Key Morningstar metrics for Advanced Micro Devices

  • Fair Value Estimate: $450.00
  • Morningstar Rating: ★★★
  • Morningstar Economic Moat Rating: Narrow
  • Morningstar Uncertainty Rating: Very High

Advanced Micro Devices AMD and Anthropic announced a partnership to deploy up to 2 gigawatts of AMD’s artificial intelligence products (including its latest Helios racks) starting in the first half of 2027. AMD will make an equity investment of up to $5 billion in Anthropic.

Why it matters: We’re pleased with this deal for AMD, which had been rumored in recent days and will likely be discussed at its Advancing AI industry event on July 22-23. We’re encouraged that AMD will count Anthropic as a third leading AI customer, in addition to OpenAI and Meta Platforms META.

  • Anthropic’s commitment of 2 GW is less than the 6 GW in AMD’s deals with OpenAI and Meta, perhaps disappointing investors to some extent.
  • AMD is again providing some consideration to its AI GPU customers in this deal via the $5 billion investment. However, this is an improvement from AMD’s first two deals, where it offered dilutive warrants to its customers (albeit at high in-the-money share prices).

The bottom line: We maintain our $450 fair value estimate for narrow-moat AMD, as well as our Very High Uncertainty Rating, given the rapidly changing AI landscape. The deal fits into our existing forecast for AMD’s GPU and rack shipments.

  • AMD shares were up about 2% intraday on July 22. The partnership is a clear net positive, in our view, but perhaps the smaller deal size and equity investment negates the upside in the minds of some investors.
  • The shares appear modestly overvalued to us after more than doubling in 2026 to date (versus a 10% rise in the S&P 500 over the same period), as we think a bit too much optimism is baked into AMD’s AI GPU and server CPU businesses for now.

Coming up: We look forward to AMD’s Advancing AI event, where we hope to learn more about this deal.

  • AMD announced a partnership with Microsoft earlier in the week. We suspect that the Microsoft deal overlaps somewhat with the partnerships AMD has made with OpenAI and Anthropic, as both model builders count Microsoft Azure as a cloud hosting platform.