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Investing.com - Bernstein SocGen Group raised its price target on AMD (NASDAQ:AMD) to $200 from $140 while maintaining a Market Perform rating following the chipmaker’s partnership announcement with OpenAI. The stock, currently trading at $203.71, has surged nearly 26% in the past week, with InvestingPro data showing the shares are trading near their 52-week high of $226.71.
The price target increase comes after AMD and OpenAI revealed on Monday a significant AI infrastructure partnership where OpenAI plans to deploy 6 gigawatts of AMD GPU hardware over multiple years. As part of the deal, AMD is granting OpenAI warrants for up to 160 million shares that will vest in tranches as infrastructure ships. With a market capitalization of $330.59 billion and an "GOOD" overall financial health score according to InvestingPro, AMD appears well-positioned to execute on this ambitious partnership.
Bernstein estimates the deal’s value at approximately $15 billion per gigawatt, projecting about $2 billion in incremental revenues in Q4 2026 and another $12.5 billion in fiscal 2027. The firm now forecasts total AI sales of approximately $25.5 billion for AMD in fiscal 2027. Based on current InvestingPro Fair Value analysis, AMD appears to be trading above its Fair Value, with elevated P/E and EBITDA multiples reflecting high growth expectations. Discover 20 more exclusive insights and detailed valuation metrics with InvestingPro.
The research firm adjusted its financial projections, lowering fiscal 2027 gross margins from about 56% to 54% while increasing operating expenses by roughly $1 billion. These changes result in revised earnings per share estimates of $5.20 for fiscal 2026 (up from $4.90) and $8.32 for fiscal 2027 (up from $6.06).
Bernstein raised its earnings multiple from 25x to 30x, citing "more potential growth to come," while applying this multiple to the average of its fiscal 2026/2027 earnings per share estimates to arrive at the new $200 price target.
In other recent news, Advanced Micro Devices (AMD) has announced a strategic partnership with OpenAI, which is expected to generate over $100 billion in incremental AI revenue. The multi-year agreement involves AMD providing GPUs for OpenAI’s data centers, supporting 6 gigawatts of data center capacity, with the first 1 gigawatt deployment slated for the second half of 2026. Following this announcement, several analyst firms have updated their price targets for AMD. Baird has increased its price target to $240 from $175, maintaining an Outperform rating, and highlighted the competitive potential of AMD’s Mi450 AI accelerator chips. Morgan Stanley raised its price target to $246 from $168, citing a significant increase in projected datacenter GPU revenue by 2027. Evercore ISI also raised its price target to $240 from $188, maintaining an Outperform rating and noting the partnership’s potential to significantly boost AMD’s earnings per share by 2027 and 2028. Despite the positive outlook from these firms, Goldman Sachs has maintained a Neutral rating on AMD with a price target of $210, focusing on the strategic deployment of AMD GPUs over the coming years. These developments underscore the significant impact of the OpenAI partnership on AMD’s financial forecasts and market perception.
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