Oracle Corporation (NYSE:ORCL) announced Tuesday that it will deploy 50,000 graphics processors from Advanced Micro Devices (NASDAQ:AMD) starting in the second half of 2026, signaling a growing appetite among cloud providers for alternatives to Nvidia’s AI accelerators. AMD shares jumped more than 3% in premarket trading after the news.
Oracle plans to use AMD’s Instinct MI450 chips, introduced earlier this year as the company’s first AI processors designed for rack-scale systems. The technology allows up to 72 GPUs to function as a single unit, enabling more efficient model training and deployment.
“We feel like customers are going to take up AMD very, very well — especially in the inferencing space,” said Karan Batta, senior vice president of Oracle Cloud Infrastructure, in an interview with CNBC’s Seema Mody. He emphasized that AMD’s software stack is “critical” to the company’s AI strategy and reiterated that “customers are going to take up AMD very, very well, in the inferencing space.”
Earlier in the day, Wolfe Research upgraded AMD stock from Peer Perform to Outperform and lifted its price target to $300, pointing to a “conservative path to $10+ earnings power” by 2027 (CY27).
The firm’s bullish outlook rests on AMD’s multi-year deal with OpenAI and better visibility in server demand. Wolfe estimates $15 billion in annual revenue from OpenAI alone and $27 billion in total AI-related sales by 2027, supporting an EPS forecast of $10.36. The price target implies a multiple of roughly 29x — slightly above AMD’s five-year average.
Currently, AMD trades at about 36.5x its CY26 EPS estimate and 21x CY27, compared to its historical average of 28.1x. Wolfe also raised its server CPU forecasts, projecting $9.55 billion in revenue for 2025 and $11.4 billion for 2026, citing accelerated CPU demand linked to agentic AI applications.
The OpenAI contract is expected to begin contributing in late 2026, with roughly $4.5 billion in server GPU revenue projected for Q4 and a sharp ramp-up in 2027. Additional growth catalysts could include AMD’s upcoming Helios and MI450 rack-scale platforms and the rollout of UALink technology.
However, Wolfe cautioned that execution remains crucial, noting “risk is if the stock were to fall below the warrant target.”
Advanced Micro Devices stock price
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
Some portions of this content may have been generated or assisted by artificial intelligence (AI) tools and been reviewed for accuracy and quality by our editorial team.