Deep Dive on AMD (Advanced Micro Devices)
The AI Revolution's Rising Titan
Investment Contents:
1. Executive Summary
2. OpenAI, Oracle & Other Partnerships
3. Hardware Stack & Roadmap
4. ROCm Software Improvement & Validation
5. Q2 Financial Results
6. Financial Projections
7. Analyst Price Targets
8. Risks & Challenges
9. Concluding Thoughts
Executive Summary:
Despite AMDs recent runup from the OpenAI partnership and Oracle deal announcement, there is significant upside potential in the stock price, which will be explained in this deep dive. Based on our thesis, we expect AMD to reach ~$350 by the end of 2026 and $1,000+ by the end of 2029. This represents a ~40% CAGR in a base case.
Advanced Micro Devices stands at the precipice of one of the most significant transformations in semiconductor history. AMD’s current trajectory suggests the company is entering a multi-year period of exceptional growth, supported by strategic partnerships, an expanding competitive moat in inference workloads and the ability to produce advanced AI chips at a marginal cost.
The OpenAI Partnership: A Game-Changing Validation
On October 6, 2025, AMD announced a partnership that fundamentally altered the competitive landscape of AI computing. OpenAI will deploy 6 gigawatts of AMD Instinct GPUs over multiple years, beginning with 1 gigawatt of MI450 GPUs in the second half of 2026. To contextualize the scale: this agreement is projected to generate “tens of billions of dollars“ in revenue for AMD through 2027 and beyond, with some analysts estimating approximately $80 billion by 2030 if demand trajectories continue.
The partnership structure includes a warrant for OpenAI to acquire up to 160 million AMD shares—approximately 10% of the company—with vesting tied to specific deployment milestones and AMD share price targets.
Although it’s not exciting AMD is possibly giving up a 10% stake in their business, this alignment of incentives creates a durability rarely seen in supplier relationships, transforming OpenAI from customer to strategic partner with skin in the game.
Perhaps more significant than the hardware supply agreement is OpenAI’s active participation in optimizing AMD’s ROCm software stack. This co-development addresses what has historically been AMD’s Achilles’ heel: a software ecosystem for developers.
NVIDIA’s CUDA has maintained a multi-year lead in developer mindshare, framework compatibility and performance optimization. OpenAI’s validation of AMD hardware and active investment in the ROCm ecosystem sends a powerful signal to hyperscalers, enterprises, and the broader developer community that AMD GPUs are production-ready for frontier model training and large-scale inference.
Oracle Partnership: Hyperscaler Validation
Just one week after the OpenAI announcement, Oracle Cloud Infrastructure revealed plans to deploy 50,000 AMD Instinct MI450 Series AI chips, with deployments beginning in Q3 2026 and scaling through 2027. Oracle has become the first hyperscaler to adopt AMD’s open, rack-scale AI infrastructure (Helios), integrating Instinct MI355X GPUs, next-generation EPYC CPUs, and Pensando advanced networking.
This deal with Oracle gives immediate market validation of the Helios platform and establishes AMD as a key provider for major cloud providers.
Other Partnerships & Future Wins
· May 2025: Dell to use Instinct MI350 GPUs and EPYC CPUs for Dell PowerEdge XE9785 and XE9785L servers for Dell AI platform
· May 2025: HUMAIN $10 billion strategic partnership to broadly build cost-efficient AI infrastructure
· June 2025: Multi-year Microsoft partnership to co-engineer custom chips for XBOX (consoles and handheld devices
· October 2025: IBM initiative for utilizing AMD chips (GPUs, CPUs and FPGAs) for quantum computing correction algorithm – in addition, a multi-year partnership to open-source AI company, Zyphra
· October 2025: US Department of Energy Forms $1 billion Supercomputer and AI Partnership with AMD with MI355X AI Chips
Remember: This is still a small portion of the overall market – there are many more customers looking to develop close ties with AMD in a similar fashion – and this revenue hasn’t hit the P&L yet!
Other tech conglomerates such as META and Amazon are starting to source more chips from AMD.
META, for instance, has one of the largest CAPEX budgets across the MAG-7 (Zuck has communicated spending of $600B+ on U.S. data centers and AI infrastructure) and has announced their extensive deployment of Instinct MI300X GPUs for running Llama models. This utilization of AMD chips will only increase as new generation chips are released in 2026 and beyond.
In addition, CNBC’s David Faber reported “talk“ of a potential GPU win for AMD with AWS, possibly involving a large order for MI355X accelerators. OpenAI has started the partnership momentum, and more companies will start to divert their focus to a more sustainable, margin-driven AI CAPEX budget, thus driving more deals for AMD’s hardware + software stack.
