Advanced Micro Devices (NASDAQ:AMD | AMD Price Prediction) just landed a chip deal with OpenAI, and the market is taking notice. The stock jumped 119% over the past year to $252, with most of that momentum coming in recent months as AMD’s AI revenue story gains traction.
OpenAI’s choosing AMD for its infrastructure signals something important: NVIDIA Corporation (NASDAQ:NVDA) doesn’t own the entire AI chip market anymore. While NVIDIA still dominates with a $4.54 trillion market cap and 53% net margins, AMD is carving out share where it matters. The company’s Q3 2025 revenue hit $9.25 billion, up 35.6% year-over-year, with gross margins recovering to 51.7%. That’s the kind of operating leverage investors want to see.
Piper Sandler maintains an Overweight rating on AMD, pointing to the Helios cluster ramp and OpenAI demand as key drivers for 2025. The firm expects MI300X chips to see substantial growth as hyperscalers diversify away from single-vendor dependence. Prediction markets show 73% confidence AMD will beat Q1 2026 earnings estimates when it reports February 3.
The competitive dynamic is clear: NVIDIA proved the AI chip market generates extraordinary profits (107% return on equity, 62.5% year-over-year growth in its latest quarter). AMD’s OpenAI deal positions it to capture a piece of that opportunity. With a forward P/E of 41x versus NVIDIA’s 24x, AMD is pricing in aggressive growth. The question is whether it can deliver.
Analysts overwhelmingly think it can. Forty of 51 analysts rate AMD a Buy or Strong Buy, with a consensus target of $287.38. If AMD executes on the OpenAI partnership and continues taking share in data center GPUs, that target looks achievable. The shortage Jim Cramer called “insatiable” isn’t going away anytime soon.
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