The AI technology contender has begun making more high-profile deals.
Although not considered a full-blown AI stock yet, by the end of this year, investors will have no choice but to concede that it’s become one.
The stock is worth more, but it’s not likely to reach that mark in a straight line.
It’s been a disappointing past few months for shareholders in Advanced Micro Devices (NASDAQ: AMD). After soaring in early October on news that the company will be supplying processing chips for OpenAI’s ChatGPT, the stock has since stalled, as have many other names in the artificial intelligence (AI) space.
Advanced Micro Devices (AMD for short) is still very much worth watching, though — and maybe even buying — despite the recent lethargy. Here are the three top things would-be owners might want to keep their eyes peeled for in the year ahead, since these developments will ultimately steer the stock toward its future price.
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It’s not just OpenAI. Shortly after that agreement was made, AMD inked another one with AI data center operator Oracle to supply it with 50,000 GPUs (AI processor chips) beginning later this year, with an option to ramp up this number after that.
And just this week, India’s Tata Consultancy Services announced it would soon begin using AMD’s Helios rack-scale AI architecture, touted at this year’s CES show held in early January, after committing in November to 80% annualized revenue growth for its AI data center business for at least the next few years.
Although it’s not clear which institutions will be its next big customers, it is clear that AMD is now turning the heads of some big names in the business. Don’t be surprised to see at least a couple more high-profile deals made in 2026.
These deals will make an obvious quantitative impact. They’ll also make a qualitative impact, too. That is, they’ll clearly define AMD as the true artificial intelligence player it hasn’t quite become yet, putting it into the same conversations as Nvidia, Microsoft, Amazon, and Alphabet‘s Google, each of which now has its own home-grown AI processing chip.
That doesn’t mean it will eventually be as big as Nvidia, to be clear. Just being a legitimate contender in the space, however, bolsters the stock’s arguable valuation.
Lastly, while it’s obviously the least certain of the three predictions for AMD, look for its stock to perform well by the end of 2026. That is, after a sizable correction.
This assumes a more sweeping correction of most AI tech stocks is in the cards. That’s not exactly an unrealistic expectation, though. This earnings season has proved that investors are finally starting to scrutinize the results that companies are getting with their AI investments.
Several of them — like the aforementioned Microsoft and Oracle — have been found wanting. Even if AMD hasn’t yet been fully established as one of the AI stocks, it’s already lumped into this group enough now to suffer the same philosophical groupwide fate that their recent lack of forward progress suggests is still brewing.
Just be prepared to dive in after any decent-sized dip. Despite the broad backdrop of worry that is casting a shadow on the entire AI industry at this time, analysts still collectively say AMD stock is a strong buy, currently worth $288 per share. That’s nearly 40% above the ticker’s present price.
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James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, Nvidia, and Oracle. The Motley Fool has a disclosure policy.
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