Rosenblatt reiterated its Buy rating on Advanced Micro Devices (AMD) with a price target of $300.00, citing the company’s expanded collaboration with Meta Platforms. The firm views the broadened partnership as highly positive for AMD’s Instinct GPU and EPYC CPU product lines.

The multi-year, multi-billion-dollar agreement reinforces AMD’s ability to scale its architecture into mass production. AMD’s chiplet-based architecture allows for flexible customization to meet Meta’s diverse workload requirements. This flexibility helps avoid the costly process of designing application-specific integrated circuits (ASICs) from scratch for each or a limited set of workloads. Rosenblatt believes the associated warrant issuance confirms Meta’s long-term commitment to AMD’s product roadmap. The firm expects AMD to announce additional multi-year, multi-billion-dollar agreements in the coming months.

Meanwhile, analysts at Mizuho expressed skepticism about the sustainability of AMD’s stock rally following the Meta deal, warning that challenges may lie ahead.

Mizuho noted that some hedge funds have pushed back against the recent surge, arguing that the rally could reverse sharply within the next forty-eight hours. For some investors, the warrant issuance is viewed as a significant negative factor. Additionally, the upcoming GTC conference in mid-March is approaching, with many market participants reportedly positioning for potential short trades in AMD ahead of the event.

Some observers suggested that AMD management could have timed the announcement closer to March 13 or the Friday before Nvidia’s GTC keynote on March 16 to maximize short-squeeze potential. Instead, the company now faces a waiting period of about three weeks.

Market Interpretation:

The partnership is designed to enhance Meta’s AI computing capabilities. In related developments, AMD has appointed Ariel Kelman as its new Chief Marketing Officer, where he will oversee global marketing strategy. These recent moves underscore AMD’s strategic efforts to strengthen its competitive position in the technology sector.