Bernstein’s $200 price target may sound like a conservative upgrade, but with AMD’s 26% weekly rally and trading levels going through the roof, it comes across more as the market is running on excitement rather than fundamentals.
The OpenAI alliance undoubtedly brings credibility and potential for expansion, as installing 6 gigawatts of GPU gear is no minor accomplishment, but don’t forget that expectations are now sky-high.
Investors do seem to be considering AMD as the next AI force, but with stressed valuations and short-term revenue clarity, this rally may be pricing in an idealized scenario that has yet to show up.
This agreement has the potential to solidify AMD as an authentic competitor to Nvidia in the AI chip space. Analysts estimating more than $25 billion in AI revenue by 2027 indicates real long-term expansion, and the OpenAI collaboration places AMD at the center of the next generation of data center innovation. Bernstein’s new earnings multiples and increased EPS estimates reflect optimism in the execution capability of AMD and its ability to grab a bigger chunk of the AI sector.
However, the numbers seem to be way too optimistic. AMD’s high P/E and EBITDA multiples already assume aggressive growth, and the company still faces tough competition, supply chain limitations, and execution risks associated with scaling up GPU production. Goldman Sachs’ more conservative position, keeping its Neutral rating, reflects that not everyone is convinced that the fundamentals support this madness.
Currently, AMD’s narrative rests upon a fusion of ambition and opportunity. The deal with OpenAI has certainly transformed the story, as AMD now appears on a list of contenders who are racing towards redefining the infrastructure for artificial intelligence.
Such excitement should be handled with caution, as reality has a way of hitting hard. For investors, the best tactic may well be to enjoy AMD’s current momentum while remembering that in the technology business, even the brightest players need steadiness to keep alive.
