Three-day surge of 43%! AMD and OpenAI milestone agreement propels stock price, analysts raise targets together

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The milestone agreement reached with OpenAI sent AMD's stock price soaring.

AMD closed up 11.4% this Wednesday, with its share price closing above $230 for the first time ever. Over the past three days, the stock has surged 43% in total, marking its largest three-day gain in nine years since April 2016.

This rally was mainly fueled by OpenAI’s announcement on Monday of a partnership with AMD to deploy AMD chips with a combined computing power of 6 gigawatts (GW). On that day, AMD's share price surged nearly 38% at one point, closing up nearly 24%—its best single-day performance in a year.

Analysts broadly believe that this agreement will reshape the competitive landscape of AI chips. Mizuho analyst Jordan Klein stated that AMD’s actual financials are no longer as important; what matters is whether the company can rapidly ramp up production of its MI450 chips to fully deliver the 6GW deployment for OpenAI. Dave Novosel, Senior Bond Analyst at Gimme Credit, believes OpenAI’s endorsement of AMD chips may prompt other AI giants to seriously consider adopting AMD GPUs.

This week, 26 Wall Street analysts have raised their AMD price targets, with the highest suggesting that AMD’s stock has the potential to rise another nearly 30% after the three-day rally as of Wednesday. The vast majority of analysts maintain a ‘buy’ rating.

On Wednesday, AMD became the best-performing stock in the S&P 500, reigniting overall activity among AI concept stocks. Even Oracle, which saw its shares plunge more than 7% on Tuesday due to concerns about cloud profit margins, managed to reverse course, closing up 1.5%.

OpenAI Agreement Launches "Equity-for-Purchase" Model

According to the agreement, OpenAI will deploy a total of 6GW of AMD GPU computing power over the coming years, with the first batch of 1GW’s worth of chips beginning deployment in the second half of 2026. At the core of the deal, AMD grants OpenAI warrants to purchase up to 160 million common shares, with an exercise price of just $0.01 per share.

Analysts believe the sophistication of this agreement lies in its financial structure.

Regulatory filings from AMD show that the exercise of some warrants is tied to AMD’s share price meeting certain targets, functioning as a performance-based equity incentive by design, rather than traditional equity dilution. AMD does not need to give up governance or board representation rights.

The initial batch of warrants will vest upon completion of the first 1GW deployment, with subsequent warrants unlocked gradually based on two dynamic variables—OpenAI’s future GPU purchase volumes and AMD’s share price.

This design creates a powerful symbiotic relationship. Only after OpenAI has actually purchased and deployed AMD hardware, driving material growth in AMD’s data center business and resulting in capital market recognition reflected in rising AMD shares, can OpenAI fully reap equity gains. For OpenAI, AMD shares can essentially be obtained at zero cost, with returns fully determined by operational execution and future market performance.

AMD CFO Jean Hu stated the agreement "is expected to bring AMD tens of billions in revenue" and "will enhance the company's earnings per share."

If all the warrants are exercised, OpenAI could own about 10% of AMD’s shares, with the agreement valid through October 2030. AMD has also retained anti-dilution and transfer restriction provisions to ensure OpenAI cannot freely sell or transfer these warrants.

Analysts Bullish on AMD's Long-Term Prospects

Mizuho analyst Klein believes that although long-term investors are "skeptical" of AMD’s recent surge and reluctant to chase the rally, there are more catalysts ahead, including a key AMD investors day event in November expected to be positive. He stressed that the key now is how quickly AMD can ramp up MI450 chip production, rather than the performance of the current MI355 line.

Veteran analyst Stephen Guilfoyle said the agreement with OpenAI is “the biggest win for AMD in its quest for market share.” He pointed out that AMD had long been "a distant second" in AI chip design to Nvidia, but "as of Monday morning, that gap no longer feels so wide."

Guilfoyle also praised AMD CEO Lisa Su's strategic shift toward inference chips.

Dave Novosel analyzed that OpenAI’s desire for diversification of chip suppliers was the main driver for the deal, with another being that Nvidia might not be able to meet all of OpenAI’s chip needs. The endorsement effect from OpenAI could prompt other AI companies to seriously consider using AMD chips as well.

Wall Street Turns Bullish, Raises Price Targets by Most Yet

This week, 26 analysts updated their AMD coverage ratings or price targets, with 24 giving a ‘buy’ rating and just 4 maintaining a ‘hold’ rating.

Among these, Barclays analyst Thomas O'Malley, Melius Research’s Ben Reitzes, and Jefferies’ Blayne Curtis gave the highest price targets, all at $300. The first two raised their previous targets of $200 by 50%, while Curtis made the largest upward revision, raising his target from $170 by more than 76%.

A $300 price target suggests that AMD’s stock could rise more than 27% from Wednesday’s closing level.

Two analysts also upgraded AMD from ‘hold’ to ‘buy’, including Jefferies’ Curtis. Another analyst, Amanda Tan from DBS, raised her target from $155 to $260.

Even analysts maintaining a hold rating raised their price targets. Morgan Stanley’s Joseph Moore raised his target by 46.4% from $168 to $246, and Goldman Sachs’ James Schneider raised his target by 40% to $210.

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