AMD x OpenAI: The Next AI Chip King?

Jefferies analysts have flipped bullish on Advanced Micro Devices (AMD) — upgrading the stock to buy after its sharp rally driven by a new partnership with ChatGPT creator OpenAI.

The research note sounded almost like a mea culpa.

“We rarely do this,” admitted analysts led by Blayne Curtis. “We raised estimates and our [price target] last week following positive server checks but couldn’t triangulate the AI ramp.”

That ramp came into focus after OpenAI agreed to purchase up to 6 gigawatts of AMD chips, a move Jefferies says could generate well over $100 billion in revenue potential. AMD has said each gigawatt equates to “double-digit billions” in value.

OpenAI’s buying spree doesn’t stop there — the company is also investing heavily in Nvidia, Oracle, Hynix, and Samsung, as it races to secure massive computing capacity for its growing AI infrastructure.

“While none of these deals are binding, they highlight just how massive OpenAI’s AI compute ambitions have become,” Jefferies wrote. “This is a land grab — not just for GPUs, but for gigawatts of data center power. There’s still a lot to sort out, but what’s clear is that AI spending is accelerating from here.”

Jefferies lifted its price target to $300 from $170, now the most optimistic on Wall Street, according to FactSet.

Other analysts may soon have to follow suit: Goldman Sachs’s target remains at $150, while Deutsche Bank and Wedbush sit below AMD’s recent close of $203.71.

AMD shares jumped 23.7%, a six-standard-deviation move, according to MarketWatch — its second-biggest percentage gain this year, narrowly trailing the 23.8% surge on April 9.