Advanced Micro Devices (NASDAQ:AMD) deal with OpenAI (OPENAI) to provide up to 6GW of artificial intelligence infrastructure has the potential to provide extended benefits to AMD, according to Piper Sandler.
“In exchange, OpenAI will receive 160M warrants for AMD stock as specific milestones are achieved over the next five years,” said Piper Sandler analysts Harsh Kumar and Robert Aguanno in a Tuesday investor note. “The initial agreement covers a broad range of content, including GPUs, CPUs, DPUs and some licensing revenue from the Helios rack. AMD expects each GW deployed to drive high double-digit billions of annual revenue. We expect AMD to also start shipping Pensando’s UALink switches along with the MI500 chip in 2027.”
In response, Piper Sandler reiterated its Overweight rating on AMD and increased its price target to $240 from $190. AMD surged 23.7% by the close of trading on Monday and was up another 3.7% by noon trading on Tuesday.
“Revenues from this deal are expected to begin in the second half of 2026 with significant revenue coming in 2027,” Kumar noted. “In earnestness, we expect 3Q26 to be modest with a larger ramp in 4Q26 and a full ramp through 2027. Additionally, management believes this partnership enables revenue from both existing and new customers with the potential to generate well over $100B in revenue through October 2030.”
The investment firm also believes the deal will help AMD improve its margins and generate incremental earnings per share growth in the years ahead.