Is AMD Stock Going to $300 After the Meta Platforms Deal?

Shares of Advanced Micro Devices (NASDAQ: AMD) changeable up astir 9% connected Feb. 24 pursuing the announcement of a concern with tech elephantine Meta Platforms (NASDAQ: META) that could springiness the spot decorator a monolithic boost.

Meta Platforms is focused connected an assertive build-out of artificial quality (AI) infrastructure, which is wherefore it has been striking deals with starring AI spot designers. Just recently, Meta said that it volition beryllium procuring millions of chips from AMD rival Nvidia this year. So, its latest woody with AMD isn't astonishing arsenic it looks to get its hands connected much computing power.

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The bully quality for AMD investors is that the size of the Meta woody could supercharge its growth. But volition it beryllium capable for AMD banal to deed $300? Let's find out.

AMD and Meta person entered into a "definitive multi-year, multi-generation concern to deploy up to 6 gigawatts" of AMD's Instinct information halfway graphics processing units (GPUs). The declaration volition footwear successful from the 2nd fractional of 2026, erstwhile Meta volition commencement deploying AMD's MI450 information halfway accelerators to enactment the build-out of the archetypal gigawatt (GW) of the "Magnificent Seven" company's infrastructure.

Reuters reports that the woody volition tally for the adjacent 5 years, indicating that AMD could merchantability an mean of 1.2 GW of its AI GPUs to Meta each year. Matt Britzman, an equity expert astatine British fiscal services institution Hargreaves Lansdown, told Reuters that AMD could make an awesome $60 cardinal successful gross implicit the five-year word of the deal.

The existent figure, however, could beryllium higher. That's due to the fact that the operation of a 1 GW AI information halfway reportedly costs $35 billion, according to Bernstein Research. What's worthy noting is that 60% of this spending goes toward buying chips to powerfulness the information center. So, a 1 GW AI information halfway needs astir $20 cardinal worthy of chips, indicating that AMD's imaginable gross from this woody could beryllium overmuch larger.

We person already seen that AMD banal received a large bump pursuing the Meta deal. It is present trading astatine astir $214 a share, astir 40% beneath the $300 mark. This caller woody is apt to springiness AMD's maturation a bully changeable successful the limb successful the 2nd fractional of the year.

Analysts are predicting a 59% spike successful AMD's net this twelvemonth to $6.62 per share. However, it whitethorn extremity up doing amended than that, driven by the Meta contract. Stronger-than-expected net maturation for the remainder of the twelvemonth could nonstop AMD banal soaring.