Baird Raises AMD Price Target to $240

Baird analyst Tristan Gerra raised the price target on AMD (NASDAQ: AMD) to $240 (from $175) while maintaining an Outperform rating.

“OpenAI’s use of AMD’s Mi450 validates what we have heard from our industry discussions, that Mi450 will be highly competitive.

It is to be expected that Mi450 will enable AMD to gain AI GPU share at other customers in C2027, with multiple hyperscaler engagements and a commitment, per our checks.

AMD’s share gains ahead are not fully priced in.

Outperform-rated OpenAI’s initial ramp with AMD using the Mi450 is validation of what we have heard from our industry discussions, that Mi450 will be highly competitive.

We just did not expect Mi450 to represent a catalyst for the stock that early. It is to be expected that Mi450 will enable AMD to gain AI GPU share at other customers in C2027.

OpenAI’s agreement could be conducive of AMD potentially reaching or exceeding 20% market share with Mi450, a potential not fully priced in yet, in our view.

OpenAI’s heavy investments are meant to secure its lead. We believe two hyperscalers are considering Mi450 in addition to one being committed.

AMD announced a 6 gigawatt agreement to power OpenAI’s next-generation AI infrastructure across multiple generations of Instinct GPUs.

These deployments will be done through CSPs, with OpenAI deciding where to deploy. AMD has worked with OpenAI across both hardware and software beginning with the MI300x.

The first 1 gigawatt deployment is set to begin in 2H26 based on AMD’s MI450 GPUs and ramp over 2027.

This is expected to be immediately accretive to non-GAAP EPS, driven by significant operating leverage.

Each gigawatt of compute deployed is expected to be a significant incremental double-digit billions of dollars for AMD.

Management believes this partnership will enable additional revenue from new and existing customers, and has the potential to generate well over $100 billion in revenue over the next few years.

AMD issued OpenAI a warrant for up to 160 million AMD shares, vesting as specific milestones are achieved, including deployment of AMD products, AMD reaching specific share price targets (up to $600 for the last tranche), and OpenAI achieving technical and commercial milestones required to deploy AMD products.

The first tranche vests with the initial 1 gigawatt deployment. Additional tranches vest as scale increases, with the final tranche at 6 gigawatts.

The warrants expire in five years, so all milestones need to be met, including the entire 6 gigawatt deployment, for OpenAI to receive the entire 160 million shares. Outperform-rated.

New price target is $240.”

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