Morgan Stanley’s new Tesla analyst cuts stock rating on rich valuation
Investing.com - UBS raised its price target on AMD (NASDAQ:AMD) to $265.00 from $210.00 while maintaining a Buy rating following the chipmaker’s deal with OpenAI. The stock has shown remarkable momentum, surging nearly 26% in the past week alone. According to InvestingPro data, AMD maintains a "GOOD" financial health score, with 18 additional key insights available to subscribers.
The 6GW deal represents a five-year agreement with four years of shipments that is at least partially funded by AMD stock warrants aligned with installation and performance metrics.
UBS views the agreement as a major validation of AMD’s roadmap that could potentially attract additional customers, despite offering an ownership stake being arguably less attractive than a direct investment.
The firm estimates that based on the OpenAI benchmark, AMD will account for approximately one-third of merchant GPU deployments, representing a larger market share than most investors have been considering.
UBS believes the AI infrastructure build over the next 3-4 years remains substantial enough to support continued investment in the sector, despite noting the deal perpetuates a circularity dynamic in AI investments.
In other recent news, Advanced Micro Devices (AMD) has announced a significant partnership with OpenAI, which is expected to have a substantial impact on the company’s future revenue. OpenAI plans to purchase 6 gigawatts of AI chip capacity from AMD over the next five years, a deal that could be worth between $80 billion and $100 billion according to Jefferies. This partnership also includes performance-based warrants for up to 160 million AMD shares at a nominal price. Following this announcement, Jefferies upgraded AMD’s stock from Hold to Buy and increased its price target from $170 to $300. Similarly, Stifel maintained a Buy rating while raising its price target to $240, and Truist Securities increased their target to $273, reinforcing their positive outlook on AMD. Analyst Ming Chi-Kuo from TF International Securities noted that the deal could generate tens of billions in annual revenue, with plans to deploy 1 gigawatt of AMD MI450 systems starting in the second half of 2026. Oppenheimer also maintained a Perform rating for AMD, raising its estimates due to the partnership. These developments highlight the growing interest and confidence in AMD’s strategic direction and potential for future growth.
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