It’s likely the first of many — analysts at Jefferies upgraded Advanced Micro Devices to a buy, after the chip manufacturer’s stock surged on a pact with ChatGPT maker OpenAI.

The note reads as much like an apology as a changed investment thesis.

「We rarely do this,」 said analysts led by Blayne Curtis. 「We raised estimates and our [price target] last week following positive server checks but couldn’t triangulate the AI ramp.」

That came on OpenAI’s decision to purchase up to 6 gigawatts of AMD chips — what Jefferies says has the potential to fuel 「well over $100 billion」 worth of revenue. AMD has stated that each gigawatt would represent double-digit billions of dollars.

OpenAI, the analysts note, has been on a spending spree, not just with AMD but also with Nvidia, Oracle, Hynix and Samsung.

「While none of these deals are binding, they highlight how large OpenAI views the need for AI compute. This is a land grab for compute as well as GWs of data center capacity to house those GPUs. Lots of details will need to be sorted out but what is clear is that AI spending is accelerating even from here,」 the analysts said.

The new Jefferies price target, of $300 versus $170 previously, now becomes the Wall Street high, according to FactSet data.

More humbling sell-side notes are likely to come, through.

Goldman Sachs, for instance, has a price target of $150, so half of Jefferies’s. Deutsche Bank and Wedbush also have price targets below Monday’s close of $203.71.

The 23.7% single-session surge for AMD was a more than a six-standard-deviations move, according to MarketWatch calculations, though it wasn’t even the biggest percentage move all year — that came when the stock surged 23.8% on April 9.

On Tuesday, AMD’s stock tacked on another 3.8%, to trade at $211.51.