AMD Stock Soars on Multi-Year OpenAI Deal
AMD has inked a multi-year deal with OpenAI, sparking a significant rise in its stock price. The agreement involves the delivery of high-performance GPUs and could bring in over $100 billion in additional AI revenues for AMD.
The deal, announced on 9 October, includes an infrastructure performance of 6 gigawatts, with the first gigawatt set to be delivered by the end of 2026. OpenAI will receive stock options for up to 160 million AMD shares as part of the agreement.
Following the news, AMD's stock price surged. Analysts have been quick to adjust their price targets. Citi raised its target to $215 but maintained a 'neutral' rating, while Morgan Stanley elevated theirs to $246, also keeping a neutral ('equal-weight') stance. Goldman Sachs remained cautious, keeping its target at $210. Meanwhile, Piper Sandler, Baird, and Bernstein have all raised their targets for AMD stock.
However, not all is positive. Critics warn of a potential bubble in the AI sector due to record highs in AI and other commodities. AMD's latest numbers suggest urgent action may be required for shareholders. Ava Hahn, AMD's Vice President and General Counsel, sold 2,868 shares for $648,196 on October 6, indicating some insider activity.
The AMD-OpenAI deal has injected optimism into the market, with analysts adjusting their price targets accordingly. However, caution is advised due to potential sector bubbles and mixed analyst sentiments. The deal's full impact on AMD's future remains to be seen.
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