AMD Challenges Nvidia's AI Dominance with Massive OpenAI Deal

AMD wins massive AI chip deal from OpenAI with stock sweetener

On Monday, AMD announced it will supply AI chips to OpenAI in a multi-year deal worth tens of billions of dollars annually that gives the ChatGPT creator an option to acquire up to 10 percent of the chipmaker's stock for 1 cent per share, Reuters reports. The agreement covers hundreds of thousands of AMD's AI graphics processing units over several years starting in the second half of 2026. The deal marks a major endorsement of AMD's AI hardware and software capabilities as the company competes with Nvidia for dominance in the AI chip market. AMD executives project the agreement will generate more than $100 billion in new revenue over four years from OpenAI and other customers who follow OpenAI's lead. "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," AMD Executive Vice President Forrest Norrod told Reuters on Sunday. The chipmaker will start booking income from the deal next year when OpenAI starts building a 1 gigawatt facility based on AMD's forthcoming MI450 series chips. As part of the arrangement, AMD will allow OpenAI to purchase up to 160 million AMD shares at 1 cent each throughout the chips deal. OpenAI diversifies its chip supply With demand for AI compute growing rapidly, companies like OpenAI have been looking for secondary supply lines and sources of additional computing capacity, and the AMD partnership is part the company's wider effort to secure sufficient computing power for its AI operations. In September, Nvidia announced an investment of up to $100 billion in OpenAI that included supplying at least 10 gigawatts of Nvidia systems. OpenAI plans to deploy a gigawatt of Nvidia's next-generation Vera Rubin chips in late 2026. OpenAI has worked with AMD for years, according to Reuters, providing input on the design of older generations of AI chips such as the MI300X. The new agreement calls for deploying the equivalent of 6 gigawatts of computing power using AMD chips over multiple years. Beyond working with chip suppliers, OpenAI is widely reported to be developing its own silicon for AI applications and has partnered with Broadcom, as we reported in February. A person familiar with the matter told Reuters the AMD deal does not change OpenAI's ongoing compute plans, including its chip development effort or its partnership with Microsoft.

Even after Stargate, Oracle, Nvidia and AMD, OpenAI has more big deals coming soon, Sam Altman says | TechCrunch

At nearly the same moment as Nvidia CEO Jensen Huang was expressing surprise over OpenAI's multi-billion-dollar deal with competitor AMD -- shortly after his company agreed to invest up to $100 billion into the AI model maker -- Sam Altman was saying that more such deals are in the works. Huang appeared on CNBC's Squawk Box on Wednesday. When asked if he knew about the AMD deal before it was announced, he answered, "Not really." As TechCrunch previously reported, OpenAI's deal with AMD is unusual. AMD has agreed to grant OpenAI large tranches of AMD stock -- up to 10% of the company over a period of years contingent on factors like increases in stock price. In exchange, OpenAI will use and help develop the chipmaker's next generation AI GPUs chips. This makes OpenAI a shareholder in AMD. Nvidia's deal is the reverse. Nvidia has invested in the AI model-making startup, making it a shareholder in OpenAI. While OpenAI has been using Nvidia gear for years through cloud providers like Microsoft Azure, Oracle OCI and CoreWeave, "This is the first time we're going to sell directly to them," Huang explained. He added that his company would still continue to supply gear to the cloud makers, too. These direct sales, which include AI gear beyond GPUs like systems and networking, are intended to "prepare" OpenAI for the day when it is its own "self-hosted hyperscaler," Huang said. In other words, when it's using its own data centers. But Huang admits that OpenAI doesn't "have the money yet" to pay for all of this gear. He estimated that each gigawatt of AI data center will cost OpenAI "$50 to $60 billion," to cover everything from the land and power to the servers and equipment. So far, in 2025, OpenAI has commissioned 10 gigawatts worth of U.S. facilities through its $500 billion Stargate deal with partners Oracle, and SoftBank. (Plus, it penned a $300 billion cloud deal with Oracle.) Its partnership with Nvidia was for at least 10 gigawatts of AI data centers. Its partnership with AMD was for 6 gigawatts. Plus its "Stargate UK" partnership involves expanding data centers in the UK, and it has other European commitments. By some estimates, OpenAI has this year inked $1 trillion dollars worth of such deals. Similar to the AMD deal, Nvidia's deal has been criticized for being so-called "circular," Bloomberg reported. The critics say Nvidia is essentially underwriting OpenAI's purchases, getting the AI startup's stock for its efforts. As Huang was dissecting OpenAI's infrastructure needs on CNBC, OpenAI CEO Sam Altman's interview with Andreessen Horowitz's The a16z Podcast dropped. During the pod, a16z co-founder Ben Horowitz told Altman that he's "very impressed by deal structure improvement" referring to these most recent deals. A16z is an OpenAI investor, so it would be shocking if he wasn't impressed. OpenAI has found a way to potentially obtain billions of dollars of equipment on someone else's dime. Repeatedly. When asked about these recent deals, Altman said, "You should expect much more from us in the coming months." Altman sees OpenAI's future models and upcoming other products as so much more capable, thereby fueling so much more demand, that "we have decided that it is time to go make a very aggressive infrastructure bet," he explained. The problem is that OpenAI's revenue today is currently nowhere near a $1 trillion though it is, by all accounts, growing rapidly, reportedly hitting $4.5 billion in the first half of 2025. Yet Altman obviously believes that eventually all of this investment will pay for itself. "I've never been more confident in the research road map in front of us and also the economic value that will come from using those [future] models." But, he said, OpenAI can't get to all of that economic lushness on its own. "To make the bet at this scale we kind of need the whole industry, or big chunk of the industry, to support it. And this is from the level of electrons to model distribution and all the stuff in between, which is a lot. So we're going to partner with a lot a lot of people," Altman said, with more deals expected in the coming months. So stand by, tech industry. OpenAI is still wheeling and dealing.

OpenAI's Blockbuster AMD Deal Is a Bet on Near-Limitless Demand for AI

OpenAI announced Monday that it will acquire several data centers' worth of chips from AMD in a blockbuster deal that could also give OpenAI the option to acquire a roughly 10 percent stake in the chipmaker. It's another bold bet from OpenAI that demand for generative artificial intelligence will continue rising -- bubble be damned. "Excited to partner with AMD to use their chips to serve our users!" OpenAI CEO Sam Altman said on X; adding that the company will also ramp up its investments in Nvidia chips. He added: "The world needs much more compute..." OpenAI said in a blog post this morning that it would commit to purchasing 6 gigawatts' worth of AMD chips over the next several years. The first deployment of a gigawatt worth of AMD Instinct MI450 GPUs will take place in the second half of 2026, the company said. The deal also involves AMD issuing OpenAI the right to purchase up to 160 million shares of AMD common stock (roughly a 10 percent stake). OpenAI will be able to acquire the stocks as it deploys AMD's chips. Today's announcement should also help AMD challenge Nvidia in supplying chips for AI training and inference. "This is a breakthrough achievement for AMD," Patrick Moorhead, a prominent chip industry analyst wrote on X in response to today's news. "It will be a strategic supplier for the leading AI company and this will attract even more tier 1 customers." This deal is just the latest in a string of data center investments involving OpenAI and other tech firms. Shortly after his inauguration in January, US president Donald Trump announced that OpenAI, SoftBank, and Oracle would invest $100 billion in building AI data centers on US soil and would pour up to $500 billion into AI infrastructure over time.

Wall Street analysts explain how AMD's own stock will pay for OpenAI's billions in chip purchases | TechCrunch

After AMD and OpenAI announced an expanded partnership on Monday, the chatter immediately turned to the unusual way OpenAI would pay for its AMD purchases. It will use AMD's own stock to do so. To recap: OpenAI has agreed to help AMD refine its line of Nvidia competitor chips, the Instinct GPUs, as well as to purchase and deploy 6 gigawatts of compute capacity from AMD over multiple years. AMD said this deal is worth billions in revenue. But OpenAI isn't paying for this out of its own revenues. Instead AMD has granted OpenAI a boatload of stock warrants -- up to 160 million AMD shares -- which will vest in tranches as certain milestones are achieved. Those milestones include specific increases in the stock price, with the last tranche dependent on AMD shares soaring to $600 million apiece, AMD disclosed. They were trading at about $165 before the news hit and soared to $214 by market close Monday after the announcement. If the stock price hits its marks, and OpenAI achieves all its required contributions, and OpenAI holds all of AMD's shares, not selling any along the way, OpenAI may make enough on AMD stock to pay for a lot of GPUs. The stock could be worth about a $100 billion. "We would note that the final 6th tranche requires ~$1T market cap to vest - ergo, if OAI were to hold stock until the end of the deal, its stake would be worth ~$100B," writes UBS analyst Timothy Arcuri in a research note on Tuesday. But Arcuri believes that a more likely scenario is that OpenAI will sell its AMD stock along the way to pay its AMD bill. So, essentially, this is a scheme for AMD to finance this customer's purchases. Still, Arcuri argues, the validation that AMD's AI GPUs can handle OpenAI workloads, and ergo any other AI workloads, is valuable enough for AMD to make this financing gambit. "AMD highlighted ongoing customer dialogs beyond OpenAI and expects this agreement to ultimately accelerate AMD adoption momentum," he writes. In particular, OpenAI's stamp of approval gives it an in to sell its GPUs to the many cloud service providers it already provides with CPUs. So in the long run, the ones who will truly be paying for OpenAI's giant multi-year purchase of AMD GPUs will be retail and intuitional investors if they do indeed bid the stock price up. In many ways Nvidia is also financing OpenAI's purchases of Nvidia's wares with its own $100 billion investment announced last month. The difference, of course, is that Nvidia's multiple investments in OpenAI has granted Nvidia a stake in the fast-growing AI provider, not the other way around. But what choice did AMD have? By financially engineering a deal that costs OpenAI little, it gets a significant foothold -- as much as 30% marketshare, USB estimates -- into one of the biggest build-outs of next-generation data centers the world has ever seen. While Arcuri admits that AMD's deal is "arguably less attractive" than Nvidia's, "we see this as a major validation of its [AMD's] roadmap that could snowball to other customers."

AMD teams up with OpenAI to challenge Nvidia's AI chip dominance

AMD is partnering with OpenAI to provide six gigawatts worth of processors for AI data centers, a move that challenges Nvidia's AI chip market dominance. The five-year agreement aims to help OpenAI bolster its infrastructure to meet growing computational demands for AI applications like ChatGPT, starting with a gigawatt deployment of AMD Instinct MI450 GPUs in the second half of 2026, according to AMD's press release. The financials of the deal have not been disclosed, but AMD said it expects the agreement to deliver "tens of billions of dollars in revenue" for the company. "We are thrilled to partner with OpenAI to deliver AI compute at massive scale," AMD CEO Lisa Su said in the announcement. "This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem."

AMD to supply 6GW of compute capacity to OpenAI in chip deal worth tens of billions | TechCrunch

AMD has signed a multi-year chip supply deal with OpenAI that could generate tens of billions in revenue for the chipmaker, helping accelerate its momentum in the AI industry. AMD has agreed to supply 6 gigawatts of compute capacity to OpenAI -- enough to power up to 4.5 million homes -- across multiple generations of its Instinct GPUs, starting with the Instinct MI450 GPU. OpenAI will receive the first gigawatt of capacity in the second half of 2026, when the new chip is scheduled for deployment. AMD claims the MI450 series will outperform Nvidia's comparable offerings (NVIDIA Rubin CPX) through hardware and software improvements, many of which will be made with OpenAI's input. Its current MI355X and MI300X series GPUs, currently used in some workloads for OpenAI, are already strong for AI inference in large language models due to their large memory capacity and bandwidth. As part of the agreement, AMD has given OpenAI the option to buy up to 160 million shares of AMD stock, which amounts to a 10% stake. The first tranche will vest with the initial 1 gigawatt deployment, and additional tranches will vest as OpenAI buys up to the total 6 gigawatts, AMD said. OpenAI's stake will also be directly tied to increasing AMD's stock price milestones, with the final tranche vesting when the stock reaches $600 per share. For context, AMD shares closed at $164.67 on Friday, but started off Monday at $222.24, up nearly 35% following news of the deal. The deal comes as OpenAI works to secure as many chip partnerships as possible in its race to build out AI infrastructure, including five new Stargate data centers with a planned capacity of 7 gigawatts. "We are thrilled to partner with OpenAI to deliver AI compute at massive scale," said Dr. Lisa Su, chair and CEO of AMD, in a statement. "This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem." OpenAI CEO Sam Altman said in a statement that the partnership is "a major step in building the compute capacity to realize AI's full potential." This is the latest of several deals the AI giant has made in recent weeks to secure compute capacity. Last month alone, Nvidia agreed to invest up to $100 billion in OpenAI and supply the AI firm with at least 10 gigawatts; OpenAI and Broadcom also signed a $10 billion deal to develop and manufacture custom AI chips; and OpenAI said its Stargate initiative with Oracle and SoftBank would be expanding. Last week, OpenAI struck agreements with Samsung Electronics and SK Hynix to source DRAM memory chips for the Stargate project and build data centers in South Korea.

Nvidia Isn't Enough -- OpenAI Turns to AMD for GPUs, Too

Don't miss out on our latest stories. Add PCMag as a preferred source on Google. OpenAI needs so many GPUs that it's now turning to Nvidia's biggest rival, AMD, for more chips. On Monday, OpenAI announced a deal to source up to 6 gigawatts of computing power from AMD. Financial terms, including how much OpenAI will spend, were not disclosed. However, the agreement involves OpenAI purchasing up to 160 million shares of AMD stock at $0.01 per share -- or a 10% stake -- contingent upon specific milestones being achieved. In exchange, OpenAI will deploy 1 gigawatt worth of AMD's Instinct MI450 enterprise GPUs starting in the second half of 2026. AMD also told The Wall Street Journal it expects each gigawatt of compute to cost tens of billions of dollars. The deal is surprising since OpenAI has long touted its partnership with Nvidia -- the leading provider of AI GPUs. Two weeks ago, OpenAI also announced a similar agreement with Nvidia for at least 10 gigawatts of AI data center capacity. But in that case, Nvidia is going to invest up to $100 billion in OpenAI. In return, the San Francisco lab is adopting Nvidia's next-generation GPUs, including the Vera Rubin architecture. OpenAI potentially owning a 10% stake in AMD might also raise concerns about whether the deal poses a threat to its partnership with Nvidia. However, CEO Sam Altman said in a tweet: "This is all incremental to our work with Nvidia (and we plan to increase our Nvidia purchasing over time). The world needs much more compute..." IT industry analyst Patrick Moorhead added that the deal is about OpenAI incentivizing AMD to "scale" its AI GPUs to the point they can be deployed widely across data centers. Altman literally needs millions of additional GPUs for his plan to power next-generation AI, which requires building numerous power-hungry data centers. OpenAI's CEO even envisions the tech industry possessing enough capacity to "produce a gigawatt of new AI infrastructure every week." It's a tall task considering OpenAI is already building a data center about 60 football fields in size in Texas that'll offer only about 1.2 gigawatts of compute. In contrast, the Hoover Dam generates about 2 gigawatts of electricity. Last month, OpenAI also signed a $300 billion contract to buy computing power from Oracle. The eye-popping figures are naturally causing analysts and investors to wonder if OpenAI can actually come up with the cash, and if the investments will pay off. On social media, some users accuse the companies of propping up their stocks and valuations by announcing such deals when the funding remains unclear. According to The Information, OpenAI generated $4.3 billion in revenue during the first half of this year, but incurred $2.5 billion in costs.

