Wall Street just gave Advanced Micro Devices a big vote of confidence. After AMD made a huge deal with OpenAI that could bring in $100 billion in revenue over the next few years, Bank of America Global Research raised its price target for the chipmaker to $250; a big move.
“OpenAI is arguably the most disruptive of GenAI cloud computing customers… its success is likely to act as a force multiplier for other cloud vendors and LLM providers to accelerate their capex, positive for multiple chip, memory, optical, networking, and foundry suppliers.”
Bank of America, also known as BofA, now thinks that AMD will rake in more than $15 per share in earnings by 2030. This is a big change from their previous estimate, and was driven by the chipmaker’s deal to provide OpenAI with 6 gigawatts of AI computing power starting in late 2026.
The deal gives OpenAI performance-based warrants to buy up to 160 million AMD shares, with tranches vesting if AMD stock reaches milestones as high as $600 per share.
Arya thinks this partnership makes AMD a serious long-term competitor to Nvidia in the AI compute race. AMD’s rack-scale Helios architecture and MI450X GPUs seem to be gaining ground, even though Nvidia is still in charge.
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AMD has long been seen as playing catch-up in the high-stakes GPU arms race, but this partnership is a big step forward for the company. BofA thinks AMD’s position is getting stronger because demand for other AI silicon is rising quickly and the company can deliver on a large scale.
AMD’s win is important due to the deal’s size and structure, but Nvidia and Broadcom remain buy-rated. The situation is a classic “a rising tide lifts all boats,” thanks to the huge amounts of money that OpenAI and its competitors are expected to spend.
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The research note says that each 1 GW of computing power could bring in about $17.5 billion in revenue, depending on how it is set up. If AMD’s full 6 GW capacity commitment is fully deployed, it could lead to a big increase in earnings, even after taking into account the dilution from OpenAI’s equity stake.
The note also says that this deal is in addition to AMD’s other wins from earlier this year, like sovereign cloud deals in the Middle East.
BofA’s new price target of $250 is based on 33 times the estimated EPS for 2027, which is in line with historical multiples and a PEG ratio of 1.1 times. Before, BofA thought the stock would be worth $200.
