AMD's stock is rising. Here are two reasons for Wall Street's optimism.

By Britney Nguyen

AMD just announced an extension of its relationship with Oracle. Plus, an analyst upgraded the stock and implied Wall Street's profit expectations aren't high enough.

AMD, led by CEO Lisa Su, is deploying tens of thousands of its GPUs with Oracle next year.

Fresh off its monumental deal with OpenAI, Advanced Micro Devices Inc. isn't letting up as it tries to keep pace with Nvidia Corp. in the booming market for artificial-intelligence chips.

AMD (AMD) said on Tuesday that it is counting on Oracle Corp.'s (ORCL) Oracle Cloud Infrastructure to help it launch the first publicly available supercluster of its next-generation AI chips. The AI supercluster will initially be powered by 50,000 Instinct MI450 series graphics processing units starting in the third quarter of next year, and will also be supported by AMD's first rack-scale solution, Helios, which can hold 72 chips to work together.

The collaboration, expected to continue into 2027 and beyond, is an expansion of the partnership between the chip company and cloud provider to offer OCI's customers AMD's GPUs. The two companies worked together to launch AMD's Instinct MI300X chips last year.

Mahesh Thiagarajan, OCI's executive vice president, said in a statement that its customers need "robust, scalable, and high-performance infrastructure" to build out AI applications.

The deal is the latest boost of confidence for the chip maker, which is competing with Nvidia Corp. (NVDA) and Broadcom Inc. (AVGO) to meet the ever-growing compute needs of AI leaders such as OpenAI.

See more: Here's what the OpenAI-AMD deal says about Nvidia

Earlier this month, the ChatGPT maker said it is planning to deploy six gigawatts' worth of multiple generations of AMD's GPUs to train and run its next-generation AI models. The first gigawatt, to be powered by the Instinct 450 series and Helios rack solution, is set for deployment in the second half of 2026 - the same period as the AI supercluster deployment with Oracle.

AMD's stock notched a record close on Oct. 8, though it's since pulled back from its highs. The shares rose 0.8% on Tuesday.

The OpenAI deal led analysts at Wolfe Research to upgrade AMD's stock on Tuesday to outperform from peer perform. The analysts said they see "a conservative path" to more than $10 in earnings power for AMD in 2027, based on their model of $15 billion in annual revenue from the AI startup. Wolfe's profit estimate is above the $8.81 FactSet consensus for AMD's 2027 earnings per share.

In Wolfe's view, AMD also can reach $27 billion in total AI revenue in 2027 - and that "could be higher" if AMD can ink more deals.

"Our view is that AMD now simply needs to execute to drive a $300 stock price," the analysts said, adding that there is room for upside if AMD finds partners beyond OpenAI.

In the near term, the Wolfe team sees AMD's revenue estimates going up "due to traditional server strength."

Emily Bary contributed reporting

-Britney Nguyen

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10-14-25 1748ET