Key Takeaways
- Amkor Technology shares rose 4.7% on Wednesday after a new $1.3 billion agreement to add capacity for NVIDIA in South Korea, which brings their multi-year agreements to $3 billion.
- NVIDIA is prepaying for Amkor’s capacity, which shows that advanced packaging has become one of the bottlenecks in the AI buildout.
- The prepayments help pay for an expansion that took most of Amkor’s operating cash flow in fiscal 2025: $900 million of capex against $1.1 billion of cash from operations.
- Analysts already expect normalized EPS to rise 71% in 2026, and the third-quarter report after the close on Oct. 26 is the next test.
Amkor Technology (AMKR) shares rose 4.7% on Wednesday after the chip packager said it’s adding capacity in South Korea for NVIDIA (NVDA) under a new $1.3 billion agreement.
That brings Amkor’s multi-year agreements with NVIDIA in Arizona and South Korea to $3 billion, and NVIDIA is prepaying to lock in that capacity. The news landed at 7:30 a.m. ET, about an hour after NVIDIA announced new capacity agreements with its supply-chain partners.
“Our partnership with NVIDIA underscores the critical role advanced packaging plays in enabling next-generation AI platforms,” said Kevin Engel, Amkor’s president and CEO, in the company’s release.
NVIDIA is footing part of the bill
When the world’s biggest AI chipmaker pays a supplier up front, it’s telling you that supplier’s capacity is scarce. Packaging has become one of the things holding back the AI buildout, and NVIDIA wants its place in line.
That matters for Amkor’s cash. Its operations have brought in about $1.1 billion a year since fiscal 2021, while capital spending climbed to $900 million in fiscal 2025…
…leaving roughly $200 million of free cash flow. With NVIDIA prepaying, Amkor doesn’t have to squeeze all of its new Korean and Arizona capacity out of that.
Arizona came first. In July, NVIDIA agreed to prepay $1.5 billion for Amkor’s expansion there. A month earlier, Amkor signed a 10-year U.S. packaging partnership with Taiwan Semiconductor Manufacturing Company Limited (2330).
So the two most important companies in AI hardware now have long-term deals with Amkor. And in September, Amkor raised its planned Arizona campus investment to $12 billion, which makes every prepaid dollar count.
TIKR tracks 11 analysts on Amkor Technology. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Amkor Technology, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Amkor Technology’s Analyst Ratings
Analysts were already bullish
The Street expected a big year before Wednesday’s deal. Consensus has normalized EPS jumping from $1.50 in fiscal 2025 to $2.57 in 2026, a 71% leap, then reaching $3.30 by 2028:
New capacity takes time to build, so this deal is more likely to lift the 2027 and 2028 estimates than anything in the coming third-quarter report.
And the stock isn’t stretched. At Tuesday’s close, Amkor traded at 14.9x forward earnings, a bit below its five-year average of 16.0x:
Even after Wednesday’s gain, Amkor traded at about 13.9x forward earnings, just under its five-year average of 16.0x. Most of the damage came in July, when weak third-quarter revenue guidance sent the stock tumbling.
The risk is that the good news is already in the price. B. Riley, which rates the stock Neutral, cut its target to $46 from $65 on Tuesday, ahead of third-quarter results. Wednesday’s gain left shares near $44, so they’re within a few dollars of that target.
My take: NVIDIA paying up front is the clearest sign yet that Amkor’s AI business has real staying power. At a multiple just under its average, the stock doesn’t need everything to go right.
Of course, the third-quarter report after the close on Oct. 26 is the next test. Watch whether management raises its outlook on the back of the NVIDIA capacity. It’s also management’s first chance since July to win back investors burned by that guidance.
So what is Amkor stock actually worth?
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