AMD jumped 4%, hitting all time highs to $242

The short-term setup could be promising for AMD's stock, according to Bernstein. But delivering over a longer period gets more complicated.

AMD's stock has rallied since the company announced a partnership with OpenAI earlier this month.

Advanced Micro Devices Inc. has given investors reasons to be confident in its chip business going forward, and while the stock's strong recent performance suggests Wall Street is hyped for what's ahead, some analysts worry that the path won't be so smooth.

The chip maker's stock $(AMD)$ has rallied 43% since the company announced a partnership earlier this month to deploy multiple generations of its artificial-intelligence chips and rack-scale solutions with OpenAI. Bernstein's Stacy Rasgon said that Wall Street seems to believe AMD has found its "grail" by securing orders from the AI startup, and while he didn't anticipate AMD "giving up 10%" of its equity as part of the partnership, he thinks the arrangement makes sense.

"AMD has to be on the OpenAI rocket ship or get left in the dust, and so Lisa Su bought her ticket," Rasgon said in a Tuesday note, referring to AMD's chief executive.

For investors, though, there are two big things to consider: whether AMD shares can keep moving higher in the near term, especially with earnings just weeks away, and whether the company can live up to the AI hype over a longer period, since that's when the OpenAI deployment will really begin.

Deployments are expected to start in the second half of next year, and Rasgon noted that it "remains to be seen how smoothly the ramp will go." He also wonders whether AMD will attract more major customers for its chips after seemingly receiving a vote of confidence from the industry leader. With that, Rasgon said he and his team "worry somewhat that the Street may be getting overly-optimistic as to the pace into 2027."

Going into AMD's third-quarter earnings report next month, however, Rasgon said the company's setup "admittedly looks solid" after the OpenAI deal. In addition, the company's core markets of personal computer and server chips "are looking better in the near term" as AMD continues "to take oodles of share."

Meanwhile, "a tremendous amount of pressure has probably been removed from any nearer-term AI expectations," Rasgon said, since the ramp with OpenAI doesn't start for a year. And the company's upcoming analyst day in November could give AMD a chance to further impress bullish investors.

Despite staying "on the sidelines" on the stock with a market-perform rating, Rasgon acknowledged that shares "could work for now."

The Bernstein team adjusted their estimates for the third and fourth quarters of 2025 and for all of 2026 "to incorporate better PC/server assumptions in the near term."

For the third quarter, the Bernstein analysts expect revenues of $8.94 billion and earnings of $1.22 per share, which is above the FactSet consensus for $8.75 billion and $1.17. For the fourth quarter, the analysts are modeling $9.13 billion in revenue - up from their previous $8.93 billion estimate, but below Wall Street's consensus for $9.20 billion. The Bernstein team raised their estimates for 2026 to $39.1 billion and earnings of $5.27 per share, which is also below the consensus for $42.2 billion and earnings of $6.22 per share.