Advanced Micro Devices (NASDAQ:AMD) has captured Wall Street’s attention again after a blockbuster partnership with OpenAI that could reshape the future of artificial intelligence (AI) hardware. Analysts at HSBC just boosted their AMD price target to a Street-high $310, signaling growing confidence that AMD could challenge Nvidia’s (NASDAQ:NVDA) dominance in the AI chip race.
But with shares already soaring to new highs, investors are asking: Is it still a good time to buy AMD stock?
AMD’s Expanding Role in AI Technology
Headquartered in Santa Clara, California, AMD has evolved from a PC chipmaker into a key force in data centers, AI, and cloud computing. The company’s latest announcement with OpenAI — the maker of ChatGPT — could mark a turning point.
Under the agreement, OpenAI will deploy six gigawatts of AMD’s Instinct GPUs over several years, beginning late next year. In exchange, OpenAI could take up to a 10% equity stake in AMD, aligning the two companies strategically. HSBC estimates this partnership could generate roughly $80 billion in revenue potential, more than ten times AMD’s projected 2025 AI GPU revenue.
This deal not only boosts AMD’s credibility in AI infrastructure but also positions it as the top challenger to Nvidia, whose GPUs currently dominate the market.
AMD’s New Hardware Innovations
AMD has been rolling out new technology to solidify its competitive edge. The company recently launched the Instinct MI350 Series GPUs, delivering improved performance and energy efficiency for large-scale AI workloads.
It’s also developing next-generation AI racks known as “Helios,” designed to provide open, scalable systems for cloud and enterprise customers. These innovations could help AMD expand its reach in hyperscale data centers — a market projected to grow exponentially with the rise of generative AI.
In addition, AMD expanded its long-term partnership with Oracle (NYSE:ORCL). Oracle plans to deploy 50,000 AMD GPUs starting in Q3 2026, further diversifying AMD’s enterprise customer base.
AMD Stock Performance and Valuation
Investor enthusiasm has pushed AMD stock sharply higher in recent months. The shares have surged 109% year-to-date and 65% over the past 12 months, recently hitting a 52-week high of $253.39 on October 24.
However, AMD’s rapid rise has left it trading at 74.8 times forward earnings, well above the industry average — suggesting that expectations are sky-high. Still, the potential for explosive AI-driven growth could justify the premium.
AMD’s Q2 2025 Earnings Show Strength
On August 5, AMD reported fiscal Q2 2025 results that topped estimates. Revenue climbed 32% year-over-year to $7.69 billion, beating analyst forecasts of $7.41 billion. The data center segment was a standout, with a 14% YOY increase to $3.2 billion, powered by strong demand for EPYC processors.
The company faced headwinds from U.S. export controls on its Instinct MI308 GPUs, which led to about $800 million in inventory charges. Despite this, AMD still managed to beat consensus earnings expectations, posting non-GAAP EPS of $0.48, slightly above the $0.47 forecast.
Looking ahead, management expects Q3 revenue around $8.7 billion, up 28% year-over-year, and a non-GAAP gross margin of 54%. Analysts project EPS growth of 28% for the quarter, with full-year EPS expected to rise 20% to $3.14, followed by a sharp 68% jump to $5.28 in the next fiscal year.
Analysts Lift AMD Price Target
Wall Street analysts are turning increasingly bullish.
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HSBC raised its AMD price target from $185 to $310 and reiterated a “Buy” rating.
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BofA Securities increased its target from $250 to $300 after the company showcased its Helios racks at the OCP Conference.
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Wedbush lifted its target from $190 to $270, citing AMD’s AI partnerships as key catalysts.
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Wolfe Research upgraded AMD from “Peer Perform” to “Outperform,” setting a target of $300.
Of 44 analysts covering AMD, 30 rate it a “Strong Buy,” two call it a “Moderate Buy,” and 12 maintain a “Hold.” The average target is $253.70, while HSBC’s $310 projection implies a 23% upside from current levels.
The Bottom Line
The surge in the AMD price target reflects optimism that the company’s AI partnerships and GPU advancements will drive long-term revenue growth. While the stock’s valuation looks stretched, AMD’s expanding footprint in AI and data centers could justify the premium.
For investors who believe in the sustained growth of AI infrastructure, AMD stock may still have room to run — and HSBC’s $310 target might only be the beginning.
Featured Image: Unsplash
