Shares in Advanced Micro Devices climbed back above $500 after Oppenheimer upgraded the chipmaker to Outperform with a $600 price target, and Google Cloud selected AMD's server processors to power its latest artificial intelligence system.

AMD closed at $508.58 on Monday, 9 November, up 13.26%, or $59.54, from its previous close of $449.04. The shares had fallen to about $402 in the previous week before recovering in two sessions, and they held above $500 on Tuesday, closing at $515.21.

Oppenheimer raises target to $600

Oppenheimer analyst Rick Schafer upgraded AMD to Outperform from Perform in a note on Sunday, 8 November, and set a $600 price target, implying about 18% upside from Monday's close and about 34% from Friday's close. The brokerage raised its revenue and earnings estimates after speaking with AMD's chief financial officer Jean Hu, and it models data-centre revenue growth of 135% in 2027, when it expects data-centre products to make up about 85% of total sales.

The upgrade followed AMD's record third quarter, reported on 3 November, when revenue rose 45% to $13.38 billion and adjusted earnings reached $2.09 per share, above the roughly $1.95 expected. Data-centre revenue nearly doubled to $8.55 billion, and the company guided fourth-quarter revenue to about $17 billion, above the roughly $16.23 billion analysts had forecast.

Google picks EPYC for new TPU system

AMD also said on Monday that its fifth-generation EPYC server processors will power Google Cloud's new TPU 8tx system. The platform combines Google's custom AI accelerators with AMD's server processors, which handle workload scheduling, data preparation and communication between chips, and it is the first cloud TPU system to offer hardware-enforced confidential computing to protect AI models and enterprise data.

AMD said EPYC processors now serve more than 10 leading cloud providers and AI laboratories. The company has not said when the TPU 8tx system will be broadly available or how much revenue the deployment will generate.

Looking ahead, AMD plans to launch a new AI chip each year, with the MI500 series due in 2027 and the MI600 following in 2028, while a strategic partnership with Anthropic is scheduled to ramp up in the first quarter of 2027. Oppenheimer said favourable pricing on next-generation deals should support the outlook, although the firm also noted that AMD must keep executing to justify demanding valuations.

The rally added nearly $100 billion to AMD's market value in a single session and erased the rest of last week's steep sell-off, when chip stocks fell on doubts about the pace of AI infrastructure spending. AMD shares remained up about 137% for the year, according to TheStreet, even after the pullback that followed its earnings report. Read the FX Leaders report on the upgrade and Google win and the Motley Fool account of Monday's trading.