs in major game consoles—provide stable, multi-year revenue streams and market breadth.???Earnings On Deck TuesdayManagement has guided for Q3 2025 revenue of $8.4 to $8.8 billion, up nearly 30% year-over-year, with AI and data center as primary growth engines. GPU adoption for training and inference at cloud providers is accelerating, and the long-term vision is scaling AI data center revenue to tens of billions. AMD now trades near record highs above $260 with a market cap over $400 billion, reflecting investor confidence in its expanding role as a key enabler of global AI infrastructure and its persistent execution under CEO Lisa Su.Consensus 2025 revenue projections among 14 analysts call for a 28% annual jump to over $33 billion. And next year's forecast is for another 22% advance to $40 billion, making shares trade at just 10 times sales.Since NVIDIA (NVDA) could consistently trade over 15X sales, I always felt that this was a valuation gap that should close as AMD became the #2 supplier for the insatiable GPU demand from hyperscalers.A Powerful Way to Trade AMDIn June, with AMD shares trading near $125, I initiated a bullish levered ETF trade using the GraniteShares 2x Long AMD Daily ETF (AMDL) for my TAZR Trader group. Then in early August we sold that position for a gain of over 70% as AMD rallied to $175.But as I reevaluated the bullish case for AMD, even with the average analyst price target under $200, I suddenly realized that the stock was probably headed much higher than $200.So we began buying AMDL again, accumulating a sizable allocation near an average of $11 by late September as AMD was building a new base around $160. Then on October 6, AMD announced a strategic partnership with OpenAI to deploy 6 gigawatts of AMD GPUs for advanced AI infrastructure. The deal entails OpenAI committing to purchasing billions of dollars of AMD's advanced AI hardware, including GPUs, to power 6 gigawatts of compute infrastructure.The excitement was further fueled by details indicating that OpenAI would acquire up to a 10% stake in AMD, contingent upon future performance and strategic milestones. The size and exclusivity of the landmark OpenAI collaboration led to the market repricing AMD’s future prospects, as investors anticipated tens of billions in new revenue and a significant leap in market share for AI silicon accelerators from the #2 provider. AMD shares jumped to $225 that Monday, and while the historic move in the stock met some selling and doubt, within a week shares were challenging $240.TAZR Traders were able to sell our AMDL position in different trades for +34%, +115%, and +152% as AMD rose to $260.The Analysts Capitulate Upwards on the AMD OutlookThe month of October saw many new AI deals and new highs for the related stocks. But the most enjoyable may have been seeing Lisa Su get her due.For instance, one of the more cautious investment banks on the GPU party was HSBC. They reversed course with big upgrades for both NVIDIA and AMD..."We upgrade Nvidia to Buy on the back of increasing FY27e GPU total addressable market (TAM) relative to our previous expectations, leading to an upward revision in our FY27e datacenter revenue to $351B, which remains 36% above consensus forecast of $258B."I told my TAZR group the week prior that analysts were still underestimating NVIDIA sales. When a skeptic flips to "36% revenue beat against consensus" he is now my spirit animal.While setting a new Street high price target for NVDA at $310, the same HSBC analyst raised their AMD PT from $185 to $310!A few days later, Bank of America lifted its target on AMD to $300 following the 2025 Open Compute Project (OCP) Conference, citing stronger visibility into MI450 “Helios” rack deployments launching in the second half of 2026. The upgrade reflects accelerating demand across key customers including Oracle, Meta Platforms (META), and OpenAI, reinforcing AMD’s positioning in the AI compute buildout cycle.OpenAI: As Open as a Black HoleAnd of course OpenAI is the center of gravity (or the black hole, if you prefer) of much of the building...OpenAI is reportedly preparing a five-year financing plan to support more than $1 trillion in AI infrastructure spending, according to the Financial Times.The company is developing new revenue streams, debt partnerships, and fundraising initiatives to meet its commitments, which include 26 gigawatts of capacity from Oracle, Nvidia, AMD, and Broadcom.OpenAI currently books about $13 billion in annual recurring revenue, with 70% from ChatGPT subscriptions. Plans include government and enterprise AI contracts, shopping and video tools like Sora, and AI-powered consumer hardware designed with Jony Ive.The company is also exploring advertising models, AI agent monetization, and becoming a computing supplier through its Stargate data center project.Bottom line on AMD: For long-term investors, the stock is buyable right now below $260 ahead of earnings. And I'm ready for another bullish AMDL trade if the stock drops for any reason at all.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks