AMD and Meta "10% equity for $100 billion order," Goldman Sachs: Need to see actual deployment to be more confident

Regarding AMD and Meta's "10% equity for 100 billion orders," Goldman Sachs stated that it is not willing to give a more positive rating until it sees the actual deployment progress of Meta and OpenAI.

On February 24, an article from Wall Street Insight pointed out that AMD and Meta announced a five-year strategic partnership, where Meta will deploy 6GW of AMD GPUs. In exchange, AMD will provide up to 160 million shares (approximately 10% equity) of performance-based warrants.

On February 25, according to news from the Wind Trading Desk, Goldman Sachs noted in its latest research report that this cooperation significantly enhances AMD's position in the accelerator market, and also indicates that AMD has made important progress in competing with giants like NVIDIA. However, the firm emphasized that it will only take a more positive stance on AMD after seeing the actual deployment timeline of Meta and OpenAI, maintaining a "neutral" rating on AMD, with a target price raised to $240.

Strategic Cooperation Details: Equity for Orders

Goldman Sachs stated that the core logic of this transaction is: Meta exchanged potential equity for AMD's deeply customized services and long-term supply commitments, while AMD exchanged future equity dilution for guaranteed orders and market share endorsement from a top-tier hyperscale cloud vendor.

Goldman Sachs indicated that, in terms of financial structure, this cooperation is very similar to the OpenAI deal announced in October 2025. The transaction includes performance-based warrants for up to 160 million shares of AMD common stock (approximately 10% ownership). These warrants will vest in batches as deployment is completed and stock price thresholds are met (the final batch will vest when 6GW is deployed and the stock price reaches $600).

Goldman Sachs pointed out that as part of the agreement, AMD is designing a semi-custom MI450 GPU specifically 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 earnings per share (EPS).

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

At the same time, Goldman Sachs noted that this announcement has a slight negative impact on NVIDIA and Broadcom due to increased competitive intensity from key customers.

Maintaining "Neutral" Rating: Waiting for Actual Deployment

Despite the broad prospects of the cooperation, Goldman Sachs currently maintains a "neutral" rating on AMD. Goldman Sachs pointed out that AMD's significant risk exposure to OpenAI and high operating expenses (OpEx) are the main reasons for maintaining a neutral rating.

Goldman Sachs stated that if it can gain more confidence in the deployment timeline of Meta and OpenAI before 2027, it may consider taking a more constructive stance. Based on the incremental contribution from Meta's strategic cooperation, Goldman Sachs has raised its non-GAAP EPS (excluding stock-based compensation, SBC) forecasts for AMD for 2027 and 2028 by approximately 16% and 17%, respectively.

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

Goldman Sachs has increased AMD's 12-month target price from $210 to $240, based on a 28 times price-to-earnings ratio (down from the previous 30 times due to a decline in peer valuations) applied to a normalized EPS forecast of $8.50 (up from the previous $7.00)