Day Two of AMD's Rally Has Been Boosted by Wall Street's Very Bullish Call

Advanced Micro Devices Inc. (AMD) extended its rally on Tuesday following news of a landmark partnership with OpenAI, as Jefferies lifted its rating on the stock and sharply increased its price target.

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Jefferies analysts upgraded AMD from hold to buy and raised their price target to $300, up from $170 implying nearly a 50% upside from Monday’s closing price. AMD’s shares had already soared 24% on Monday to $203.71 after unveiling the OpenAI deal and were up another 4% in premarket trading following Jefferies’ bullish call.

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The partnership between AMD and OpenAI marks a major move in the fast-growing AI hardware space. Under the agreement, OpenAI could acquire up to a 10% stake in AMD, while the chipmaker will supply 6 gigawatts worth of its high-performance Instinct GPUs over several years to power OpenAI’s expanding AI infrastructure, including the technology behind ChatGPT.

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“AMD still needs to deliver on key milestones, but this partnership is a powerful endorsement of its AI strategy and the broader strength of AI demand,” wrote Jefferies analyst Blayne Curtis in a note to clients Monday evening. He described the OpenAI collaboration as a “multi-generational opportunity” that compelled the firm to upgrade AMD even after its dramatic one-day surge.

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According to Curtis, OpenAI has been aggressively investing in AI compute power, forging deals with Nvidia, Oracle, and Hynix/Samsung. “While these agreements aren’t binding, they underscore how significant OpenAI believes AI compute will be,” he said. “This is essentially a land grab for processing capacity and massive data center space to support those GPUs. There’s still a lot to iron out, but one thing is certain AI spending continues to accelerate.”

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AMD’s stunning rally also pushed the Nasdaq Composite Index to a new record high on Monday. In a rare twist, Nvidia the long-time market favorite in AI slipped as investors rotated into AMD shares, betting that the OpenAI deal could shift the balance of power in the AI chip market.

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The Jefferies report also outlined a bullish upside scenario, projecting AMD shares could reach $400 if the AI server market expands faster than expected and AMD captures a larger slice of Nvidia’s dominant share. That scenario would nearly double AMD’s stock price from current levels.

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The enthusiasm surrounding AMD highlights how rapidly investor sentiment in the AI sector continues to evolve. Just months ago, Nvidia was considered the undisputed leader in AI computing, but AMD’s recent momentum suggests that competition in the space is intensifying. Analysts see AMD’s growing footprint in GPUs especially with OpenAI’s backing as a major validation of its technology roadmap and long-term potential.

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The OpenAI deal also provides AMD with more than just a financial boost it enhances its credibility among cloud and data center clients. By aligning with one of the most influential players in generative AI, AMD is positioning itself as a credible alternative to Nvidia in an industry expected to see multi-trillion-dollar investments in the coming decade.

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For investors, Jefferies’ aggressive target and optimistic tone underscore how sentiment has shifted dramatically in favor of AMD. While risks remain particularly around execution and profit margins as the company ramps up production the long-term outlook appears increasingly promising.

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Curtis added that AMD’s partnership pipeline could open additional opportunities beyond OpenAI, especially as enterprises and governments race to build AI-ready infrastructure. “The pace of AI spending hasn’t slowed it’s accelerating,” he wrote. “This is the beginning of a long cycle of investment that will continue shaping the market for years.”

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As the AI boom continues to reshape the tech landscape, AMD’s newfound role as a central player in powering advanced AI systems has investors and analysts alike rethinking old assumptions. With Wall Street’s confidence growing and OpenAI’s support reinforcing its strategy, AMD’s surge may be more than a short-term reaction it could signal the start of a new chapter in the company’s evolution.

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