Top Mizuho analyst Vijay Rakesh increased his price targets for stocks of semiconductor giants Advanced Micro Devices (AMD) and Nvidia (NVDA) despite noting concerns about artificial intelligence (AI) spending and circularity (risk arising from a handful of companies turning to one another for their massive capital needs and computing power). Rakesh reiterated a Buy rating on AMD stock and increased his price target to $275 from $205, citing tailwinds from the recently announced deal with ChatGPT maker OpenAI (PC:OPAIQ).
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Meanwhile, the 5-star analyst raised his price target for NVDA stock to $225 from $205 and reaffirmed a Buy rating, noting the company’s dominance in the AI data center market.
Top Mizuho Analyst Is Bullish on AMD’s OpenAI Deal Despite Risks
Rakesh highlighted that the AMD-OpenAI deal of 6 gigawatts (GW) spans six tranches (1GW each) from Q4 2026 through 2030. He added that the agreement includes a 160 million warrant tied to GW deployments and AMD’s share price, estimated at about $600 for the final tranche. The analyst conservatively forecasts about $14 billion in incremental revenue in Fiscal 2027, reaching up to $22 billion per year by Fiscal 2030. Overall, he sees the deal having a 5-year “face value” of $90 billion, with “some strings attached” and growing investor concerns over AI capital spending and revenue circularity.
Rakesh also noted potential gross margin dilution of more than 300 basis points from warrants. Despite these risks, the analyst noted that the AMD-OpenAI deal is accretive to revenue and earnings per share (EPS). Based on his analysis, Rakesh raised his Fiscal 2027 revenue estimate for AMD by 26% (above the Street’s consensus). Furthermore, he expects EPS upside of 30% to 50%, with EPS doubling to about $11 by 2027-28, though risks related to OpenAI funding remain.
Rakesh made another observation that over the near term, AMD’s MI355 AI server traction could be limited, as its ROCm ecosystem lags Nvidia’s CUDA. However, the analyst noted that AMD’s traditional server market share remains strong at 25% to 30%, though challenges could emerge over the long term as key cloud service providers (CSPs) shift toward ARM Holdings (ARM).
Currently, Wall Street has a Moderate Buy consensus rating on Advanced Micro Devices stock based on 27 Buys and 10 Holds. The average AMD stock price target of $241.82 indicates 8.4% upside potential, as of writing.
Mizuho Is Bullish on NVDA Stock
Meanwhile, Rakesh raised his price target for Nvidia stock, as he continues to view the GPU giant as the AI leader with over $300 billion in AI data center revenue in 2028, followed by Broadcom (AVGO) at $80 billion to $90 billion, and AMD at $40 billion.
Rakesh cautioned that he sees neocloud budgets increasingly strained by Rubin and Instinct pricing, as customers pay more attention to return on investment (ROI). Nonetheless, he concluded that Broadcom and Nvidia are “best-positioned,” while AMD’s OpenAI deal indicates upside potential.
Currently, Nvidia scores Wall Street’s Strong Buy consensus rating based on 35 Buys, two Holds, and one Sell recommendation. The average NVDA stock price target of $219.86 indicates about 16% upside potential, as of writing.
