Leading analysts are hailing Advanced Micro Devices Inc.'s (NASDAQ:AMD) new partnership with OpenAI as a breakthrough moment for the chipmaker, one that could propel it to the center of the AI arms race.
Just The Start For AMD
Analyst Dan Ives of Wedbush Securities said that the deal, which involves ChatGPT parent OpenAI deploying up to 6 gigawatts of AMD Instinct GPU power, brings the chipmaker “right into the AI revolution,” and that “any lingering fears around AMD should now be thrown out the window,” while speaking on CNBC’s Closing Bell on Monday.
Ives also termed the partnership as a “validation moment for AI” and said the “street is still massively underestimating the spending on the AI revolution.”
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Ives added that he believes this market is still in its early stages. “We're in the second inning of a nine-inning game,” he said. “I think this is actually just the start for AMD, before this next stage of the AI revolution takes hold.”
OpenAI’s Getting GPUs At A Discount
New Street Research analyst, Pierre Ferragu, described the deal as “wild,” saying that “OpenAI is getting GPUs at an average 40% discount.” He also said that the deal increases AMD’s chances of becoming a “sustainable challenger” to NVIDIA Corp. (NASDAQ:NVDA).
OpenAI’s Planned Build-Out ‘Roughly The Size of Mexico’s Economy’
The Chief Market Strategist at Futurum Equities, Shay Boloor, notes that with the backing of Nvidia and AMD, OpenAI’s planned AI infrastructure buildout reaches $1.5 trillion, which he said was “roughly the size of Mexico's economy.”
“Wild times,” he said.
Vulcan Stock Research, an equity research firm, has since responded to Boloor’s comments, saying that the $1.5 trillion outlay will include the entire infrastructure, such as power, cooling, and facilities, among several other things, and not just chips.
In a post on X, the firm notes that the figure falls short of Mexico’s GDP, which currently stands at $1.789 trillion, but acknowledges it as an “unprecedented scale” of investment for AI.
Shares of AMD were up 23.71% on Monday, closing at $203.71, after the deal was announced, and are up another 1.99% after hours. The stock scores high across the board in Benzinga’s Edge Stock Rankings, apart from Value, and has a favorable price trend in the short, medium and long terms. Click here for deeper insights into the stock.
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