OpenAI and AMD announce multibillion-dollar partnership -- AMD to supply 6 gigawatts in chips, OpenAI could get up to 10% of AMD shares in return

OpenAI and AMD have announced a multibillion-dollar partnership that will see the companies collaborate on AI data centers powered by AMD processors. OpenAI has committed to purchasing 6 gigawatts of AMD chips, starting with the MI450 next year. That will be done either by purchasing the chips directly from AMD or through cloud computing partners. AMD CEO Lisa Su told the WSJ that the deal would generate tens of billions of dollars in revenue for AMD over the next five years. The two companies are not disclosing the exact financial details of the deals. However, AMD emphasized that each "per gigawatt" of capacity is worth tens of billions of dollars, so it's possible the deal is worth upwards of $60 billion. In return, OpenAI will receive warrants for up to 160 million AMD shares, approximately 10% of AMD, at a price of $0.01 per share, to be awarded in phases, provided that OpenAI meets deployment milestones. The warrants will only be exercised if AMD's share price increases, although again, the specifics are unclear. The deal is an enormous win for AMD and stands juxtaposed with Nvidia's groundbreaking Intel partnership announced last month. Under the terms of that deal, Nvidia and Intel are jointly developing Intel x86 RTX SOCs for PCs featuring Nvidia graphics, as well as custom Nvidia data center x86 processors. Nvidia also received $5 billion in Intel stock as part of the deal. OpenAI will use AMD's chip for inference in order to cope with skyrocketing demand. "It's hard to overstate how difficult it's become... We want it super fast, but it takes some time." OpenAI's Sam Altman said to WSJ. "We are thrilled to partner with OpenAI to deliver AI compute at massive scale," said Dr. Lisa Su, chair and CEO, AMD. "This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem." The first deployment will be 1 gigawatt worth of MI450 chips, scheduled for the second half of 2026. Altman said the AI buildout has reached a phase "where the entire industry's got to come together and everybody's going to do super well," not only on chips and data centers, but also further down the supply chain too. OpenAI has also inked a $100 billion deal with OpenAI, and will use Nvidia's investment to secure and deploy 10 gigawatts worth of AI data centers. While that deal isn't finalized, AMD and OpenAI reportedly say this deal is "definitive" and plan to immediately file the requisite details with regulators, a step that has yet to happen in the Nvidia deal.

Stargate isn't big enough yet to make OpenAI-AMD-Nvidia work

Since revealing Stargate in January, Altman and friends have brought about 200 MW online - they'll need at least 16 GW to claim their red and green prize Comment AMD has issued OpenAI a warrant for roughly 10 percent of its stock. In exchange, the AI model giant will work with its partners (such as Oracle) to deploy up to 6 gigawatts' worth of AMD GPUs. But while Wall Street rejoices and AMD's share price rallies, OpenAI faces a very real problem. To make good on either the AMD deal or a similar one with Nvidia, it will need to expand its Stargate datacenter initiative massively. Even then, AMD and Nvidia are still getting the better end of the deal here. Nvidia's agreement to pony up to $100 billion for 10 gigawatts with OpenAI is really just the GPU giant scratching its own back. Nvidia sells GPUs and networking kit at a sizable margin to the likes of Oracle, who in turn rent them to OpenAI at a profit. And because those payouts are tied to specific capacity milestones, Nvidia and its datacenter and cloud partners are guaranteed a return on every dollar invested in OpenAI. It's a bit like giving out a "buy four get one free" coupon. AMD's tie-up with OpenAI is similar in many respects, but House of Zen lacks Nvidia's war chest. So instead, CEO Lisa Su is essentially making a trade. AMD has granted OpenAI a warrant to purchase up to 160 million shares of common stock at just a penny apiece in exchange for driving up AMD Instinct's share of the GPU market. Assuming OpenAI hits its milestones and AMD's share price grows as it anticipates, OpenAI will be able to use its equity in the company as collateral to solicit new debt financing, and buy time while it figures out how to extract enough cash from AI developments to justify the investment. And considering that Altman doesn't expect to turn a profit until at least 2029 at the earliest, the company is going to need all the financial help it can get. While six gigawatts in exchange for the option to buy 160 million shares of AMD common stock certainly got the market's attention -- AMD's stock surged by as much as 35 percent on the news -- the figures represent an upper bound. Just like OpenAI's partnership with Nvidia, the deal is structured in such a way that the AI flag bearer can only exercise its options on the first tranche of AMD stock after its partners have deployed a gigawatt of Instinct GPUs. Even then, OpenAI is under no obligation to execute on its warrant -- though they'd be crazy not to. The bigger problem is OpenAI doesn't actually have the datacenter capacity necessary to see either deal through. As of October, OpenAI has only received commitments for about seven gigawatts of Stargate datacenter capacity, and from what we understand, Crusoe and Oracle have only managed to bring about 200 megawatts online at the company's flagship Stargate datacenter in Abilene, Texas. Stargate's addressable compute capacity is expected to grow significantly over the next year. Crusoe is slated to bring six new buildings online by mid-2026, bringing its Texas campus to about 1.2 GW total capacity. Along with OpenAI's Abilene centers, Oracle, which also happens to be one of the few companies with experience deploying large quantities of AMD Instinct hardware, has committed to overseeing about 5.7 gigawatts of compute over the next four years. AMD expects to begin delivering the first gigawatt of capacity in the second half of next year. So what exactly would that mean for the chip biz? The answer to that depends on a number of factors, notably system power and pricing. At this point, AMD has only teased its MI400-series Helios rack systems and we don't yet have good information on either data point. But, assuming peak system power consumption comes in somewhere in the neighborhood of 250kW, we're looking at around 3,200 double-wide rack systems or around 230,000 GPUs per gigawatt of datacenter capacity. Even a single gigawatt-scale deployment of MI400 would have a meaningful impact on AMD's GPU market share. If we assume the House of Zen can sell its Helios rack systems for at least $3.5 million apiece -- roughly in line with what Nvidia is charging for its own NVL72 rack systems today -- it's looking at least $11.2 billion in revenues.

AMD Shares Soar on OpenAI Deal

Advanced Micro Devices Inc. shares surged in premarket trading after the chipmaker signed a deal with OpenAI for AI infrastructure that could generate tens of billions of dollars in new revenue. The two signed a definitive agreement for OpenAI to deploy 6 gigawatts of AMD graphics processing units over multiple years, the companies said Monday in a statement. AMD has given OpenAI a warrant for as many as 160 million shares which will vest as milestones are achieved. Those targets require AMD's stock price to continue to increase in value and future exercise points include a tranche tied to a share price of $600. AMD shares closed Friday at $164.67. (Source: Bloomberg)

How OpenAI put itself at the centre of a $1tn network of deals

The pursuit of a humanlike artificial intelligence does not come cheap. OpenAI, the company that sparked the tech industry's AI race, recognises that its quest will need more capital than any investment project in corporate history. As a result, it has been forging new and unusual financial bonds with some of the biggest names in tech. "We have decided that it is time to go make a very aggressive infrastructure bet," chief executive Sam Altman said on a podcast with venture capital firm Andreessen Horowitz this week. "To make the bet at this scale, we kind of need the whole industry, or a big chunk of the industry, to support it." The size of that gamble has become clear in recent weeks as the company behind ChatGPT has lined up a series of deals that could lead to it spending more than $1tn on computing power. Tapping into that much capital has led OpenAI to weave deals that draw on the financial resources of other Big Tech companies, adding to a growing web of financial dependencies across the AI world. In the process, it could be helping to create a new level of systemic risk in an industry that may already have entered bubble territory. The latest evidence of Altman's unconventional dealmaking was an agreement this week with chipmaker AMD that could eventually result in OpenAI buying enough chips to require six gigawatts of electric power, three times the capacity of the Hoover dam. Each gigawatt of new computing capacity is generally assumed to require capital investment of about $50bn, of which some two-thirds could flow to AMD to pay for chips. OpenAI, however, has only placed a firm order for the first gigawatt, and it is not clear how much of this deal -- or other parts of its mammoth spending spree -- will ever be fully realised. The arrangement also came with an unusual sweetener that could lead to AMD in effect giving OpenAI about 10 per cent of its stock, currently worth $36bn. This is just one of the financing novelties that OpenAI has visited on the markets recently. Late last month, it reached a preliminary agreement for chipmaker Nvidia to inject up to $100bn in equity in 10 instalments, each tied to OpenAI placing orders for 1GW of Nvidia chips. OpenAI also confirmed last month that it had agreed to pay $300bn in a five-year deal to buy data centre capacity from Oracle. Parsing the risks from giant transactions like these has brought a new complexity to the financing of the AI boom. One challenge has been weighing the odds that these and other megadeals will ever be fully consummated. Among the unknowns: whether demand for AI services will be strong enough to justify building all the data centres, whether the new facilities can be financed, built and equipped, and whether there will be enough electricity to power them. Under US accounting rules, companies can only report expected future revenue -- known as "remaining performance obligations" -- on contracts that cannot be cancelled. But that does not mean Oracle's shareholders can treat OpenAI's $300bn promise as money in the bank. If demand for its services falls short, OpenAI may simply be unable to pay, or the two sides could choose to renegotiate. Oracle's shares jumped 36 per cent on news of its growing book of AI business, but they have since given up a third of those gains. Beyond the sheer scale and uncertainty of contracts like this, meanwhile, there are also questions about whether they are leading to new interdependencies and wider systemic risks in the AI world. The circularity of the way money moves between companies in some transactions, for instance, could inflate the apparent level of demand. With more interdependence, a setback at one big AI player could reverberate through the industry. And, depending on how they are financed, the effects could spread beyond the AI world, putting a dent in the wider financial system. For sceptics who have questioned whether OpenAI and others can finance or build AI data centres on the massive scale they have promised, the latest slew of deals stretches credulity. "How are they going to pay for it all?" says Charles Fitzgerald, a tech investor and former Microsoft executive. "Maybe their real value will be in financial engineering." OpenAI has not been alone in forging unusual deals with suppliers. To a large extent, this reflects a move by some of the biggest tech companies to use their powerful balance sheets and cash flow to support new AI start-ups that are also their customers. Google and Amazon, for instance, have invested billions of dollars in AI model builder Anthropic, which is a customer of their cloud computing arms. Those deals echo the $13bn that Microsoft has ploughed into OpenAI, a cloud customer and broader business partner. Nvidia has been among the most active, using its spare cash to fund a new generation of AI infrastructure companies that are also its customers, including CoreWeave and Lambda Labs. To some, the heavy dependence on money from suppliers is a sign of potential instability. Nvidia has become "the central bank of AI, they're the lender of last resort", says Fitzgerald. Taking equity from vendors, and using the money to support further borrowings, has made the AI boom dependent on a high level of convoluted financial engineering, he adds. The circularity has also prompted questions about how sustainable the revenues will turn out to be. It echoes arrangements that were a common feature of the dotcom bubble at the end of the 1990s, says Bill Janeway, a former chair of investment firm Warburg Pincus. Back then, an enterprise software company might have paid to advertise with a new internet media company, in return for the media company buying its software. That artificial arrangement would have created the illusion of stronger demand for both companies' services, adds Janeway. In the closest parallel to today's AI infrastructure boom, telecom equipment companies such as Lucent and Nortel advanced money to customers in the 1990s to buy equipment, only to face write-offs when a wave of bankruptcies hit the industry. Yet many observers claim there are big differences in the present boom. AI companies report that demand for their services is greatly outstripping supply, making this a far cry from the 1990s telecom bubble when start-ups built capacity for which there was no immediate need, says Tomasz Tunguz, a venture capitalist at Theory Ventures. Even if this type of circularity has yet to become a cause of serious concern, it highlights the broader interconnectedness in the AI world among a group of companies that have a variety of overlapping relationships as investors, customers or partners, as well as high levels of customer concentration. If a company like OpenAI were forced to retrench, it would ricochet through the industry. One sign of the concentration is that four Nvidia customers generated 46 per cent of sales in the most recent quarter, while just three accounted for 56 per cent of accounts receivable at the end of July. Yet even this level of concentration is not out of the ordinary in the tech world, says Jim Tierney, a portfolio manager at AllianceBernstein. Having five or six competitors makes the AI market highly competitive, he says. Were OpenAI to cut back its capital spending, other big AI companies -- some of which have extremely strong balance sheets -- might see it as an opportunity to step up their own investments. A more serious cause for concern, according to many observers, stems from the growing amounts of debt being used in the AI build-out. When tech bubbles burst, they can leave stock market investors nursing heavy losses without causing wider damage to the economy, says former Warburg Pincus chair Janeway. It is only when bubbles are fuelled by large amounts of debt that the risks to the financial system become serious. "I don't worry about the circulation of the cash flow, as long as it's not debt-funded," says Janeway. "The real economic destruction is from companies that go bust and have borrowed money they can't repay." Debt is already starting to play a more significant role in the AI build-out. This week, it was reported that Elon Musk's xAI is looking to raise $12.5bn in debt as part of a $20bn capital raise. Last month, Oracle tapped the bond market for $18bn to help finance its data centres. Among the questions is where the cash flow will come from to support the heightened level of borrowing, and who will end up carrying the can if AI demand does not grow as expected. A common structure used to finance data centres involves the creation of special purpose vehicles backed by large amounts of private credit. Arrangements like these have the advantage of staying off the balance sheets of the tech companies involved and are ringfenced from other projects. "There's not a lot of visibility into what's going on," says Tunguz, the venture capitalist, of private credit arrangements like these. This type of lending "is leveraged, and it's one step removed from the banks", adds Janeway. In the event that a data centre project cannot generate the cash flow to support its debt load, the losses could feed back into the banking system, he says. OpenAI's CEO, meanwhile, shows little concern about the scale of the spending that lies ahead -- even though his company's revenue, which has reached an annualised run rate of $13bn, is dwarfed by the $1tn of investment it is planning. The pay-off, Altman said this week, would come from technology that was still on the drawing board. It will be based on AI models that his company has not developed yet, running on future generations of chips that would not even start shipping until the second half of next year. "I've never been more confident in the research road map in front of us", he said, "and also the economic value that'll come from using those models."

AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

SAN FRANCISCO, Oct 6 (Reuters) - AMD (AMD.O), opens new tab said on Monday it will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10% of the chipmaker. Shares of AMD surged more than 35% in premarket trading, putting them on track to open at their highest level since March 2024, if gains hold. The latest deal, among a string of investment commitments, is a testament to OpenAI and the broader AI industry's voracious appetite for computing power as companies race toward developing AI technology that meets or exceeds human intelligence. The deal offers OpenAI an opportunity to take a stake in one of Nvidia's (NVDA.O), opens new tab most formidable rivals and is a major vote of confidence in AMD's AI chips and software. "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," AMD executive vice president Forrest Norrod told Reuters on Sunday. The agreement covers the deployment of hundreds of thousands of AMD's AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026. AMD said OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips beginning next year, and that it would begin to recognize revenue then. AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple effect of the agreement, AMD expects to receive more than $100 billion in new revenue over four years from OpenAI and other customers, they said. "Other people are going to come along with it because this is really the pioneer, a pioneer in the industry that has a lot of influence over the broader ecosystem," AMD strategy chief Mat Hein said. The deal with AMD will help OpenAI build enough AI infrastructure to meet its needs, OpenAI CEO Sam Altman said in a statement. It was not immediately clear how OpenAI would fund the massive deal with AMD. OpenAI has generated around $4.3 billion in revenue in the first half of 2025 and has burned through $2.5 billion in cash, according to media reports, as the startup splurges on attracting top talent, while investing heavily in developing new AI tools. Analysts, on average, estimate AMD will generate revenue of $32.78 billion this year, according to LSEG data. As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chips deal. The warrant vests in tranches based on milestones that the two companies have agreed on. The first tranche will vest after the initial shipment of MI450 chips set for the second half of 2026. The remaining milestones include specific AMD stock price targets that escalate to $600 a share for the final installment of stock to unlock. AMD has 1.62 billion shares outstanding and is valued at $267.23 billion, according to LSEG data. Its shares closed on Friday at $164.67. OpenAI has a valuation of $500 billion. OPENAI WANTS MORE GPUs OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips such as the MI300X. The San Francisco-based AI company has been taking a number of steps to ensure it has the chips needed for its future needs. In September, Nvidia announced an investment of up to $100 billion in OpenAI that included a plan to supply at least 10 gigawatts worth of Nvidia systems. The plan includes OpenAI deploying a gigawatt of Nvidia's next-generation Vera Rubin chips in late 2026. Altman has floated expectations of reaching 250 gigawatts of compute in total by 2033, The Information has reported. In addition to using Nvidia hardware, cloud computing giants such as Alphabet's (GOOGL.O), opens new tab Google and Amazon (AMZN.O), opens new tab build their own in-house processors. Similarly, OpenAI is in the process of developing its own silicon for AI use and has partnered with Broadcom (AVGO.O), opens new tab, Reuters reported last year. Shares of Nvidia dipped more than 1%, while those of Broadcom fell 1.5% in trading before the bell. OpenAI and its main backer Microsoft (MSFT.O), opens new tab also announced last month that they had signed a non-binding agreement to restructure OpenAI into a for-profit entity, signaling further changes in the governance of the fast-growing AI company. A person familiar with the matter said the deal with AMD does not change any of OpenAI's ongoing compute plans, including that effort or its partnership with Microsoft. Reporting by Max A. Cherney in San Francisco; Additional reporting by Deepa Seetharaman in San Francisco and Arsheeya Bajwa in Bengaluru; Editing by Muralikumar Anantharaman and Anil D'Silva Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence Max A. Cherney Thomson Reuters Max A. Cherney is a correspondent for Reuters based in San Francisco, where he reports on the semiconductor industry and artificial intelligence. He joined Reuters in 2023 and has previously worked for Barron's magazine and its sister publication, MarketWatch. Cherney graduated from Trent University with a degree in history.

AMD's deal with OpenAI gives Nvidia much-needed challenger in market it dominates

Benoit Tessier | Ritzau Scanpix | Mads Claus Rasmussen | Reuters In the 1990s, when Intel dominated the PC chip market, the semiconductor maker needed Advanced Micro Devices to exist as a viable No. 2 to help avoid being charged with monopolistic behavior. Almost three decades later, AMD may be serving a similar role for Nvidia, which controls over 90% of the market for graphics processing units used for artificial intelligence workloads. When AMD announced a deal on Monday that involves selling many billions of dollars worth of GPUs to OpenAI, it announced itself as a serious rival the can pick up share in the quickly growing market for AI chips, analysts said. "Right now, Nvidia almost has a monopoly, with AMD having a low-single-digit share in the $250 billion market" for AI data center silicon, said Mandeep Singh, senior analyst at Bloomberg intelligence. Up to this point, Nvidia and OpenAI have defined the new era of AI. Nvidia's GPU sales have pushed the company's market cap to $4.5 trillion. OpenAI's private market valuation has climbed to $500 billion, driven by the popularity of ChatGPT and the company's hyper-aggressive plans for building out data centers. Nvidia is a significant investor in OpenAI, and last month agreed to pour up to $100 billion into the AI startup's infrastructure buildouts. While AMD is a very distant challenger, the stock has also been a Wall Street darling because of the company's promises in AI and expectations that its GPUs will be enthusiastically snapped up by customers. But until its announcement with OpenAI this week, AMD's rally has largely been built on hope. AMD's stock soared 24% on Monday, its biggest gain since 2002. It's up 89% this year compared to Nvidia's 40% gain.

OpenAI agrees to buy 'tens of billions' worth of AMD chips

It was only a few weeks ago that NVIDIA pledged a $100 billion investment in OpenAI. Now, OpenAI has come to another agreement, this time with NVIDIA's competitor, AMD. OpenAI has announced a deal to use AMD's chips to create six gigawatts worth of AI infrastructure. AMD expects to make "tens of billions of dollars" from this agreement. According to OpenAI, AMD will act "as a core strategic compute partner to drive large-scale deployments" of its technology. OpenAI will use AMD's Instinct GPUs, with plans to deploy the first gigawatt of the Instinct MI450 GPUs during the second half of 2026 "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster," Sam Altman, co-founder and CEO of OpenAI, said in a statement. The deal will also give OpenAI the chance to purchase 160 million AMD shares at a penny each. These shares will vest over time as different milestones are reached -- starting with that first one gigawatt deployment. Ultimately, these shares would give OpenAI up to a 10 percent stake in AMD. Agreements between major AI players are popping up everywhere. In its recent deal with NVIDIA, OpenAI plans to use the former's chips to make at least 10 gigawatts of AI data centers. The $100 billion investment will come in waves timed to each new gigawatt of power. This process should also start during the second half of 2026. OpenAI is also working with Microsoft on ways to share technology, with the latter having invested over $13 billion in the former -- for 49 percent of its profits. Meanwhile, Nvidia recently invested $5 billion in Intel to "seamlessly" connect "the strengths of NVIDIA's AI and accelerated computing with Intel's leading CPU technologies and x86 ecosystem." Intel has also been tasked with creating NVIDIA-custom x86 CPUs for the market and AI infrastructure platforms.

OpenAI and chipmaker AMD sign chip supply partnership for AI infrastructure

Semiconductor maker AMD will supply its chips to ChatGPT maker OpenAI as part of agreement to team up on building artificial intelligence infrastructure, the companies said Monday. According to a joint statement announcing the deal, AMD will provide OpenAI with its high performance graphics chips. It calls for supplying 6 gigawatts of computing power for OpenAI's "next generation" AI infrastructure, with the first gigawatt coming online in the second half of next year. AMD also issued OpenAI with a warrant allowing the AI company to buy up to 160 million shares of AMD's common stock, which amounts to about 10% of company. The warrant will vest based on two milestones tied to the amount of computing power deployed. The agreement is a boost for AMD, which has been left behind by rival Nvidia, which has ballooned in value because its graphics processing chips are prized by AI companies.

OpenAI, AMD strike landmark partnership worth tens of billions

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. What just happened? The scale and speed of investments by OpenAI, Meta, Alphabet, and Microsoft in chips, data centers, and energy infrastructure have drawn comparisons to past build-outs, from the 19th-century railroad boom to the fiber-optic rollout. AMD's gains suggest a shift in the AI hardware market while underscoring how closely the leading players are tying their futures to rapid infrastructure growth. OpenAI is partnering with Advanced Micro Devices in one of the largest semiconductor supply deals yet for AI data centers - a move that heightens competition with Nvidia in high-performance computing. "We are in a phase of the build-out where the entire industry's got to come together and everybody's going to do super well," OpenAI chief executive Sam Altman said. "You'll see this on chips, you'll see this on data centers, you'll see this lower down the supply chain." The multibillion-dollar arrangement will give OpenAI up to six gigawatts of AMD processors, starting with the MI450 model slated for release next year. The chips will be purchased directly or through the company's cloud partners. AMD chief executive Lisa Su told The Wall Street Journal that the deal could generate tens of billions of dollars in revenue over the next five years. AMD estimated that each gigawatt of computing capacity costs tens of billions of dollars, highlighting the project's massive scale, though AMD did not disclose the total value. The partnership includes warrants giving OpenAI the right to acquire up to 160 million AMD shares - about 10 percent of the company - at a nominal price of one cent per share. AMD will issue the warrants in phases, contingent on OpenAI meeting deployment benchmarks, and OpenAI may exercise them only if AMD's stock price rises. OpenAI plans to deploy one gigawatt of MI450 chips in the latter half of next year to run inference workloads, the computation process that allows chatbots and other AI systems to respond to user queries. Demand for inference processing has surged as large language models spread across consumer and enterprise applications. "It's hard to overstate how difficult it's become to get enough computing power," OpenAI chief executive Sam Altman told The Wall Street Journal in a joint interview with Su. Su said the partnership aligns incentives between the companies. "It's a win for both of our companies, and I'm glad that OpenAI's incentives are tied to AMD's success and vice versa," she said. Mizuho Securities reports that Nvidia remains the leading supplier of AI accelerators, holding more than 70 percent of the market, with combined CPU-GPU systems selling for up to $60,000 each in data center deployments. However, the company faces growing challenges from rivals and in-house designs by hyperscale cloud operators such as Google and Amazon. OpenAI is also diversifying its chip sourcing, signing a $10 billion agreement with Broadcom to develop proprietary processors. In September, Nvidia announced plans to invest $100 billion in OpenAI over the next decade in a circular arrangement, with the proceeds used to purchase Nvidia hardware for AI data centers. Under the deal, OpenAI would deploy up to 10 gigawatts of Nvidia-powered compute. Altman has finalized multiple high-value agreements in recent months to secure unprecedented computing capacity. In addition to the AMD deal, OpenAI reached a $300 billion agreement with Oracle to acquire 4.5 gigawatts of cloud resources over five years. The announcement followed a meeting of OpenAI and Oracle executives, where they discussed a long-term vision involving trillions of dollars in AI data center investment to meet rising demand for ChatGPT, which now counts 700 million weekly users. "The thing you have to believe if you are us, or our whole industry, is that given everything we're seeing in our research and in our product metrics, the demand for AI at a reasonable revenue rate is going to continue to steeply increase," Altman said. Sources told the Wall Street Journal that Monday's AMD deal was considered definitive by both companies, with regulatory filings expected immediately. OpenAI projects spending about $16 billion this year to rent server capacity, a figure that could climb to $400 billion by 2029. The company expects around $13 billion in revenue for 2025 and is prioritizing higher-margin applications that use its AI tools. Greg Brockman, OpenAI's president and co-founder, said concerns about overspending are secondary to the risk of falling short on processing resources. "I'm far more worried about us failing because of too little compute than too much," he said. Image credit: The Wall Street Journal

OpenAI Agrees to Use Computer Chips from AMD

Late last month, OpenAI announced a $100 billion agreement to use computer chips from Nvidia, the world's most valuable publicly traded company. Now, OpenAI has entered a similar agreement with AMD, one of the many chipmakers hoping to challenge Nvidia as the dominant supplier of chips used to power artificial intelligence technologies like OpenAIs ChatGPT. On Monday, OpenAI said that it would begin using AMD chips in the second half of next year as it builds new computer data centers. The new facilities would be separate from the data centers OpenAI has committed to building in Texas, New Mexico, Ohio and a not-yet-named site in the Midwest. Over several years, OpenAI plans to deploy enough AMD chips to consume 6 gigawatts of power, an amount that could supply all the households in Massachusetts. As part of its recent agreement with Nvidia, OpenAI agreed to deploy enough chips to consume 10 gigawatts. AMD is not investing in OpenAI. But the agreement allows OpenAI to buy up to 160 million shares in the chipmaker at a penny per share, enough to give OpenAI a 10 percent stake in the chipmaker. It could also supply OpenAI with additional capital as it worked to build new computing facilities over the next several years. Explore Our Coverage of Artificial Intelligence OpenAI's New Video App Is Jaw-Dropping (for Better and Worse) OpenAI Completes Deal That Values It at $500 Billion Top A.I. Researchers Leave OpenAI, Google and Meta for New Start-Up Why Don't Data Centers Use More Green Energy? Countries Consider A.I.'s Dangers and Benefits at U.N. A.I. Fighter Jets and Cockroach Spies: Inside the Changing Business of War What We Know About ChatGPT's New Parental Controls The New AirPods Can Translate Languages in Your Ears. This Is Profound. With the Em Dash, A.I. Embraces a Fading Tradition The agreement is part of a wider effort among tech companies to spend hundreds of billions of dollars on the construction of new data centers. OpenAI, Amazon, Google, Meta and Microsoft plan to spend more than $325 billion combined on these facilities by the end of this year alone. Tech giants like Amazon, Microsoft and Google, which pull in tens of billions of dollars in profits each year, have been able to finance data center construction with cash they have on hand. But as newer and smaller companies like OpenAI have built computing facilities, they have been forced to raise or borrow tens of billions of dollars. Through its Stargate Project, OpenAI previously said it was working with the cloud computing company Oracle and the Japanese conglomerate SoftBank to spend more than $400 billion on new data centers in the United States. But the start-up and its partners do not have to money needed to pay for these data centers. So, it has looked for creative ways of bridging the financial gap. In its recent deal with Nvidia, OpenAI agreed to deploy Nvidia's chips. It also received a $100 billion investment from Nvidia. After investing an initial $10 billion in OpenAI, the chipmaker plans to invest an additional $90 billion in the company over the next several years. The agreement was the latest example of OpenAI raising money from the companies it relies on for products and services. (The Times sued OpenAI and Microsoft in 2023 for copyright infringement of news content related to A.I. systems. The two companies have denied those claims.)

OpenAI and AMD AI buildout: It's a power-for-equity swap

6GW chip pact sends AMD stock soaring, Nvidia has a rival for Altman biz love AMD and OpenAI have forged a 6 gigawatt agreement to power OpenAI's AI infrastructure across multiple generations of AMD Instinct GPUs. In a statement, the chipmaker said the first deployment of MI450 GPUs was set to start in the second half of next year. The GenAI poster child said it planned to work with AMD as a "core strategic compute partner", including a roll out of rack AI solutions as well as a commitment to future generations. The deal comes after OpenAI also hooked up with Nvidia in a mega chip agreement which signaled the LLM builder's intent to buy at least 10 gigawatts of the GPU giant's systems for its datacenters, in return for an investment of up to $100 billion. The AMD contract is also linked to a financial investment. As part of it, the house of Zen has issued OpenAI a warrant for up to 160 million shares of AMD common stock, structured to pay out as provided specific staged targets are met. "Vesting" is also dependent on AMD hitting share-price targets and to OpenAI achieving the technical and commercial milestones. "We are thrilled to partner with OpenAI to deliver AI compute at massive scale," said Dr Lisa Su, AMD's chair and CEO, in a prepared statement. "This partnership brings the best of AMD and OpenAI together to create a true win-win, enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem." Following official word of the alliance with OpenAi, AMD's share price price shot up double digits. One hedge fund trader and manager, made a wry comment on the turn of events. "I make potato farming equipment and I gave new farmer Jones, who is light years from making a profit farming, a slug of my company and in return he promises to use his new found money to buy my equipment to till fields in lands he does not yet own. My company in now 35% more valuable?" Sam Altman, OpenAI CEO, said the partnership would be a "major step in building the compute capacity needed to realize AI's full potential." OpenAI has also struck trade arrangements with two South Korean chip titans. The ChatGPT builder said earlier this month that Samsung and SK Hynix had agreed to supply advanced memory chips and collaborate on local AI datacenters. In an employee share sell-off last week, OpenAI was valued at $500 billion, making it the most valuable startup after SpaceX. It does not expect its cash flow to turn positive until 2029. OpenAI does not expect to be cashflow positive until 2029, according to reports earlier this year. It is forecast to turnover $12.7 billion this year. ®

OpenAI Inks AMD Chips Deal Worth Tens of Billions of Dollars

Advanced Micro Devices Inc. inked a deal with OpenAI to roll out AI infrastructure in a pact the chipmaker said could generate tens of billions of dollars in new revenue. AMD's shares soared. The two signed a definitive agreement for OpenAI to deploy 6 gigawatts of AMD GPUs over multiple years, the companies said Monday in a statement. AMD has given OpenAI a warrant for up to 160 million shares, which will vest as milestones are achieved. Those targets require AMD's stock price to continue to increase in value and future exercise points include a tranche tied to a share price of $600. AMD shares closed Friday at $164.67.

OpenAI Gobbles Up a Stake in AMD as Its Spending Spree Shows No Sign of Stopping

OpenAI just inked another multibillion-dollar deal. The AI giant is buying 6 gigawatts and billions of dollars worth of Nvidia-rival chipmaker AMD's latest generation chips to power its next-generation AI infrastructure. AMD unveiled its next-generation Instinct chips at a launch event in July, when CEO Lisa Su took the stage with OpenAI CEO Sam Altman to announce that the AI giant would use the new chips. The first 1 gigawatt of that deployment is set to begin in the second half of 2026. As OpenAI hits deployment targets, it will also gradually receive a total of 160 million AMD shares at 1 cent each, which translates to a roughly 10% stake in the chipmaker. Nvidia is still the leader in the global chip industry, but AMD is its closest rival in the U.S., and Thursday's deal gives the company a huge advantage in its efforts to compete. The financials of the deal were not disclosed, but AMD chief financial officer Jean Hu said in the press release that the partnership was "expected to deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI's AI infrastructure buildout." This is only the latest multibillion-dollar deal OpenAI has announced recently. OpenAI and Nvidia announced a huge addition to their long-lasting partnership last month, with a $100 billion investment by Nvidia in OpenAI to support 10 gigawatts of data center and power capacity deployment. Just a few days prior to that, OpenAI also signed a $300 billion cloud deal with Oracle, which became one of the largest cloud contracts ever signed. Around the same time, OpenAI also inked a reportedly $10 billion deal with Broadcom to create custom in-house AI chips. “Building the future of AI requires deep collaboration across every layer of the stack,†co-founder and President of OpenAI Greg Brockman said in a press release on Monday. “We are in a phase of the build-out where the entire industry’s got to come together and everybody’s going to do super well,†Altman said, per WSJ. “You’ll see this on chips. You’ll see this on data centers. You’ll see this lower down the supply chain.†The AI industry is a compact family affair. There are a handful of huge names with overlapping interests that ink a seemingly infinite series of multibillion-dollar investments with each other, injecting more money into the system and creating a self-sustaining network that props itself up... for now. With each deal, the companies also enjoy a huge boost in share prices. On Monday morning, AMD's shares skyrocketed more than 37% when news of the OpenAI deal hit the market. The biggest players in AI are currently enjoying a ride on an unprecedented gravy train. Nvidia is the first and only company in the world to hit a $4.5 trillion market cap. Oracle's chairman, Larry Ellison, was briefly the richest person in the entire world last month. OpenAI is now worth more on paper than Elon Musk's SpaceX and TikTok parent company ByteDance. But that also creates risk: if one company goes down, they all go down together, and that has only supercharged fears of an AI bubble for skeptics. If there is indeed an AI bubble, then a burst could have catastrophic consequences for the U.S. economy.

OpenAI targets 10% AMD stake via multibillion-dollar chip deal

OpenAI has agreed to buy tens of billions of dollars' worth of chips from AMD as part of a deal that could also see the ChatGPT maker take a roughly 10 per cent stake in the $270bn chipmaker over time. The San Francisco-based artificial intelligence start-up said on Monday it had agreed to purchase processors with a total power consumption of 6 gigawatts, roughly equivalent to Singapore's average demand. The companies did not put a total dollar figure on the transaction, but OpenAI executives estimate that 1GW of capacity costs about $50bn to bring online, with two-thirds of that spent on chips and the infrastructure to support them. The deal comes just a fortnight after AMD's rival Nvidia announced it planned to invest $100bn in OpenAI, with the two companies pledging to deploy 10GW of new data centre capacity. AMD has also issued OpenAI a warrant to purchase as many as 160mn shares at an exercise price of $0.01 over time based on AMD "achieving certain share price targets" and OpenAI deploying its chips. That would equate to roughly 10 per cent of the company. The transaction is the latest intended to accelerate OpenAI's development of new data centres to train and power its AI models, and to ensure the group's central position in the race to build the cutting-edge technology. "This partnership is a major step in building the compute capacity needed to realise AI's full potential," OpenAI chief executive Sam Altman said. But critics have raised concerns over the circular structure of such huge AI infrastructure deals, amid uncertainty over how the hug data centres envisaged by OpenAI would be financed or powered. AMD has pushed to establish itself as a credible alternative to Nvidia's chip and software for AI, seeking to narrow Nvidia's technological lead and winning business from companies such as Microsoft and Meta. The deal commits OpenAI to buying AMD's upcoming MI450, its most advanced AI chip, which aims to compete with Nvidia's latest Blackwell products and is due to hit the market in the second half of next year. This means OpenAI is likely to be one of AMD's biggest customers for the new technology, with people familiar with the matter adding that the two groups have worked closely together over recent weeks to determine the specifications of the MI450. Altman has said AI's demand for computing power far exceeds current capacity. He is attempting to stimulate infrastructure development, while binding some of the key businesses in the technology's supply chain closer to his start-up. OpenAI has also committed to purchasing $300bn in computing power from Oracle over the next five years, and is working with Oracle, SoftBank and other development partners to build US data centres with a further 7GW of power demand. In addition, it is working to produce its own AI chips with Broadcom. In all, those deals commit OpenAI to using 23GW of new capacity which, by the company's own estimation, would cost well over $1tn to develop. The company's growth since the 2022 release of ChatGPT has been unprecedented, with revenue having shot up to about $13bn on an annualised basis. But OpenAI remains lossmaking due to the steep cost of model development, marketing and hiring. Its recent deals are long-term and will be paid in increments as operational expenditure, meaning OpenAI is not committing to spending hundreds of billions of dollars upfront. As part of its arrangement with AMD, OpenAI could buy chips directly or rent them via a third party cloud company, according to a person with knowledge of the deal. Nonetheless, the company must find creative ways to meet its ballooning future liabilities. OpenAI executives are betting that ChatGPT continues to grow steadily from 700mn weekly users, and that they can push the proportion of paid subscribers beyond its current 5 per cent level. They are also exploring new lines of revenue, including a recently launched shopping feature and an AI device designed with former Apple star designer Jony Ive. Having raised about $60bn to date, OpenAI is now looking to lean on its partners' balance sheets and the debt market to meet its insatiable power demands. OpenAI plans to leverage Nvidia's equity investment, for instance, using the backing of the world's most valuable company to secure better terms from lenders, according to an executive at the company. The AMD deal "is expected to deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI's AI infrastructure build-out", said Jean Hu, AMD's chief financial officer. "This agreement creates significant strategic alignment and shareholder value for both AMD and OpenAI."

6-gigawatt handshake: AMD joins OpenAI's trillion-dollar AI plan

The deal begins with a 1-gigawatt rollout of AMD's upcoming Instinct MI450 GPUs in the second half of 2026. The deployment will scale to 6 gigawatts over multiple generations of hardware, powering OpenAI's next wave of models and services. AMD and OpenAI described the arrangement as a definitive agreement to deepen their long-term collaboration, which began with the MI300X and continued with the MI350X. The two companies will share technical expertise to align their product roadmaps and jointly advance AI hardware and software. "We are thrilled to partner with OpenAI to deliver AI compute at massive scale," said Dr. Lisa Su, chair and CEO, AMD. "This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem." OpenAI CEO Sam Altman said the agreement was "a major step in building the compute capacity needed to realize AI's full potential." He added that AMD's leadership in high-performance chips would help accelerate AI progress and bring its benefits to more people faster.

Jim Cramer says OpenAI might be developing an edge after inking deal with AMD

CNBC's Jim Cramer opined on the accelerating artificial intelligence arms race, saying OpenAI's latest deal with chipmaker AMD makes the ChatGPT owner more competitive. "The hyperscalers are all vulnerable if OpenAI gets this computing power," he said. "And given the number of chips it's buying, I think this company can go after everybody's business." The two companies announced Monday they reached a deal that could see OpenAI take a 10% stake in AMD. OpenAI said it would deploy 6 gigawatts of AMD's GPUs over multiple years and across multiple generations of hardware. OpenAI said the agreement was worth billions but did not disclose an exact dollar amount. AMD soared during the day's session in response to the news, helping to propel the S&P 500 and the Nasdaq Composite to record highs. The stock finished up 23.71% and continued to rise in extended trading. Cramer expressed faith in the legitimacy of the AI boom, saying he believes its major players will reap the rewards of their lofty investments -- even as many on Wall Street worry the hype is overblown, and Big Tech is wasting money. Cramer noted that OpenAI has made a similar deal with Nvidia, a $4 trillion chipmaker that is one of the biggest drivers of the AI boom. He suggested OpenAI "seems to view AMD's chips as equal to Nvidia's," and he said the company "needed computing power to meet the demand, because the demand is overwhelming them." According to Cramer, hyperscalers don't want to fall behind in the AI race, and each giant has its own vertical that needs AI. Meta has social media with advertisements, he continued, while Microsoft has the enterprise, Google has search, Amazon has retail and Tesla has robotics and autonomous driving. He also said Big Tech largely isn't concerned about huge spending because the outfits "all have very deep pockets." "After today's announcement by OpenAI, I think they're right to be afraid. They're right to keep spending," Cramer said of the hyperscalers. "They have to, and that's what OpenAI's partnership with AMD is all about. They want to challenge every one of these verticals - they need every bit of computing, they need both Nvidia and AMD." OpenAI and AMD did not immediately respond to request for comment.

OpenAI may gain 10% of AMD and gamers won't like it

If AMD turns to the cloud, does that mean less love for the PC market? In the ongoing war of AI investment, OpenAI has secured itself a new ally: AMD. The chip maker will trade millions of its upcoming Instinct MI450 GPUs for an investment by the AI company, worth up to 10 percent of its stock. The numbers, though, remain vague. The deal hinges on AMD's ability to deliver "6 gigawatts" worth of Instinct MI450 GPUs, a rack-scale enterprise GPU chip that the chip manufacturer hasn't begun shipping yet. If it begins shipping the MI450 by an undisclosed milestone and in undisclosed amounts, then OpenAI has warrants to buy the company's stock, worth up to 160 million shares. That would be about 10 percent of its current outstanding shares, according to CNBC. AMD must deliver its first tranche, or shipment, of MI450 GPUs by the second half of 2026, worth one gigawatt. The total deal encompasses six gigawatts, though the company's announcement of the deal didn't put a timetable to the final shipments. It also includes "multiple generations" of Instinct chips. Since AMD hasn't formally announced the MI450 yet, it's unclear how six gigawatts' worth translates to in actual chips. Assuming that the MI350X draws a kilowatt of power apiece, and that the older MI300X drew a board power of 750 watts, I asked OpenAI's ChatGPT for a projection. It returned a range of between three to six million GPUs, with a likelier target of between four and five million. That also assumes that the upcoming MI355X draws 1,400W, which hasn't been confirmed. In the technology space, there's one surefire domestic source of nearly unlimited cash -- and no, it's not the Trump administration. That administration has already agreed to convert its CHIPS Act investment into Intel and transfer it into a nearly 10 percent stake. OpenAI's cash reserves aren't publicly known, but it's in the process of raising a $40 billion funding round this year, and CNBC reports that the AI company is already pulling in between $10 billion and $13 billion per year. But there's a very uneasy subtext in all this, too. AMD chief executive Lisa Su now has a very loud, dynamic, and persuasive voice telling her to invest in high-end GPUs for the cloud, and not the PC. Every business, from Intel to Nvidia to AMD, has to decide how to spend their capital allotment and negotiate for production output inside TSMC and other fabs. "We are thrilled to partner with OpenAI to deliver AI compute at massive scale," Su said in a statement. "This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem." When a report was published last week that AMD might use Intel as a production partner, no one from Intel would comment. Charlie Demerjian at SemiAccurate reported that the rumor was simply not true. It most likely isn't, but the problem in the breakneck world of AI, where truckloads of money are backed up to anyone who can use "AI" in a press release, is that most anything is somewhat plausible these days. Intel has already built tiles inside its Core Ultra PC processors at both its own fabs as well as at TSMC, of course. The second half of 2026 is far away, but enthusiasts do have to grumble and worry. With more and more emphasis being placed on GPU training and inferencing in the cloud, how much will be left for PCs? Nvidia already controls more than 90 percent of all PC GPU shipments, even after AMD had made waves about trying to aim at the mainstream PC market instead of the high end. If it can't succeed in PCs, why wouldn't it simply turn to the more lucrative enterprise market instead? Sure, Nvidia GeForce 5000-series GPUs may be near MSRP once again. But remove a source of competition, and who knows how long that will last?

AMD, Nvidia rivalry enters frosty new chapter in battle for AI dominance

Why it matters: The chip designers and competitors are jockeying for position in the billowing AI economy. Driving the news: After AMD announced a deal earlier this week to give OpenAI up to 10% of itself, Nvidia CEO Jensen Huang Wednesday morning suggested that it was a "clever" deal ... with one big caveat. * "It's imaginative, it's unique and surprising, considering they were so excited about their next-generation product," Huang told CNBC. "I'm surprised that they would give away 10% of the company before they even built it." The intrigue: Nvidia and AMD have both announced deals with OpenAI in the last two weeks. * AMD's stock soared 24% Monday after it unveiled its multi-year deal to deliver 6 gigawatts of GPUs to OpenAI to power its AI infrastructure. * Nvidia in September announced an investment of up to $100 billion in OpenAI, enabling the company to stand up at least 10 gigawatts of AI data centers. Follow the money: The Nvidia investment called attention to an emerging loop in which the chip designer invests in OpenAI, which buys data software from Oracle, which gets chips from Nvidia, and so on. * AMD wanted a lucrative loop of its own. (The company did not respond to a request for comment on Huang's remarks.) * Wedbush Securities analyst Dan Ives, in a research note, called the whole thing an "AI Arms Race" that's becoming a "1996 Moment for the tech world." The bottom line: AMD is nipping at Nvidia's heels, but its market cap remains less than 1/10th that its larger rival's.

OpenAI and AMD reveal billion-dollar partnership - Sam Altman says deal will "bring the benefits of advanced AI to everyone faster"

AMD and OpenAI sign a multi-year deal for 6 GW of GPUsOpenAI will also get up to 160 million shares ($32.5 billion) in AMDAMD shares surged 37% following the announcement OpenAI has signed a major deal with AMD in an effort to continue its expansion of AI infrastructure. The billion-dollar, multi-year agreement will have AMD being responsible for deploying 6 GW of its Instinct GPUs, with the first gigawatt coming from AMD Instinct MI450 series GPUs in the second half of 2026. Under the deal, OpenAI will also get access to future generations of AMD's chips, as well as better software-hardware optimization in the future. Although precise financial details have not been revealed, the companies said the deal would "deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI's AI infrastructure buildout." "This partnership creates a true win-win for both companies, enabling very large-scale AI deployments and advancing the entire ecosystem," OpenAI said in its announcement. AMD has also issued OpenAI a warrant for up to 160 million shares of AMD common stock, which the ChatGPT maker can vest when specific milestones of the agreement are achieved. Share prices surged over 37% before dropping slightly (equivalent of around 24% growth) in the day following the announcement. With a share price of $203.71, 160 million shares would net OpenAI over $32.5 billion at today's value. "This agreement creates significant strategic alignment and shareholder value for both AMD and OpenAI and is expected to be highly accretive to AMD's non-GAAP earnings-per-share," AMD CFO Jean Hu noted. OpenAI CEO Sam Altman described the deal as a "major step in building the compute capacity needed to realize AI's full potential." AMD's most recent quarter drew in a record $7.7 billion in revenue, up 32% year over year, driven by "strategic investments across hardware, software and systems."

OpenAI signs multibillion-dollar chip deal with AMD

The deal offers the ChatGPT maker an opportunity to buy a 10% stake in chipmaker AMD OpenAI and chipmaker AMD announced Monday that they had signed a multibillion-dollar chip deal that would also give the ChatGPT creator the option to buy a large stake in the chipmaker. The deal offers OpenAI an opportunity to buy 10% in AMD and marks a major vote of confidence in the company's AI chips and software. Shares of AMD surged more than 30% and added about $80bn to its market capitalization after the announcement. "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," said Forrest Norrod, AMD's executive vice-president. The latest deal, among a string of investment commitments, is a testament to OpenAI and the broader AI industry's voracious appetite for computing power as companies race toward developing AI technology that meets or exceeds human intelligence. Sam Altman, the OpenAI CEO, has said the biggest constraint on his company's growth is access to computing power, which comes in the form of enormous data centers filled with advanced semiconductor chips. Last week, Nvidia announced it would invest $100bn in OpenAI, forging a close alliance between two of the leading firms in artificial intelligence. Monday's agreement covers the deployment of hundreds of thousands of AMD's AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026. This is roughly equivalent to the energy needs of 5m US households, or the electricity produced yearly by the Hoover Dam three times over. AMD said OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips beginning next year. As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160m shares of AMD for 1 cent each over the course of the chips deal. AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple effect of the agreement, AMD said it expects to receive more than $100bn in new revenue over four years from OpenAI and other customers. "Other people are going to come along with it because this is really the pioneer, a pioneer in the industry that has a lot of influence over the broader ecosystem," Mat Hein, AMD's strategy chief said. The deal with AMD will help OpenAI build enough AI infrastructure to meet its needs, Altman said in a statement. It was not immediately clear how OpenAI would fund the massive deal with AMD. The startup, valued at roughly $500bn, has generated about $4.3bn in revenue in the first half of 2025 and has burned through $2.5bn in cash, according to media reports, as it splurges on attracting top talent and invests heavily in developing new AI tools.

OpenAI bets big on AMD with massive investment

In a press release on its website, the company behind ChatGPT and Sora announced a massive partnership with GPU maker AMD. OpenAI will use AMD hardware to create up to six gigawatts of AI infrastructure over the coming years, with one gigawatt rolling out in 2026. In all, this deal could see OpenAI come to own as much as 10 percent of AMD. The exact dollar amounts at play here have not been revealed, but an AMD executive was quoted in the press release as saying the deal would "deliver tens of billions of dollars in revenue" to AMD while scaling up OpenAI's projects. "This partnership is a major step in building the compute capacity needed to realize AI's full potential," OpenAI CEO Sam Altman said in the press release. "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." This announcement comes just days after OpenAI announced a different deal with Nvidia, the market leader in GPUs and an AMD competitor. That deal would see 10 gigawatts' worth of OpenAI infrastructure built with Nvidia hardware. Per Fortune, that kind of rollout would use as much power as New York City and San Diego combined just to fuel whatever it is Altman and co. are planning to do with AI.

AMD has stepped out of Nvidia's shadow with an OpenAI deal

OpenAI didn't break up with Nvidia; it opened the relationship. AMD just got invited to the family dinner -- not as a fling, but as another long-term partner. Call the relationship a hedge or heresy, depending on your AI denomination. If you worship at the Church of Santa Clara, this deal looks like quiet blasphemy. If you count blessings in megawatts, this looks like an admission that the AI future won't be built on a single supplier's mercy. The deal itself sounds almost romantic in scale: six gigawatts of AMD's forthcoming Instinct chips, with the first arriving in 2026, and an option for OpenAI to take up to 10% of AMD's stock if everything shows up on time. AMD gets validation, OpenAI gets optionality, and both get to hint that they're no longer beholden to Nvidia's one-true-faith monopoly on the frontier of machine intelligence. And this partnership with AMD is additive, not subtractive, for OpenAI. Last month, Sam Altman's company and Nvidia unveiled a separate plan for at least 10 gigawatts of Nvidia systems, with Nvidia intending to invest up to $100 billion progressively "as each gigawatt is deployed," and a first 1-GW block targeted for 2H 2026 on the Vera Rubin platform. OpenAI's move isn't a love letter to AMD as much as it is a leverage play. With this deal, the ChatGPT-maker gets to keep its history with Nvidia and add a non-exclusive lane with AMD, and suddenly, the golden rule -- that all roads to intelligence run through Jensen Huang and his company -- looks more like a guideline. Optionality becomes a feature, not a flirtation. Even the language shifts from chips to choreography: split the workloads, hedge the timelines, keep the models fed. "We need as much computing power as we can possibly get," OpenAI president Greg Brockman told CNBC as the AMD news hit -- a line that doubles as the mission statement for the hedge. He praised Nvidia for training and inference and said AMD is "really delivering in terms of the next-generation chip," arguing the demand curve justifies multiple lanes. All of that is the backdrop for OpenAI's new partnership with AMD: a decision born less from disloyalty than from necessity. If you can't get enough of the world's best chips, the world's second-best start to look divine. Wall Street didn't need a translator. AMD's stock ripped more than 25-30% on the headline, and Wedbush called it a "major validation moment" -- with the Dan Ives flourish that "any lingering fears around AMD should now be thrown out the window." With this partnership, AMD gets a credibility makeover montage that has been two decades in the making. The nerdy kid who spent a decade playing second fiddle -- first to Intel, then to Nvidia -- just got handed a first chair and a stopwatch. Nvidia's hardware isn't just powerful; it's rare. You don't buy the company's chips so much as you earn the right to receive them. The waiting lists are long, the prices are high, and the global economy of "compute" has started to resemble a rationing system with better branding. For the last two years, things have felt like trying to book a table at the hottest restaurant in town months in advance. Even the richest diners have to wait. "What we're really seeing is a world where there's going to be absolute compute scarcity, because there's going to be so much demand for AI services and not just from OpenAI, really from the whole ecosystem," OpenAI's Brockman said. "And so that's why it's just so important for this whole industry to come together and say, 'How can we build in advance of this compute desert that we're heading toward otherwise?'" OpenAI has learned the hard way that GPU access is destiny. Last year's supply crunch slowed everything from ChatGPT's uptime to Altman's ambitions for custom silicon. Adding a second backbone is a hedge against dependency -- and a subtle warning shot to Nvidia that loyalty isn't forever. Diversification, in this world, isn't betrayal; it's survival. OpenAI didn't renounce Nvidia's gospel; it wrote an addendum and slipped it into the hymnal. A single vendor means a single point of failure -- and in this market, failure doesn't always look like a bad chip. It looks like a packaging bottleneck in Taiwan, a memory shortfall that pushes delivery two quarters, or a networking component you can't get at any price until the next fiscal. When the most valuable thing you sell is time-to-capacity, you don't bet the quarter (or the roadmap) on one supply lane. You multiply lanes and let calendar math do what press releases can't. Non-exclusive is the magic word in this OpenAI-AMD partnership -- the clause that turns the whole thing into leverage. With a real second supplier on the board, OpenAI can split workloads by what's urgent and what's merely important, move training runs to whichever stack clears first, and refuse to let a single ecosystem chokepoint set the pace for everything else. Even if 60% or 70% of OpenAI's heavy lifting still runs on Nvidia, the existence of a credible AMD lane changes the temperature of every negotiation. And that means: Discounts get tighter. Bundles get more bespoke. Support SLAs start to sound like promises instead of poetry. Optionality stops being a press-release cliché and starts being a line item. The deal does three things at once: ties equity to delivery, syncs AMD's reputation to OpenAI's uptime, and turns migration pain into investment instead of regret. Hedges never look glamorous -- until the day you need one. For years, AMD was defined by the negative space around its competitors -- not Intel in CPUs, not Nvidia in accelerators -- and that reputation bred a certain kind of expectation. You could win a price/performance bake-off here, land a hyperscaler pilot there, earn polite applause for incremental gains, and still be understood as the other guy. OpenAI's commitment forces a different identity: platform, not alternative. Second rail, not second fiddle. Investors, predictably, are already writing the movie's ending. A stock that jumps on a headline is a beautiful chart and an unforgiving boss. The pop pulls expectations forward. Suddenly, "on time" becomes "obvious," and "parity" becomes "table stakes." That's fine -- as long as the milestones cooperatively turn into muscle memory. If they don't, the market will rediscover its affection for the status quo with startling speed. AMD earning the shot may have been the easy part; whether it can stand in the rehearsal room and then carry the show eight times a week without losing its voice will be the real test. AMD isn't being asked to out-Nvidia Nvidia on day one. AMD is being asked to be inevitable enough that, if the calendar turns hostile, the buyer doesn't have to explain why they picked AMD. In the hedge-or-heresy framing, that's the difference between polite flirtation and a real second marriage: not a box of chocolates, but a mortgage. OpenAI's first gigawatt on the Nvidia lane is circled for the back half of next year; so is the first gigawatt on the AMD lane -- not for symmetry, but because physics doesn't care about keynotes. The civil work takes as long as it takes, equipment ships when it ships, and the grid will not bend for ambition. Two suppliers don't make the ground softer; they just make the plan survivable. And in this new utility economy, the winners aren't the ones commanding the stage -- they're the power companies, the colocation operators, the memory and packaging suppliers, the fiber builders quietly industrializing intelligence while everyone else chases the spotlight. Nvidia won't lose its crown over this; it's still the best in class, with the margins to prove it. But this might be an early sign that its monopoly era is beginning to fracture. Once buyers know they can divide their orders without tanking performance, the market starts to behave again. What looks, at first, like heresy could end up saving the faith. So hedge or heresy, the sermon hardly matters anymore. OpenAI's pact with AMD isn't a declaration of faith or defiance; it's a recognition of physics. It admits what few will say aloud: The future of intelligence won't be powered by devotion; it will be powered by redundancy. And if that sounds unromantic, so be it. The age of belief gave us the boom. The age of logistics will decide who survives it. The hymns fade, the hum stays.

OpenAI and chipmaker AMD sign chip supply partnership for AI infrastructure

Semiconductor maker AMD will supply its chips to artificial intelligence company OpenAI as part of an agreement to team up on building artificial intelligence infrastructure, the companies said Monday. OpenAI will also get the option to buy as much as a 10% stake in AMD, according to a joint statement announcing the deal. It's the latest deal for the ChatGPT maker as it races to beef up its AI computing resources. Under the terms of the deal, OpenAI will buy the latest version of the company's high performance graphics chips, the Instinct MI450, which is expected to debut next year. The agreement calls for supplying 6 gigawatts of computing power for OpenAI's "next generation" AI infrastructure, with the first batch of chips worth 1 gigawatt to be deployed in the second half of 2026. AMD also issued OpenAI with a warrant allowing the AI company to buy up to 160 million shares of AMD's common stock. That amounts to about 10% of company based on AMD's 1.6 billion outstanding shares. The warrant will vest based on two milestones tied to the amount of computing power deployed, as well as unspecified "share-price targets." Shares of AMD spiked 25% before the opening bell Monday. Shares of Nvidia, which have repeatedly set new record-highs this year, fell slightly. "This partnership is a major step in building the compute capacity needed to realize AI's full potential," OpenAI CEO Sam Altman, said in a news release. "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." The deal is a boost for Santa Clara, Calif.-based AMD, which has been left behind by rival Nvidia. But it also hints at OpenAI's desire to diversify its supply chain away from Nvidia's dominance. The AI boom has fuelled demand for Nvidia's graphics processing chips, sending its shares soaring and making it the world's most valuable company. Last month, OpenAI and Nvidia announced a $100 billion partnership that will add at least 10 gigawatts of data center computing power.

AMD stock soars after striking a landmark deal with OpenAI -- part of Sam Altman's bid to loosen Nvidia's grip on AI | Fortune

AMD announced a long-term partnership with OpenAI on Monday that will make it one of the startup's key chip suppliers for training and running advanced AI models. The company's stock jumped 28% in midday trading on the news of the multiyear deal, which could generate tens of billions of dollars in annual revenue for AMD over time and marks one of the largest AI infrastructure commitments that's not based on processors by industry leader Nvidia. The AMD deal arrived on the heels of OpenAI CEO Sam Altman's Asia tour last week, during which OpenAI inked memory chip agreements with Samsung and SK Hynix and reportedly held discussions in Taiwan with TSMC, the world's largest contract manufacturer of chips. The moves suggest OpenAI is aggressively diversifying its chip supply chain beyond Nvidia - a shift that could complicate OpenAI's relationship with Nvidia, whose GPUs still power much of OpenAI's training infrastructure. Perhaps in consideration of that issue, Altman posted a statement on X that the AMD deal "is all incremental to our work with NVIDIA" and that OpenAI plans to increase its Nvidia purchasing over time. "The world needs much more compute," he wrote. Nvidia, which has been one of the biggest beneficiaries of the AI boom since ChatGPT debuted in November 2022, still dominates the market for "training" AI models -- the compute-intensive process of teaching systems like ChatGPT from massive datasets. But "inference," or running those models in real-world applications, can use a wider range of chips. AMD and Intel, as well as newer players such as Cerebras, SambaNova, and Groq, see an opening to win business and (no pun intended) chip away at Nvidia's dominance. As part of the agreement, OpenAI will use AMD's next generation of AI GPU chips in massive data-center deployments starting in 2026. To strengthen the alliance, AMD also granted OpenAI a performance-based stock warrant that will vest as specific rollout milestones are met, which could give OpenAI up to a 10% stake in the company. The deal underscores how Big Tech and leading AI developers are broadening their supply chains to reduce dependence on Nvidia, whose GPUs have so far dominated the market for AI chips. "This is a major win for AMD and shows that it has been putting the right strategy in place to take advantage of the AI mega-wave with its advanced GPUs," said infrastructure analyst Jack Gold in an emailed note. "Its also an endorsement that AMD has become competitive with NVIDIA processing power, as well as enhancing its software strategy to compete, much as it did in the data center market earlier against Intel." The deal also shows that OpenAI is looking to broaden its chip supply as it rapidly expands its data-center footprint, he explained. Nvidia's most advanced GPUs remain in short supply, and demand is growing faster than production. By locking in access to AMD chips through this agreement, OpenAI can keep scaling its infrastructure without waiting on Nvidia's bottlenecks. There is also pricing leverage, he added: "If OpenAI has more than one supplier, they have much more pricing leverage on buying chips than if they had only a single supplier for those chips," Gold said. "That could ultimately save them a great deal of money when it comes time to negotiate on pricing."

OpenAI hands AMD a big win in AI chip race. What does it mean for Nvidia?

OpenAI's blockbuster chip-buying agreement with Advanced Micro Devices appears to be a shot across the bow at market leader Nvidia . Jim Cramer says Nvidia is hardly surrendering its lead in the AI computing race. "In the end -- I know this is going to be facetious -- I think everybody wins," Jim said Monday, as AMD shares surged more than 30% on its deal with the ChatGPT creator, which AMD expects will result in tens of billions of revenue in the coming years. Nvidia's stock, meanwhile, slipped about 1.5% on Monday, which Jim suggested is not a surprising initial reaction considering AMD has worked furiously in recent years to become a more formidable challenger in the red-hot market for power-hungry AI chips. "Nvidia goes down maybe $5, $6 [per share] today. Then you need to buy it, because I don't think there's any change in the demand," Jim said. "I think that all these companies have to rethink and say, 'Oh my, [OpenAI CEO Sam] Altman is really spending. I guess we've got to spend more.'" OpenAI's recent dealmaking spree also includes a tie-up with Nvidia -- adding to the intrigue around the influential startup's deepening ties with AMD. OpenAI agreed to purchase 6 gigawatts of AMD's AI chips over multiple years. Every gigawatt of compute translates to "significant, double-digit billions of revenue to us," AMD CEO Lisa Su told CNBC on Monday. OpenAI also secured warrants for AMD common stock that, if certain conditions are met, could result in OpenAI owning roughly 10% of AMD. Su said that the ownership arrangement aligns the incentives of both companies. OpenAI is looking to use AMD's chips for inference, the process of running AI models on a day-to-day basis. Feeding AI models massive amounts of data to prepare them for use is called training, which has historically been Nvidia's stronghold. AMD is projected to bring in roughly $33 billion in sales this year, according to FactSet, with about half of that coming from its data center business, where its AI revenue is recorded along with sales of traditional server processors. NVDA AMD 5Y mountain Nvidia's stock performance versus AMD over the next five years. Nvidia, for its part, in late September agreed to invest $100 billion in OpenAI to help the company construct 10 gigawatts of artificial intelligence data center capacity over a multiyear timeframe. OpenAI has long used Nvidia's chips to train and run the AI models that have fueled its rapid rise since the launch of ChatGPT in late 2022. Nvidia has ascended to the world's most valuable company thanks to the AI boom, and its annual revenue is projected to top $200 billion in its current fiscal year, up from $27 billion in the 12 months ended in January 2023. For some on Wall Street, Nvidia's investment in one of its most important customers called to mind some of the creative financing agreements that arose in the later stages of the dot-com bubble. Nvidia CEO Jensen Huang has pushed back on concerns about "circular revenue," whereby Nvidia's investment dollars end up flowing back to the company via OpenAI chip orders. "The investment side is not tied to anything," Huang said on a Sept. 25 podcast hosted by the Silicon Valley investor Brad Gerstner. "It's an opportunity to invest in [OpenAI]. This is likely to be the next multitrillion-dollar hyperscale company. Who doesn't want to be an investor in that?" OpenAI was valued at $500 billion in a stock sale for employees that closed last week. As the usage of OpenAI's applications surges, the company needs more resources to meet the demand, said Greg Brockman, its president and a co-founder alongside Altman. "We need as much computing power as we can possibly get," Brockman said in a CNBC interview with Jim on Monday, when asked why OpenAI struck an accord with AMD on top of its Nvidia deal. OpenAI is also reportedly working with Club name Broadcom to develop custom chips. Broadcom shares were flat in midmorning trade Monday, giving up earlier gains. "I think that when it comes to the suppliers of this computing power, I think that Nvidia has something very special - we use them for training, we use them for inference," Brockman said. "AMD, I think, also is really delivering in terms of the next generation of chip they've been working on. We've provided feedback. We've been doing a lot of software work to enable it for inference within our infrastructure. We really see the whole ecosystem as something that's coming together to deliver the amount of inference that will be required to bring AI to everyone at scale." Brockman said OpenAI is "unable to launch many features in ChatGPT -- many products that would generate lots of revenue -- simply because of a lack of compute power." If OpenAI had 10 times as much computing power as it does now, "I don't know if we'd have 10x more revenue, but I don't think it'd be that far," he said. (Jim Cramer's Charitable Trust is long NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

AMD Stock Skyrockets on OpenAI Bet to Loosen Nvidia's Grip on the AI Chip Market - Decrypt

Wall Street cheered, sending AMD shares skyrocketing as Nvidia slipped and the GPU arms race reached new extremes. AMD struck its biggest AI deal yet Monday morning, securing a 6 gigawatt GPU contract with OpenAI. The partnership gives OpenAI the option to acquire up to 160 million AMD shares -- roughly 10% of the company -- while AMD commits to delivering its next-generation Instinct MI450 chips starting in late 2026. The deal comes just two weeks after Nvidia announced its own $100 billion partnership with OpenAI for 10 gigawatts of compute capacity. OpenAI's dual-supplier strategy reflects a calculated hedge: The ChatGPT maker needs 16 gigawatts total to power its infrastructure ambitions, and relying solely on Nvidia carries too much risk in a market where GPU shortages have become routine. AMD CEO Lisa Su called it "the world's most ambitious AI buildout," projecting tens of billions in revenue over the next four years, according to CNN. The warrant structure ties AMD's payoff directly to execution -- shares vest as OpenAI scales from one gigawatt to the full six, with additional triggers linked to AMD hitting specific stock price targets that climb as high as $600 per share. Wall Street's reaction was immediate. AMD shares opened at $226 in Monday trading, up from Friday's close of $164.67 while hitting its highest price in at least a year and a half. At the current price of $207, it's up more than 25% on the day. Nvidia, on the other hand, fell 1% on the news. OpenAI is burning through capital at an unprecedented rate, with projected losses hitting billions despite expected revenue of $12.7 billion in 2025 according to Bloomberg. The company needs cheaper alternatives to Nvidia's premium-priced chips, which currently controls roughly 70%-95% of the data center AI accelerator market according to estimations. AMD's MI450 series promises competitive specs -- greater memory capacity than Nvidia's Blackwell chips and comparable performance on large language model benchmarks. But hardware is only half the equation. AMD's ROCm software platform, its answer to Nvidia's CUDA, remains the company's Achilles heel. CUDA has spent 18 years becoming the industry standard, with five million developers and seamless integration across PyTorch, TensorFlow, and every major AI framework. ROCm, despite being open-source, suffers from a broken out-of-the-box experience which AI developers don't want to deal with. For example, recent testing by SemiAnalysis found AMD's MI300X chips couldn't run standard models without extensive debugging, with researchers calling the software "riddled with bugs." The software gap explains why AMD is practically giving away equity to land this deal. While Nvidia commands premium prices based on CUDA's reliability, AMD has to sweeten the pot with warrants and promises of joint development. The broader chip wars are intensifying. Elon Musk's xAI plans to spend $12 billion on Nvidia GPUs for its Memphis supercomputer. Google continues developing its TPUs. Amazon pushes its Trainium chips. And OpenAI itself is reportedly working with Broadcom on a $10 billion custom "Titan XPU" chip for inference, targeting production in 2026. The economics driving this shift are stark. A single Nvidia GB300 NVL72 rack costs roughly $3 million. OpenAI's infrastructure roadmap calls for 23 gigawatts of capacity, translating to hundreds of billions in hardware costs. Custom chips and alternative suppliers like AMD offer potential savings of 30-50% per compute unit. For AMD, landing OpenAI validates its AI ambitions after years of playing catch-up. The company's data center revenue hit $3.24 billion last quarter, up 14% year-over-year. But until ROCm matches CUDA's stability, AMD will struggle to convert this marquee win into broader market share. This, of course, can be easier to achieve now that OpenAI is sitting at the table with AMD executives, owning 10% of the company. OpenAI's engineering resources can help close that gap, but most customers won't have that luxury. Meanwhile, Nvidia keeps its 80% market share and premium pricing -- for now.

AMD seals multi-year megadeal with OpenAI involving 6 gigawatts' worth of AI GPUs and a possible 10% stake in AMD

AMD and OpenAI have announced a massive multi-year deal for AI GPUs. Exactly how many GPUs AMD will sell to OpenAI isn't clear, but the announcement says that if the arrangement comes fully to fruition, OpenAI will be running fully 6 gigawatts' worth of AMD Instinct GPUs. Intriguingly, the deal also includes OpenAI taking an up to 10% equity stake in AMD. The first 1 gigawatt tranche kicks off in the second half of next year based on AMD's next-gen Instinct MI450 AI GPU. At the same time, OpenAI will acquire the first segment of up to 160 million AMD shares. If the deal progresses right through to the final 6 gigawatt GPU power figure, OpenAI will by then have bought 160 million AMD shares accounting for roughly 10% of the company. At current values, that would be a $26 billion investment. So, it's a megabucks deal all round. It also the first really big AI GPU win of this kind for AMD, at least that we are aware of. It looks like it's big news too for the markets, as AMD's share price rocketed up 35% on the news during early trading. Kerching! It's yet another good news item for AMD in stark contrast to Intel's ongoing trials and tribulations. It's also the first time that AMD's GPUs for AI training and inferencing have looked like they're competing really squarely with the market monster that is Nvidia. As for what it means for poor old PC gaming, well, the good news is that it helps AMD be even more successful and profitable, so it should have plenty of spare cash to develop new gaming GPUs. The bad news is that it pulls the company's revenue streams even further away from the traditional PC market. Still, we'll take this as a win and probable good news for the PC. AMD says it is unifying its RDNA gaming and CDNA AI GPU architectures into the. the single UDNA architecture. That means AI GPU successes and invest are more closely correlated than ever with gaming GPUs. And it really should mean that AMD can take on not just Nvidia's AI GPUs directly, but its gaming GPUs, too.

OpenAI signs multi-billion dollar chip deal with AMD

New York (AFP) - OpenAI signed a multi-year partnership Monday with chipmaker Advanced Micro Devices as the ChatGPT-maker continues an investment spree to secure massive amounts of computing power for rolling out generative artificial intelligence. The companies announced the plan to develop AI data centers that the chipmaker said would bring in tens of billions of dollars in new revenue over the next five years. AMD's share price surged 35 percent when markets opened on news of the agreement that would see the company deliver six gigawatts worth of chips to the ChatGPT-maker. OpenAI sits at the center of an AI investment bonanza to power the promised artificial intelligence revolution. It oversees the Stargate project, which has secured $400 billion of the $500 billion planned by 2029 for giant data centers in Texas, New Mexico and an undisclosed site in the US Midwest. The deal with AMD follows a contract with Nvidia for more than $100 billion in equipment intended to increase OpenAI's generative AI capabilities. Nvidia's graphics processing units (GPUs) are by far the dominant player in the AI field, with its products integrated into the company's software ecosystem, making it harder for rivals to compete. "This is all incremental to our work with NVIDIA (and we plan to increase our NVIDIA purchasing over time). The world needs much more compute..." wrote OpenAI CEO Sam Altman on X. California-based AMD generates the bulk of its revenue from CPU sales -- processors used for personal and business computers that are less powerful than GPUs. Data server giant Oracle saw its share price skyrocket by 35 percent last month when it announced its own deal with OpenAI. OpenAI also signed a chip deal with South Korea's Samsung and SK Hynix. It was not immediately clear how OpenAI would finance the deals. OpenAI is years away from turning a profit, with the costs of computing needed to power the company's AI needs far surpassing revenue from paying customers of ChatGPT and other products. However, Wall Street's faith in the future of AI remains strong, and OpenAI is now the world's most valuable private company, surpassing Elon Musk's SpaceX, worth $500 billion with investment still pouring in. Monday's announcement shows OpenAI moving to diversify its supply of semiconductors so that it does not depend solely on US powerhouse Nvidia for the GPUs that are key to the development of generative AI. Analysts say chipmaker AMD is facing competition from -- in addition to Nvidia -- China's Huawei, as well as Amazon and Google. Under the deal Monday, AMD will issue OpenAI 160 million "warrants" -- a financial product that can be converted to shares under certain conditions, leaving the AI giant in a position to buy roughly 10 percent of AMD.

AMD signs AI chip-supply deal with OpenAI

SAN FRANCISCO -- AMD said on Monday it will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10% of the chipmaker. The deal offers OpenAI an opportunity to take a stake in one of Nvidia's most formidable rivals and is a powerful endorsement of Advanced Micro Devices' (AMD's) AI chips and software. "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," AMD executive vice president Forrest Norrod told Reuters on Sunday. The agreement covers the deployment of hundreds of thousands of AMD's AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026. AMD said OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips beginning next year, and that it would begin to recognize revenue then. AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple effect of the agreement, AMD expects to receive more than $100 billion in new revenue over four years from OpenAI and other customers, they said. "Other people are going to come along with it because this is really the pioneer, a pioneer in the industry that has a lot of influence over the broader ecosystem," AMD strategy chief Mat Hein said. The deal with AMD will help OpenAI build enough AI infrastructure to meet its needs, OpenAI CEO Sam Altman said in a statement. Analysts, on average, estimate AMD will generate revenue of $32.78 billion this year, according to LSEG data. As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chips deal. The warrant vests in tranches based on milestones that the two companies have agreed on. The first tranche will vest after the initial shipment of MI450 chips set for the second half of 2026. The remaining milestones include specific AMD stock price targets that escalate to $600 a share for the final installment of stock to unlock. AMD has 1.62 billion shares outstanding and is valued at $267.23 billion, according to LSEG data. Its shares closed on Friday at $164.67. OpenAI has a valuation of $500 billion. OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips such as the MI300X. The San Francisco-based AI company has been taking a number of steps to ensure it has the chips needed for its future needs. In September, Nvidia announced an investment of up to $100 billion in OpenAI that included a plan to supply at least 10 gigawatts worth of Nvidia systems. The plan includes OpenAI deploying a gigawatt of Nvidia's next-generation Vera Rubin chips in late 2026. In addition to using Nvidia hardware, cloud computing giants such as Alphabet's GOOGL.O Google and Amazon AMZN.O build their own in-house processors. Similarly, OpenAI is in the process of developing its own silicon for AI use and has partnered with Broadcom AVGO.O, Reuters reported last year. OpenAI and its main backer Microsoft also announced last month that they had signed a non-binding agreement to restructure OpenAI into a for-profit entity, signaling further changes in the governance of the fast-growing AI company. A person familiar with the matter said the deal with AMD does not change any of OpenAI's ongoing compute plans, including that effort or its partnership with Microsoft.

