Jefferies maintained a Buy recommendation and a $300 price target on Advanced Micro Devices Inc. (NASDAQ:AMD) after AMD disclosed a supply arrangement with Meta Platforms Inc. The shares were trading at $213.05, representing a market capitalization of $346.4 billion and an 81.85% gain over the prior 12 months.
The agreement, announced on February 23, 2026, commits Meta to purchase AMD Instinct GPU products under a multi-year framework that could scale to as much as 6 gigawatts (GW) of GPU capacity. As part of the deal, AMD issued Meta a performance-based warrant that grants the right to buy up to 160 million shares of common stock at an exercise price of $0.01 per share.
Vesting of the warrant shares is structured in tranches tied to hardware purchase milestones. The initial tranche requires a binding commitment from Meta for the equivalent of 1GW of AMD products, with full vesting reached only after purchases totaling 6GW. In addition to purchase milestones, vesting is contingent on AMD’s share price meeting progressively higher thresholds, culminating with a $600 per-share level for the final tranche. The warrant is exercisable through February 23, 2031, and Meta is permitted to sell shares once they have been acquired and vested.
Company disclosures indicate the structure mirrors elements of a prior arrangement AMD announced in October 2025 with OpenAI, in which AMD exchanged warrants tied to GPU revenue. Jefferies characterized these types of agreements as carrying an immediate cost to AMD but viewed them as necessary to establish a strategic footprint that could facilitate future business with large cloud and AI customers.
Separately, AMD has outlined operational details connected to the Meta deal. The multi-year contract contemplates deployment of up to 6GW of AMD Instinct GPUs and includes shipments of millions of EPYC CPUs alongside MI450 Helios GPU server racks. AMD expects to begin shipments covering the first gigawatt in the second half of 2026.
Analyst reactions to the Meta partnership and its implications for AMD’s valuation vary. Jefferies reiterated its Buy stance and $300 price target following the announcement. Rosenblatt similarly described the pact as constructive and reiterated a Buy rating with the same $300 target, citing the potential for AMD’s architecture to scale to high-volume production.
Not all firms share that optimism. Mizuho flagged concern that the recent rally in AMD shares could be transient, suggesting the gains might recede even with the Meta agreement in place. DA Davidson initiated coverage with a Neutral rating and a $220 price target, noting that while AMD is a strong competitor in consumer and server central processing unit markets, it remains in the process of catching up in the AI accelerator segment.
Investment research tools referenced in AMD disclosures indicate the stock appears undervalued at current levels under one set of quantitative analyses. Specifically, AMD is listed among more than 1,400 U.S. equities covered by Pro Research Reports that synthesize data into actionable investment intelligence, according to the materials cited by the company.
The terms of the Meta arrangement - including a sizable, performance-tied warrant and long exercise window - add complexity to the commercial and capital structure implications for AMD. The sequence and scale of hardware shipments, the achievement of contractual vesting milestones, and the company’s share-price performance will determine how much of the warrant ultimately converts into common stock available for sale by Meta.
Summary
Jefferies reaffirmed a Buy rating and $300 target on AMD after the company announced a multi-year supply agreement with Meta that could reach 6GW of Instinct GPU capacity. The deal includes a performance-based warrant for up to 160 million shares exercisable at $0.01 each, with vesting linked to purchase milestones and share-price thresholds. Analyst views are mixed, with Rosenblatt also positive while Mizuho and DA Davidson express caution or neutrality.
Key points
- Jefferies reiterated Buy and a $300 price target on AMD following the Meta partnership announcement.
- The agreement includes a performance-based warrant allowing Meta to purchase up to 160 million AMD shares at $0.01, vesting from 1GW to 6GW of hardware purchases and subject to share-price triggers up to $600 for the final tranche.
- Analyst sentiment is mixed: Rosenblatt also reiterated Buy and $300, Mizuho warned of a potential retracement of recent gains, and DA Davidson started coverage with Neutral and a $220 target.
Risks and uncertainties
- Warrant dilution and cost - The structure imposes a near-term cost to AMD and could generate significant dilution if vesting milestones and share-price conditions are met; this affects equity holders and the technology sector.
- Vesting and performance dependency - Vesting hinges on both hardware purchases and AMD share-price thresholds, creating execution and market-price risk that will influence realization of the warrants; this impacts capital markets and cloud/AI infrastructure procurement.
- Analyst divergence on valuation - Mixed analyst views highlight uncertainty around how the market will price AMD’s progress in AI accelerators versus its CPU businesses, which is relevant to semiconductor and enterprise computing investors.