AMD stock price target raised to $275 from $205 at Mizuho on OpenAI deal

Investing.com - Mizuho has raised its price target on AMD (NASDAQ:AMD) to $275.00 from $205.00 while maintaining an Outperform rating. The semiconductor giant, currently trading at $214.90 with a market capitalization of $348.75 billion, has demonstrated remarkable momentum with a 130% surge over the past six months. According to InvestingPro analysis, AMD maintains a "GREAT" financial health score, though it trades at a relatively high P/E ratio of 130.

The price target increase follows AMD’s recently announced deal with OpenAI, which Mizuho describes as a "6GW Deal" spanning six tranches of 1GW each from the fourth quarter of 2026 through 2030.

The agreement includes approximately 160 million warrant shares tied to gigawatt deployments and AMD’s share price, with the final tranche potentially reaching around $600 per share, according to Mizuho’s analysis.

Mizuho projects approximately $14 billion in incremental revenue for AMD in fiscal 2027, potentially growing to about $22 billion annually by fiscal 2030, though with possible gross margin dilution exceeding 300 basis points from the warrants.

The firm has raised its fiscal 2027 revenue forecast by 26% above consensus and expects earnings per share to double to approximately $11 by 2027-2028, while noting that OpenAI funding risks remain a concern.

In other recent news, Advanced Micro Devices, Inc. (AMD) has experienced several significant developments. Moody’s Ratings upgraded AMD’s and its subsidiary Xilinx’s senior unsecured ratings to A1 from A2, citing strong multi-year revenue and earnings growth prospects, particularly due to AMD’s partnership with OpenAI. This collaboration has also led to various analysts revising their price targets for AMD. TD Cowen increased its price target to $270, maintaining a Buy rating, while Piper Sandler raised its target to $240, also keeping an Overweight rating. Bernstein SocGen Group adjusted its target to $200, following the announcement of a substantial AI infrastructure partnership between AMD and OpenAI. BofA Securities maintained its $250 price target, noting the progress in OpenAI’s deployment plans involving AMD’s MI450 Series racks. These developments underscore the impact of AMD’s strategic partnership with OpenAI on its financial outlook and analyst evaluations.

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