OpenAI delivers Midas touch to AMD as AI economy booms

Why it matters: The company is becoming a powerful kingmaker in the AI economy as investors heap rewards onto anyone who partners with the ChatGPT creator. Driving the news: Advanced Micro Devices shares soared 24% Monday after the chip designer announced a deal to deliver the data processing power for 6 gigawatts in computing capacity for OpenAI. * OpenAI will also take up to a 10% share of the American semiconductor firm. * AMD's stock jumped to a level seen just twice in a single session over the past 40 years, Bespoke Investment Group noted. * Also, "with today's gain, shares of AMD will also be trading at 'extremely extreme' overbought levels," Bespoke reported. "Over the last 45 years, there have only been a handful of other days when the stock traded" at these volumes. The big picture: OpenAI's blessing signaled to the market that AMD is keeping pace in the AI revolution. * It shows "AMD now joining the AI party as this 1996 Moment for the tech world accelerates," Wedbush Securities analyst and tech bull Dan Ives wrote Monday. "Any lingering fears around AMD should now be thrown out the window as this gives them a major platform to monetize the AI Revolution." Catch up quick: The AMD spike came after OpenAI last week gave a jolt to shares of Shopify and Etsy after announcing an "instant checkout" feature. * "Such market-moving sway, usually reserved for behemoths like Apple Inc. or Nvidia, is the latest sign of OpenAI's rising influence on a wide variety of stocks," Bloomberg reported. It's "made OpenAI's announcements and events ... critical for traders." Yes, but: The Midas effect also works in reverse. * When OpenAI recently posted a blog "detailing new features the company is using internally," it "sent a fresh wave of jitters through software stocks like Atlassian Corp.," Bloomberg reported. The bottom line: OpenAI announcements have become must-see TV.

AMD parks its tanks on NVIDIA's lawn with OpenAI gigawatt deal. Turns out it is who you know...

While appearances may be to the contrary, it turns out it isn't NVIDIA's world that we just get to live in; AMD just staked some serious territorial claims via an unexpected deal with OpenAI to deliver chip tech to power data center build out. Just two weeks ago NVIDIA had announced its own deal with the AI firm in the form of a $100 billion partnership to deliver at least 10 gigawatts of NVIDIA chips for OpenAI's AI infrastructure, beginning from the end of next year. OpenAI will reportedly pay cash for NVIDIA's tech, while NVIDIA will take a minority stake in the AI start-up. Now AMD has parked its tanks on the lawn with the announcement of its own deal to deliver 6 gigawatts for data centers powered by its chips, one gigawatt by this time next year and the rest to follow in phases. OpenAI CEO Sam Altman said on 'the-social-media-platform-formerly-known-as-Twitter' that the AMD deal is "incremental" to the work with NVIDIA and that the intention is to ramp up its spend with the latter, declaring: The world needs much more compute. For her part, AMD CEO Lisa Su wasn't about to miss the chance to make hay here - and it's clearly going to be a case of it is who you know: This isn't just about the first gigawatt or two gigawatts. This is about how do we align our road map with one of the leaders in the AI industry. She explained: AMD and OpenAI will work even closer together on future road maps and technologies, spanning hardware, software, networking and system-level scalability. By choosing AMD Instinct platforms to run their most sophisticated and complex AI workloads, OpenAI is sending a clear signal that AMD GPUs and our open software stack deliver the performance and TCO required for the most demanding at scale deployments. As part of the new deal, OpenAI will be taking a performance and delivery-linked minority stake in AMD. According to Su: To further align our interest, exercises of warrants are tied to OpenAI achieving key commercial and technical conditions that are important to ensure the success of their AMD Instinct deployments. This unique structure tightly aligns OpenAI and AMD, driving significant revenue and earnings growth for AMD, while allowing OpenAI to accelerate their AI build-out and share directly in the upside of our mutual success... It's highly accretive to our shareholders. I think it's also an opportunity for OpenAI to share some of that upside if we're both as successful as we plan to be. The OpenAI connection should open some critical doors to help AMD hit its goal of "tens of billions of dollars" of data center AI revenue by 2027, she added: Let me say, we're having a very, very active conversations with a number of other customers who are also very interested in MI450 and Helios [chip tech] that gives us an opportunity to be a significant piece of the market as we go forward. Of course all this depends on successful and timely delivery of product, which in turn raises the shadow of supply chain constraints. Su is inevitably 'glass half full' on that front: We've been working on this very, very actively. The MI450, the Helios rack, 2-nanometer technology, all of the rack scale solutions require a very detailed supply chain planning. So we are absolutely ready to ensure that we deliver all of this compute. And in addition, as I mentioned, we have lots of other very important and strategic customers who are interested in MI450, and we have the supply chain capacity to satisfy this strategic deal as well as many of the other strategic relationships that we have with our other large customers. She added: We have a number of strategic customers. This deal is very strategic to AMD, but I want to make sure it's clear that we have a lot of other very strategic relationships as well. There's nothing exclusive about this deal. We are well positioned to ensure that we supply everyone who is interested in MI450, and we intend to do that. OpenAI previously signed with Oracle to provide 4.5 gigawatts of infrastructure for $300 billion over five years, a deal that contributed to the recent hefty boost to the software giant's market valuation. Expect more detail and focus on this at next week's Oracle AI World in Las Vegas. OpenAI actually has to do a lot of work to make sure that our deployments are successful. Another day, another OpenAI infrastructure build out partnership announcement. One thing is certain, a lot of companies are becoming very dependent on Sam Altman delivering on OpenAI's growth plans to support the high revenue expectations that Wall Street is building up for those partner firms.

OpenAI's major chips deal with AMD could lead to 10pc stake

OpenAI and AMD have inked a major infrastructure agreement that could be worth billions to the chip maker, and could see it cede a 10pc stake to the the AI giant. AMD and OpenAI have inked a 6 gigawatt agreement to power OpenAI's AI infrastructure across multiple generations of AMD Instinct GPUs, with the first 1 gigawatt deployment of AMD Instinct MI450 GPUs set to begin in the second half of 2026. The deal includes a clause that means OpenAI will have the ability to purchase up to 10pc of AMD stocks, dependent on the initiative hitting certain milestones. It comes at a time when chipmakers like AMD are struggling to compete with chips giant Nvidia, but OpenAI CEO Sam Altman was out on X quickly to seemingly reassure its major partner: "This is all incremental to our work with Nvidia (and we plan to increase our Nvidia purchasing over time)," he said in yesterday's post. "The world needs much more compute..." Not everyone agrees that the world needs more compute, but OpenAI's own release of compute-hungry video generating app Sora, for example, means that today's massive AI deployments certainly do. As part of the agreement AMD issued OpenAI a warrant for up to 160m shares of AMD common stock, structured to vest "as specific milestones are achieved". The first tranche vests with the initial 1 gigawatt deployment, said AMD, with additional tranches vesting as purchases scale up to 6 gigawatts. It means OpenAI could end up owning up to 10pc of AMD. "Vesting is further tied to AMD achieving certain share-price targets and to OpenAI achieving the technical and commercial milestones required to enable AMD deployments at scale," said the official statement. "We are thrilled to partner with OpenAI to deliver AI compute at massive scale," said Dr Lisa Su, chair and CEO, AMD. "This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem." The agreement sees OpenAI work with AMD as a strategic compute partner to drive large-scale deployments of AMD technology starting with the AMD Instinct MI450 series, extending to future generations. "This partnership is a major step in building the compute capacity needed to realize AI's full potential," said Altman. "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." The deal could be a huge boost for AMD: "Our partnership with OpenAI is expected to deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI's AI infrastructure buildout," said Jean Hu, CFO and treasurer, AMD. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

OpenAI signs chip supply deal with AMD to build AI infrastructure

OpenAI will also get the option to buy as much as a 10% stake in AMD, according to a joint statement announcing the deal. It's the latest deal for the ChatGPT maker as it races to beef up its AI computing resources. Under the terms of the deal, OpenAI will buy the latest version of the company's high performance graphics chips, the Instinct MI450, which is expected to debut next year. The agreement calls for supplying 6 gigawatts of computing power for OpenAI's "next generation" AI infrastructure, with the first batch of chips worth 1 gigawatt to be deployed in the second half of 2026.

OpenAI to buy $10B+ worth of AMD hardware, stock through new partnership - SiliconANGLE

OpenAI to buy $10B+ worth of AMD hardware, stock through new partnership OpenAI will buy tens of billions of dollars' worth of data center hardware from Advanced Micro Devices Inc. as part of a partnership announced today. The ChatGPT developer could also receive the option to purchase about 160 million AMD shares, which represents an approximately 10% stake. The amount of stock that OpenAI will buy depends partly on how well it fulfills the terms of the partnership. The collaboration will see the artificial intelligence provider deploy 6 gigawatts' worth of AMD graphics processing units to power its workloads. OpenAI will kick off the project with a one gigawatt deployment of the chipmaker's upcoming Instinct MI450 GPU series. According to OpenAI, work on that initial cluster will begin in the second half of 2026. The MI450 is the planned successor to the MI355X, AMD's flagship data center AI accelerator. The MI355X is a liquid-cooled GPU that includes 10 chiplets, three different types of AI cores and 288 gigabytes of HBM3E memory. It can provide more than 10 petaflops of performance when processing FP4 numbers, lightweight units of data that AI models often use in calculations. "With energy and cost critical issues, infrastructure decisions will increasingly be driven by a platform's ability to deliver the best balance of speed, economics, and energy efficiency for each application it's running," said Sid Sheth, the co-founder and Chief Executive Officer of AI hardware startup d-Matrix Inc. The MI355X is designed for use in both AI clusters and supercomputers. It's believed the upcoming MI450 will have a more specialized design optimized solely for AI infrastructure. According to a May report, the chip will lack support for certain data formats that are commonly used in supercomputers but aren't as popular among language model developers. It's believed the MI450 will also support a technology called Ultra Accelerator Link, or UALink for short. It's an open-source interconnect for linking together the GPUs in AI clusters. The current iteration of the standard supports clusters with up to 1,024 AI accelerators. OpenAI and AMD describe their partnership as a "multi-year, multi-generation agreement." That hints the ChatGPT developer plans to purchase not only the MI450 but also subsequent generations of chips. "Our partnership with OpenAI is expected to deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI's AI infrastructure buildout," said AMD Chief Financial Officer Jean Hu. It's possible the deal will see OpenAI buy not only chips but also other types of hardware. Last year, AMD spent $4.8 billion to acquire ZT Systems Inc., a low-profile developer of servers and rack-scale systems. In May, SemiAnalysis reported that the chipmaker plans to ship the MI450 as part of rack-scale appliances that will each contain 128 GPUs. The appliances are expected to launch in the second half of 2026, which is when OpenAI plans to start building its initial one gigawatt MI450 deployment. The partnership with AMD includes a stock warrant that will give OpenAI the option to buy 160 million shares of the chipmaker's shares if certain conditions are met. The first batch of shares is set to vest once OpenAI sets up its initial one gigawatt deployment. According to AMD, the remaining stock will become available gradually as additional data center capacity comes online. OpenAI must also fulfill certain other requirements to access the shares. It will have to meet "technical and commercial milestones required to enable AMD deployments at scale," the companies said. Additionally, the chipmaker's share price will have to top a certain unspecified threshold. The tie-up comes less than a month after Nvidia Corp. agreed to invest up to $100 billion in OpenAI as part of a similar partnership. The ChatGPT developer will deploy at least 10 gigawatts' worth of hardware powered by Vera Rubin, Nvidia's next flagship AI chip. Like AMD's MI450 series, the processor is expected to start shipping in the second half of 2026.

OpenAI and AMD to Deploy 6 GW of GPUs | AIM

The first 1 GW of deployment of AMD Instinct MI450 GPUs is set to begin in the second half of next year. OpenAI announced a partnership with AMD to deploy 6 gigawatts (GW) of compute power to support its AI infrastructure. The first 1 GW of deployment of AMD Instinct MI450 GPUs is set to begin in the second half of next year. Besides, AMD has granted OpenAI a warrant for up to 160 million shares of its common stock. This warrant is structured to vest in tranches, with the first tranche vesting upon the initial 1 GW deployment of AMD's GPUs. Subsequent tranches will vest as purchases scale up to 6 gigawatts. Vesting is also tied to AMD achieving specific share-price targets and OpenAI meeting the necessary milestones to facilitate large-scale deployments of AMD GPUs. "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster," said Sam Altman, CEO of OpenAI, in the announcement. This partnership deepens the collaboration between the two companies, which began with OpenAI using AMD's MI300X series last year to power its services via Azure. "Our partnership with OpenAI is expected to deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI's AI infrastructure buildout," said Jean Hu, CFO of AMD. Over the last few weeks, OpenAI has signed numerous partnerships and deals with companies such as Oracle, Softbank, and NVIDIA to expand its compute capacity. Last month, OpenAI and NVIDIA signed a letter of intent for a strategic partnership to deploy at least 10 gigawatts of NVIDIA systems for OpenAI's next-generation AI infrastructure. The agreement includes NVIDIA investing up to $100 billion in OpenAI, tied to each gigawatt of systems deployed. Furthermore, OpenAI announced five new AI data centre sites, along with Oracle and SoftBank, in the United States. The announcement is part of the Stargate Project, the $500 billion initiative to build AI infrastructure across the US, led by OpenAI and SoftBank in partnership with Oracle, MGX, Arm, Microsoft and NVIDIA.

