AMD’s AI Ambitions Gain Momentum with Major Partnerships and Investments

AMD US0079031078

While Advanced Micro Devices (AMD) is aggressively pursuing significant deals to challenge Nvidia's dominance in artificial intelligence, its share price has recently faced headwinds. This divergence highlights the competitive pressures in the high-stakes AI chip market, even as the company secures billion-dollar commitments.

A key development is AMD's expanded collaboration with Hewlett Packard Enterprise (HPE). HPE plans to be among the first system providers to integrate AMD's new "Helios" architecture, a rack-based platform engineered specifically for AI workloads. The technical specifications of this partnership are substantial:

• Computing power of 2.9 exaflops per rack at FP4 precision.
• Integration of AMD Instinct MI455X GPUs with upcoming EPYC "Venice" processors.
• Deployment of specialized HPE-Juniper switches designed for maximum scalability.
• Utilization of AMD Pensando Vulcano NICs for network connectivity.

The cooperation extends further: by 2027, HPE and AMD are contracted to deliver a supercomputer for the High-Performance Computing Center in Stuttgart. This system, based on the HPE Cray GX5000 platform, will pair AMD Instinct MI430X GPUs with EPYC "Venice" CPUs.

Billion-Dollar Cloud Investment from Vultr

In a separate but equally significant move, cloud provider Vultr is constructing a massive AI data center in Springfield, Ohio, representing an investment exceeding $1 billion. The facility is slated to be equipped with 24,000 AMD Instinct MI355X graphics cards, will draw 50 megawatts of power, and will feature an Ethernet-based network infrastructure.

Notably, the entire computing capacity of this center has already been sold out, even though it is not scheduled to go live until early 2026. Vultr, which already operates AMD GPUs in Chicago, is positioning itself as a cost-effective alternative to major hyperscalers. AMD Ventures, the chipmaker's own investment arm, is a backer of Vultr.

Share Price Performance Contrasts with Business Wins

Despite these strategic victories, AMD's stock declined by 15% in November and currently trades approximately 20% below its 52-week high. Market caution appears to be driven by intensifying competition. Reports of potential multi-billion dollar investments by Meta in Google's Tensor Processing Units (TPUs) have raised questions about AMD's ability to firmly establish itself as the primary alternative to Nvidia.

This sentiment persists despite ambitious mid-term targets recently outlined by AMD's management. The company forecasts over 35% annual revenue growth for the next three to five years, with its data center segment expected to grow more than 80% per year, targeting an operating margin above 35%.

Analyst Confidence Remains Firm

Wall Street analysts have largely maintained a positive outlook despite the stock's pullback. Raymond James issued a "Buy" rating with a price target of $377, while TD Cowen maintains its target at $290. The consensus average price target among analysts stands at $284.67, implying an upside potential of roughly 32% from recent levels.

AMD's recent partnerships with entities like OpenAI, Oracle, Vultr, and HPE demonstrate a concerted effort to solidify its position as a credible challenger to Nvidia. The success of the Helios platform and new Instinct accelerators, expected to fully materialize by 2026, could serve as a crucial catalyst for the company—provided the competitive landscape does not shift unexpectedly.