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Investing.com -- Oracle on Tuesday said it will deploy 50,000 Advanced Micro Devices graphics processors beginning in the second half of 2026, signalling rising demand for AMD hardware as cloud providers look for alternatives to Nvidia’s dominant AI accelerators.
Shares in AMD rose more than 3% in premarket trading.
Oracle intends to use AMD’s Instinct MI450 chips, introduced earlier this year as the firm’s first AI parts that can be configured into a rack-scale system, allowing 72 GPUs to operate as a single unit for advanced model training and deployment.
“We feel like customers are going to take up AMD very, very well — especially in the inferencing space,” Karan Batta, senior vice president of Oracle Cloud Infrastructure, told CNBC’s Seema Mody.
He added that AMD’s software stack is “critical” and that “customers are going to take up AMD very, very well, in the inferencing space.”
Earlier on Tuesday, Wolfe Research upgraded AMD stock to Outperform from Peer Perform and set a $300 price target, arguing that the company is now positioned for a “conservative path to $10+ earnings power” by 2027 (CY27).
The analysts base their view on AMD’s multi-year agreement with OpenAI and improving visibility in traditional server demand.
Wolfe assumes $15 billion in annual revenue from OpenAI and $27 billion in total AI-related sales by 2027. That underpins an EPS estimate of $10.36 in CY27, with the price target implying around 29x that number — modestly above AMD’s five-year average multiple.
Wolfe notes AMD is currently trading near 36.5x its CY26 EPS estimate and about 21x CY27, versus its historical forward average of 28.1x.
Server CPU forecasts were raised after management highlighted that agentic AI demand is pulling forward CPU orders. Wolfe now models $9.55 billion in server CPU revenue for 2025 and $11.4 billion for 2026.
The OpenAI contract starts to contribute in late 2026 through the MI450 ramp, with around $4.5 billion of server GPU revenue projected in the fourth quarter of that year and a steep acceleration into 2027.
Wolfe also flagged additional potential tailwinds in 2027 from AMD’s Helios and MI450 rack-scale systems and native UALink rollout, while cautioning that execution remains key and “risk is if the stock were to fall below the warrant target.”