AMD rating split: Quant still sees Buy, but SA analysts are on Hold

[AMD headquarters in Santa Clara, California, USA]
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Advanced Micro Devices (NASDAQ:AMD [https://seekingalpha.com/symbol/AMD]) stock hoped to continue its upbeat mood after closing 23.7% on Monday after it inked a partnership with OpenAI.

The company was up 3.8% in premarket trade on Tuesday.

AMD's shares soared after the company announced [https://seekingalpha.com/news/4501935-amd-surges-25-after-ai-infrastructure-deal-with-openai] a long-term agreement with OpenAI. Under the agreement, the ChatGPT developer will acquire several generations of AMD’s advanced artificial intelligence processors over the coming years.

SA quant [https://seekingalpha.com/symbol/AMD/ratings/quant-ratings] rates the firm at Buy, with a score of 4.49 out of 5. The company scored high on profitability, momentum, and growth; however, it lagged behind in valuation and revisions.

Yet, SA analysts [https://seekingalpha.com/symbol/AMD/ratings/author-ratings] kept the company at a Hold rating with a score of 3.44 out of 5. Out of the 27 analysts that rated the stock, 14 gave it Buy or higher, eight were at Hold, three gave it Sell and two were on Strong Sell.

"This deal marks a turning point for AMD, positioning AMD as a formidable competitor in the rapidly growing artificial intelligence sector," SA analyst Cash Flow Venue [https://seekingalpha.com/author/cash-flow-venue] said.

"The deal with OpenAI is a rapid shift of the paradigm regarding AMD. With the stellar product roadmap ahead and the clear confirmation of AMD's quality and competitive advantages in the market (yes, that deal represents such confirmation), AMD's future looks brighter than ever," Cash Flow Venue added.

Another SA analyst, James Foord [https://seekingalpha.com/article/4828155-amd-gets-its-oracle-moment-but-were-not-done-yet], forecasted that the deal has accelerated AMD's growth to a $1 trillion valuation, with updated data center revenue targets and a 25% CAGR.

"Risks include execution challenges, dilution from warrants, and increased reliance on OpenAI, but the deal strongly validates AMD’s AI strategy," Foord added.

However, SA analyst ValueAnalyst [https://seekingalpha.com/article/4828111-advanced-micro-devices-sell-the-openai-pop-rating-downgrade]held a more cautious view and said, "Despite the OpenAI deal, AMD's profit margins and innovation lag behind Nvidia and Broadcom, supporting my bearish thesis."

"The OpenAI agreement is non-exclusive and likely dilutive to AMD's margins, while AMD's valuation remains stretched versus its peers," ValueAnalyst added.

The AI deal also earned praise from some analyst firms. Jefferies upgraded [https://seekingalpha.com/news/4502160-amd-upgraded-to-buy-from-jefferies-following-megadeal-with-openai] its rating on Advanced Micro Devices to Buy from Hold and dramatically increased its price target to $300 from $170.

Wedbush called the partnership [https://seekingalpha.com/news/4502036-amd-openai-partnership-major-moment-in-ai-revolution-says-wedbush] a "majormoment in AI revolution."

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* AMD Hits Jackpot With OpenAI Deal [https://seekingalpha.com/article/4828200-amd-stock-openai-deal-long-term-potential]
* Advanced Micro Devices, Inc. (AMD) Announcement of Strategic Partnership between AMD and OpenAI Conference Transcript [https://seekingalpha.com/article/4828250-advanced-micro-devices-inc-amd-announcement-of-strategic-partnership-between-amd-and-openai-conference-transcript]
* AMD upgraded to Buy from Jefferies following megadeal with OpenAI [https://seekingalpha.com/news/4502160-amd-upgraded-to-buy-from-jefferies-following-megadeal-with-openai]
* Tech Voices: AMD-OpenAI infrastructure deal; Cerebras's IPO plans [https://seekingalpha.com/news/4502097-tech-voices-amd-openai-infrastructure-deal-cerebrass-ipo-plans]