Three AI giants bet big on AMD: is this the most underpriced stock?

Advanced Micro Devices stock NASDAQ:AMD has surged roughly 150% this year, yet Wall Street’s average price target still sits below the stock’s current level.

That is the paradox now driving the debate around Advanced Micro Devices. The market has already decided AMD is no longer just a distant second to Nvidia in artificial intelligence chips.

Analysts are still catching up as some of the most bullish voices on Wall Street argue the company is being valued through an old lens, as a CPU maker with an AI side business.

AMD stock: Deals that changed the conversation

The shift began with customer commitments.

OpenAI signed a 6-gigawatt agreement with AMD for next-generation AI infrastructure, starting with the first 1GW deployment of Instinct MI450 GPUs in the second half of 2026.

Meta followed with its own multi-year agreement for up to 6GW of AMD Instinct GPUs, also beginning with an initial deployment in the second half of 2026.

Oracle has committed to an initial 50,000 MI450 GPU deployment for its cloud infrastructure, with expansion planned from 2027.

OpenAI, Meta and Oracle are not small buyers experimenting with a second supplier. They are among the largest AI infrastructure spenders in the world.

When three of them independently back the same challenger, it starts looking like a shift in procurement strategy.

The message is not that AMD has caught Nvidia, but that the hyperscalers want another serious horse in the race, and AMD is increasingly the one they are choosing.

What the smart money is saying

That is why the analyst's tone has changed so sharply.

Barclays analyst Tom O’Malley raised his AMD price target to $665 from $500 while keeping an Overweight rating, according to TheStreet.

O’Malley’s argument is that investors have framed the AI chip trade too narrowly for the past two years.

“CPU-to-GPU ratios are narrowing as CPU demand reaches new levels in the rapidly expanding world of agentic AI,” O’Malley said.

“AMD is best positioned to benefit from this transition.”

Citi’s Atif Malik also moved more firmly into the bull camp. He upgraded AMD to Buy from Neutral and raised his target to $575 from $460, according to Investor’s Business Daily.

Malik said AMD’s GPU opportunity remains underappreciated and described the company as a “legit second source” in the AI accelerator market.

Bank of America has widened the argument beyond GPUs. Analyst Vivek Arya raised the bank’s 2030 server CPU market forecast to more than $170 billion from $125 billion, according to Investing.com.

That matters for AMD because its EPYC server CPUs sit at the centre of the same AI data centres buying accelerators.

AMD is no longer being discussed only as a Nvidia alternative, but as a broader AI infrastructure company.

The rally needs proof

The catch is valuation, as AMD is no longer cheap in the traditional sense.

The stock trades at a steep forward earnings multiple, and much of the next leg depends on execution that has not yet shown up in reported revenue.

The MI450 ramp begins in the second half of 2026, which means investors are paying today for a story that still has to be delivered over several quarters.

Supply, software maturity and customer deployment timelines all matter as Nvidia’s ecosystem remains deeper, stickier and more battle-tested.

That is what makes AMD compelling now: the opportunity is real, but the easy excitement may already be priced in.