AMD Stock Gets a Price Target Boost from Top TD Cowen Analyst. Here's Why
AMD has partnered with OpenAI to deploy 6 gigawatts of its Instinct GPUs, including a warrant for 160 million shares, potentially giving OpenAI a 10% stake in AMD. TD Cowen Analyst Bulchalter is optimistic about AMD's stock, citing the deal as significant validation in the AI compute race, despite being neutral ahead of Q3 results. He projects AMD's 2027 EPS could approach $10 under conservative assumptions, while noting the stock's recent spike due to the partnership and upcoming analyst day.
Under the partnership with AMD, OpenAI will deploy 6 gigawatts of the chipmaker's Instinct graphics processing units (GPUs) over multiple years. Moreover, the deal includes a warrant for up to 160 million shares of AMD common stock, which, if fully exercised, will give OpenAI approximately a 10% stake in the semiconductor company.
Top TD Cowen Analyst Is Upbeat on AMD Stock
Bulchalter contended that while a formal partnership between AMD and OpenAI is not a total surprise, given Sam Altman's appearance at the chip company's AI event and the ChatGPT maker's "insatiable" demand for compute, the "line of sight" of the deal and magnitude was still shocking. While the 5-star analyst thinks that AMD still has much to prove with its actual deployments, he believes that this deal will help address several investor concerns regarding the semiconductor company's AI roadmap.
Additionally, Bulchalter believes that the partnership offers "significant validation" of AMD's notable participation in the AI compute race, alongside rival Nvidia (NVDA).
While the analyst is bullish on AMD stock, he is neutral heading into the Q3 results. Bulchalter believes that despite AMD's strong fundamentals ahead of the Q3 print, the results may not be a significant catalyst for the stock, given the spike in shares following the "landmark deal" with OpenAI and the upcoming analyst day on November 11.
Bulchalter updated his model following the AMD-OpenAI deal and stated that even "under somewhat conservative assumptions," he sees the company's 2027 earnings per share (EPS) approaching $10.
Interestingly, Bulchalter ranks No. 750 among more than 10,000 analysts on TipRanks. He has a success rate of 60%, with an average return per rating of 16.5%.
