10:42 AM EDT, 10/07/2025 (MT Newswires) -- Advanced Micro Devices' ( AMD ) earnings growth is likely to accelerate following the chipmaker's multiyear partnership with Microsoft ( MSFT ) -backed OpenAI, Oppenheimer said in a note emailed Tuesday.

Under the agreement, AMD will deploy 6 gigawatts of its graphics processing units to power OpenAI's artificial intelligence infrastructure, with the first GW deployment due in the second half of next year. The parent of generative AI chatbot ChatGPT received a warrant to purchase up to 160 million of AMD's shares, reflecting a stake of up to 10%.

The brokerage now projects AMD's earnings of $6.40 per share in calendar year 2026 and $9.26 in 2027, up from prior estimates of $5.97 and $7.89, respectively. Analysts polled by FactSet expect adjusted EPS of $6.05 next year and $8.14 in 2027.

On an analyst call on Monday, AMD Chief Executive Lisa Su said the deal's structure will be "highly accretive" to revenue growth and earnings.

"From a revenue standpoint, revenue begins in the second half of 2026 and adds double-digit billions of annual incremental data center AI revenue once it ramps," she said, according to a FactSet transcript. "And it also gives us clear line of sight to achieve our initial goal of tens of billions of dollars of annual data center AI revenue starting in 2027."

The deal is a "long-awaited validation" of AMD's AI efforts, Oppenheimer analysts, including Rick Schafer, said. "Investors welcomed the deal, as it adds some certainty to AMD's uncertain AI ramp," Schafer wrote.

AMD shares were up 5.5% in Tuesday trade, adding to a 24% rally following the deal's announcement on Monday. The stock has surged 77% so far this year.

Schafer said he would review AMD's estimates after the company's third-quarter results, scheduled for release on Nov. 4. The brokerage maintained its perform rating, while awaiting more clarity on the deal's incremental contribution.

The agreement is expected to yield "dollar content" exceeding $15 billion per GW at an average selling price of $22,000 to $24,000, according to the Oppenheimer report.

Initial revenue from the accord is expected in the second half of 2026, with full ramp anticipated in the following year, Schafer said.

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