AMD (AMD) was in focus on Thursday after BNP Paribas held a meeting with executives and said it sees the potential for more gigawatt deals in the semiconductor company’s pipeline.
“Overall [a] quite positive mood and messaging across the AI GPU and server CPU businesses, where demand continues to outstrip supply and where Agentic AI is driving a new leg of growth for CPU servers,” analyst David O’Connor wrote in a note to clients. O’Connor has an Outperform rating and a $265 price target on AMD.
Delving deeper, O’Connor said the gigawatt deals that AMD has done (like those with OpenAI (OPENAI) and Meta (META)) are likely, but it’s unlikely they will include warrants. “[Company] reinforced the message that the bar is very high for warrants and pointed to the significant ecosystem work that OpenAI and Meta undertook on AMD hardware/software to justify a warrant option,” O’Connor added.
In addition, AMD said that hyperscalers are using agentic AI applications to drive high CPU utilization and thus looking to increase capacity “meaningfully.” As such, AMD said it feels good about growing its enterprise server CPU business and also mentioned that enterprise server CPU deals tend to come with incremental cloud business as well.
“We see Agentic AI as a strong driver of AMD’s CPU server business more from H2’26, given the server leadtimes of 4-5 months,” O’Connor explained.
Other takeaways included the belief that AMD has a competitive advantage in being able to customize its chips for AI workloads, depending upon customer requirements; AMD has a roadmap for co-packaged optics, but there is the belief that a couple of technologies will need to mature first before it really ramps up.
Lastly, given how notable the push in agentic AI has been, AMD has seen server CPU demand accelerate since its November analyst day, O’Connor said.