AMD and Meta "10% equity for 100 billion yuan order," Goldman Sachs: Seeing actual deployment will boost confidence

Regarding AMD and Meta’s “10% equity for 100 billion order,” Goldman Sachs stated that until seeing actual deployment progress from Meta and OpenAI, they are not willing to give a more positive rating.

On February 24, Wall Street Insights reported that AMD and Meta announced a five-year strategic partnership, with Meta deploying 6GW of AMD GPUs. In exchange, AMD will provide up to 160 million shares (about 10% equity) of performance-based warrants.

On February 25, according to ChaseWind Trading Platform, Goldman Sachs in its latest research report noted that this cooperation significantly enhances AMD’s position in the accelerator market, also indicating that AMD has made important progress in competing with giants like Nvidia. However, the firm emphasized that they will only adopt a more positive stance on AMD after seeing the deployment schedules from Meta and OpenAI, maintaining a “Neutral” rating with a target price raised to $240.

Strategic Partnership Details: Equity for Orders

Goldman Sachs states that the core logic of this deal is: Meta exchanges potential equity for AMD’s customized services and long-term supply commitments, while AMD uses future equity dilution to secure certainty orders and market share from top large-scale cloud providers.

Goldman Sachs indicates that, financially, this cooperation is very similar to the OpenAI deal announced in October 2025. The deal includes up to 160 million shares of AMD common stock (about 10% ownership) based on performance warrants. These warrants will vest in batches as deployment progresses and stock price thresholds are met (the final batch vests when 6GW deployment is completed and the stock price reaches $600).

Goldman Sachs points out that, as part of the agreement, AMD is designing a semi-custom MI450 GPU tailored for Meta workloads. AMD expects initial shipments to begin in the second half of 2026, and anticipates that this cooperation will increase non-GAAP EPS.

Goldman Sachs believes that this announcement is a major positive for AMD, as it provides greater certainty regarding the company’s market share position among Tier-1 large-scale cloud service providers. Due to equity ownership and product customization, Meta has strong motivation to use AMD’s products.

At the same time, Goldman Sachs notes that due to increased competition among key clients, this announcement is a slight negative for Nvidia and Broadcom.

Maintaining a “Neutral” Rating: Waiting for Actual Deployment

Despite the promising cooperation prospects, Goldman Sachs currently maintains a “Neutral” rating on AMD. They point out that AMD’s significant exposure to OpenAI and higher operating expenses (OpEx) are the main reasons for maintaining a neutral stance.

Goldman Sachs states that if more confidence can be gained in the deployment schedules of Meta and OpenAI before 2027, they might consider adopting a more constructive position.

Based on the incremental contribution from Meta’s strategic partnership, Goldman Sachs has raised its 2027 and 2028 non-GAAP EPS (excluding stock-based compensation, SBC) forecasts for AMD by approximately 16% and 17%, respectively.

Specifically, the 2027 EPS forecast has been raised from $10.00 to $11.55, and the 2028 EPS forecast from $11.75 to $13.70.

Goldman Sachs has raised AMD’s 12-month target price from $210 to $240, based on a 28x P/E ratio (lower than the previous 30x, due to a decline in peer P/E ratios) applied to a normalized EPS of $8.50 (up from $7.00 previously).

The above highlights are from ChaseWind Trading Platform.

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