OpenAI signs huge chip deal with AMD, and AMD stock soars

OpenAI has struck a sweeping deal with chipmaker AMD to secure processors for artificial intelligence systems, an agreement that could give the ChatGPT maker a 10% stake in AMD and further speeds up its trillion-dollar infrastructure push. The companies announced Monday that OpenAI will deploy up to 6 gigawatts of AMD's high-performance graphics processing units, or GPUs, across several years and generations of hardware. The rollout will begin in the second half of 2026, and more capacity will be added in phases until the full 6-gigawatt target is reached. AMD issued OpenAI a warrant for as many as 160 million shares of its stock, which could give the ChatGPT owner about about a tenth of the chipmaker's shares. The amount of stock it eventually owns is tied to both to the scale of AMD hardware deployed and to share price milestones. The chipmaker's shares jumped as much as 24% in premarket trading Monday as executives said it would add tens of billions of dollars in revenue. Rival Nvidia, which recently unveiled a $100 billion deal of its own with OpenAI, slipped about 1%. It's the latest in a string of infrastructure deals for OpenAI. The company has pledged roughly $1 trillion in the last two weeks to expand its computing base, including a dedicated supply agreement with Nvidia. Analysts have said the scale of investment rivals the energy demand of major cities. OpenAI chief executive Sam Altman called the new deal "a major step in building the compute capacity needed to realize AI's full potential. AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." AMD has been investing heavily in recent years in the market for so-called accelerator chips, which are used to train and run advanced AI models, in which rival Nvidia is dominant. Nvidia's data center division generated more than $115 billion in sales last year, while AMD's AI-related revenue is expected to reach about $6.5 billion in 2025. "We are thrilled to partner with OpenAI to deliver AI compute at massive scale," AMD's chief executive Lisa Su said. "This agreement creates a true win-win enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem." AMD's chief financial officer Jean Hu added that the deal is "expected to deliver tens of billions of dollars in revenue" for the company.

OpenAI DevDay live: Altman's keynote and comments from Jony Ive at the AI startup's flagship event

OpenAI strikes another big infrastructure deal, this time with AMD Early Monday, OpenAI announced a deal with Advanced Micro Devices that sent the chipmaker's stock soaring more than 30%. OpenAI will deploy 6 gigawatts of AMD's Instinct graphics processing units over several years, the companies said. AMD has also issued OpenAI a warrant for up to 160 million shares of AMD common stock with vesting milestones tied to both deployment volume and AMD's share price. "We need as much computing power as we can possibly get," OpenAI President Greg Brockman told CNBC in an interview on Monday.

How AMD won a multibillion AI chip deal with OpenAI

OpenAI has entered into a multibillion-dollar agreement with chipmaker Advanced Micro Devices (AMD) to use its MI450 chips to power AI products. The deal, stemming from an evolving partnership focused on hardware and software, enhances AMD's position against market leader Nvidia. A central element in the collaboration is the emphasis on software, a focus that has been internally championed at AMD. According to Forbes, Vasmi Boppana, the senior vice president of AI at the chip company, described CEO Lisa Su's consistent reaction to updates on software progress as, "Great job. You need to go faster." For a semiconductor manufacturer, this level of attention to software is critical because it is the mechanism that accesses the full capabilities of the hardware. Software optimizes the performance of the silicon and enhances its overall functionality. It also provides the essential tools for engineers to operate and program the physical chips. A significant commercial aspect of software is its "stickiness," a term describing the tendency for engineering teams, once trained on a specific software platform, to be reluctant to switch to a new one due to the associated learning curve and integration challenges. According to Boppana, this software strategy was instrumental in AMD securing the agreement with OpenAI. The deal specifies that the creator of ChatGPT will utilize AMD's upcoming MI450 chips to support 6 gigawatts of compute power for its portfolio of AI products. The financial arrangement of the partnership is structured as a multibillion-dollar transaction. In addition to the hardware procurement, the agreement grants OpenAI the option to purchase up to 160 million shares of AMD, which represents a stake of approximately 10% in the company. This partnership is a substantial development for AMD as it intensifies its efforts to compete with Nvidia, the dominant force in the AI chip market. The groundwork for this extensive agreement was laid in 2023, when OpenAI first initiated the use of AMD hardware for running some of its artificial intelligence models. This initial engagement marked the beginning of a deepening relationship between the two organizations. Over the subsequent period, AMD actively sought input from OpenAI on the architectural design of its then-forthcoming MI450 chips. This collaborative approach indicates that OpenAI's operational experience and technical requirements directly influenced the development of AMD's next-generation hardware, tailoring it to the demands of large-scale AI workloads. The collaboration extended significantly into the software domain. Boppana stated, "As our relationship with OpenAI deepened, we've expanded the engagements across all portions of the stack, but certainly on the software side." A specific outcome of this software-focused cooperation was the adaptation of Triton, an open-source programming language developed by OpenAI for writing code for graphics processing units (GPUs). Prior to this joint effort, Triton was exclusively compatible with Nvidia GPUs. AMD worked directly with OpenAI to enable Triton's functionality on AMD's own chips, broadening the language's hardware support and making AMD's platform more accessible to developers already proficient in the Triton environment. The AMD-OpenAI agreement materializes amid a period of nearly insatiable demand for computational power, driven by the rapid expansion of the AI industry. This trend is underscored by several large-scale investment initiatives announced in early 2023. One such initiative is Project Stargate, a $500 billion investment venture involving President Donald Trump, OpenAI, Oracle, and SoftBank, aimed at bolstering U.S.-based data centers and AI infrastructure. Weeks after that announcement, Apple declared its own commitment of a similar magnitude, pledging $500 billion toward related infrastructure goals. This industry-wide demand has propelled Nvidia, a company once primarily associated with chips for gaming, to a market valuation of $4.5 trillion. In this high-stakes environment, OpenAI has also diversified its hardware sourcing. Late in the previous month, OpenAI finalized a separate $100 billion partnership with Nvidia. That agreement is set to provide OpenAI with 10 gigawatts of compute power, illustrating the massive scale of resources required to develop and operate advanced AI systems. The dual partnerships show OpenAI is building a vast and varied hardware foundation. Alongside the established players, a new generation of semiconductor startups has emerged to address the specific needs of the AI era. Companies such as Cerebras, SambaNova, Groq, and d-Matrix are developing specialized chips designed from the ground up for AI workloads. Their strategy is to offer hardware that is highly optimized for these tasks, presenting an alternative to the more general-purpose architectures of legacy chipmakers. This influx of new competitors reflects a broader industry movement to create more efficient and powerful solutions for artificial intelligence. Sid Sheth, the CEO of startup d-Matrix, commented on the market dynamics, suggesting that the scale of the AI sector provides room for multiple successful hardware providers. "The opportunity is just so large, there's no way OpenAI works only with Nvidia," Sheth told Forbes. He also observed a shift in customer behavior, noting that companies are increasingly prepared to invest the effort required to integrate different hardware ecosystems. "Customers are now willing to go through the process of learning what it takes to work with AMD's software," he added, reinforcing the idea that the market is opening up to alternatives. For years, Nvidia's proprietary software platform, CUDA, has been identified by industry analysts as a key strategic asset, creating a significant competitive advantage or "moat," particularly for training AI models. However, the competitive barrier is considered lower for inference, which is the process of running already-trained models to generate outputs. Inference is a computationally less complex task than training. OpenAI's plan to use the AMD chips specifically for inference workloads plays to this dynamic. "The moat is not as significant," Sheth explained, referring to the inference market. He elaborated that "The threshold of pain is coming down over time," suggesting that the difficulties of adopting non-Nvidia hardware are diminishing. Boppana of AMD argues that the rapid pace of innovation within the AI industry itself is helping to level the playing field. "If the world was kind of static and not evolving, and you just had lots of legacy software with the same architectures...then for sure, there is a big moat," he said. He contrasted this with the current environment, where constant technological advancement is leading to the development of software that is easier to use for programming chips. "On a forward-looking basis, I think it's going to be less and less important," Boppana projected, implying that the dominance of any single software ecosystem may wane as AI technology matures. The OpenAI partnership places AMD in a dramatically different position from where it stood in 2014, the year Lisa Su assumed the role of CEO. At that time, the company was in a precarious financial state, with its stock price at approximately $2 and having undergone significant layoffs that reduced its workforce by a quarter. The company's struggles were attributed to its failure to penetrate the burgeoning mobile device market and declining sales in the personal computer sector. Su was tasked with engineering a corporate turnaround, which involved a strategic pivot toward the data center market and securing business from hyperscale cloud providers such as Google and Amazon. Under Su's leadership, AMD executed a successful recovery, with its stock price recently valued at over $235 and its market capitalization reaching $382 billion. Having re-established the company's financial stability and competitive standing, Su's focus has shifted to positioning AMD as a formidable player in the next major technological wave: artificial intelligence. The new goal is to build upon the data center successes and capture a significant share of the AI hardware market.

NVIDIA directly challenged after AMD and OpenAI sign multibillion GPU partnership

TL;DR: OpenAI and AMD have formed a multibillion-dollar partnership where AMD will power OpenAI's next-generation AI infrastructure with up to 6 gigawatts of AMD Instinct MI450 GPUs starting in late 2026. The deal includes multi-generational hardware upgrades and stock agreements tied to deployment milestones, enhancing AI compute capacity. OpenAI and AMD have announced a multibillion-dollar partnership that involves AMD powering the next generation of OpenAI's AI infrastructure with AMD Instinct MI450 GPUs. OpenAI CEO Sam Altman (left) and AMD CEO Lisa Su (right) The partnership was announced by both companies via press releases, and includes AMD supplying OpenAI with 6 gigawatts of power through its AMD Instinct GPUs, with the first gigawatt to be deployed in the second half of 2026. In addition to signing on for multi-generational hardware upgrades from AMD, OpenAI will be acquiring up to 160 million shares of AMD common stock, which have been structured to vest as specific milestones are achieved. The first tranche of the stock is set to vest after the initial gigawatt is successfully deployed, and further tranches are scheduled to vest as more AMD GPUs are purchased by OpenAI, eventually reaching the point of 6 gigawatts. Notably, vesting is also tied to AMD reaching specific share price targets and OpenAI achieving the technical and commercial milestones required to enable AMD deployments at scale. "We are thrilled to partner with OpenAI to deliver AI compute at massive scale. This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem," said Dr. Lisa Su, chair and CEO, AMD "This partnership is a major step in building the compute capacity needed to realize AI's full potential. AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster," said Sam Altman, co-founder and CEO of OpenAI Notably, this partnership between OpenAI and NVIDIA comes only weeks after OpenAI announced a similar partnership with NVIDIA, the current industry leader in AI GPUs. However, OpenAI and NVIDIA's deal included NVIDIA providing hardware for up to 10 gigawatts of power to deploy OpenAI's next-generation artificial intelligence software.

OpenAI and chipmaker AMD sign chip supply partnership for AI infrastructure

AMD is announcing a deal to supply its chips to OpenAI for building AI infrastructure Semiconductor maker AMD will supply its chips to ChatGPT maker OpenAI as part of agreement to team up on building artificial intelligence infrastructure, the companies said Monday. According to a joint statement announcing the deal, AMD will provide OpenAI with its high performance graphics chips. It calls for supplying 6 gigawatts of computing power for OpenAI's "next generation" AI infrastructure, with the first gigawatt coming online in the second half of next year. AMD also issued OpenAI with a warrant allowing the AI company to buy up to 160 million shares of AMD's common stock, which amounts to about 10% of company. The warrant will vest based on two milestones tied to the amount of computing power deployed. The agreement is a boost for AMD, which has been left behind by rival Nvidia, which has ballooned in value because its graphics processing chips are prized by AI companies.

OpenAI and chipmaker AMD sign chip supply partnership for AI infrastructure

Semiconductor maker AMD will supply its chips to ChatGPT maker OpenAI as part of an agreement to team up on building artificial intelligence infrastructure, the companies said Monday. According to a joint statement announcing the deal, AMD will provide OpenAI with the latest version of its high performance graphics chips expected to debut next year. It calls for supplying 6 gigawatts of computing power for OpenAI's "next generation" AI infrastructure, with the first gigawatt coming online in the second half of 2026. AMD also issued OpenAI with a warrant allowing the AI company to buy up to 160 million shares of AMD's common stock, which amounts to about 10% of company. The warrant will vest based on two milestones tied to the amount of computing power deployed. "This partnership is a major step in building the compute capacity needed to realize AI's full potential," OpenAI CEO Sam Altman, said in a news release. "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." The agreement is a boost for Santa Clara, Calif.-based AMD, which has been left behind by rival Nvidia. The AI boom has fuelled demand for Nvidia's graphics processing chips, sending its shares soaring and making it the world's most valuable company.

OpenAI signs multibillion-dollar deal with chipmaker AMD

Gift 5 articles to anyone you choose each month when you subscribe. AMD inked a deal with OpenAI to roll out AI infrastructure in a pact the chipmaker said could generate tens of billions of dollars in new revenue. AMD's shares soared. The two signed a definitive agreement for OpenAI to deploy 6 gigawatts of AMD GPUs over multiple years, the companies said Monday in a statement. AMD has given OpenAI a warrant for up to 160 million shares, which will vest as milestones are achieved. Those targets require AMD's stock price to continue to increase in value and future exercise points include a tranche tied to a share price of $US600. AMD shares closed Friday at $US164.67.

OpenAI to pour billions into chipmaker AMD

Why it matters: The AI revolution has an unquenchable hunger for computing power, and OpenAI is trying to lock down suppliers beyond market leader Nvidia. By the numbers: OpenAI said it expects to have the first 1 gigawatt (out of a projected 6 total) of AMD's Instinct processors up and running in the second half of 2026. The big picture: Nvidia recently cut a deal with Intel to invest $5 billion in the troubled U.S. chipmaker. In August the Trump administration said the U.S. government would receive a 10% stake in Intel in return for billions in grants under the CHIPS Act. Between the lines: AMD, like Nvidia, designs chips but manufactures them through Taiwan-based TSMC. Intel is the chief U.S.-based manufacturer of microprocessors.

AMD secures chip deal with OpenAI to add $80 billion in value, stock surges 34%

AMD said on October 6 it will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10% of the chipmaker. AMD AMD.O will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10% of the chipmaker. Shares of the chipmaker surged more than 34% on Monday, putting them on track for their biggest one-day gain in over nine years and adding roughly $80 billion to the company's market value. The deal, latest in a string of investment commitments, underscores OpenAI and the broader AI industry's voracious appetite for computing power as companies race toward developing AI technology that meets or exceeds human intelligence. "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," AMD executive vice president Forrest Norrod told Reuters on Sunday. Vote of confidence The agreement closely ties the startup at the center of the AI boom to AMD, one of the strongest rivals of Nvidia NVDA.O, which recently agreed to make substantial investments in OpenAI. Analysts said it was a major vote of confidence in AMD's AI chips and software but is unlikely to dent Nvidia's dominance, as the market leader continues to sell every AI chip it can make. It covers the deployment of hundreds of thousands of AMD's AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026. This is roughly equivalent to the energy needs of 5 million U.S. households, or about thrice the amount of power produced by the Hoover Dam. AMD said OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips beginning next year, and that it would begin to recognize revenue then. AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple effect of the agreement, AMD expects to receive more than $100 billion in new revenue over four years from OpenAI and other customers, they said. The chipmaker is expected to report revenue of $32.78 billion this year, according to LSEG data. In contrast, analysts are expecting Nvidia to report revenue of $206.26 billion for the current fiscal year. "AMD has really trailed Nvidia for quite some time. So I think it helps validate their technology," said Leah Bennett, chief investment strategist at Concurrent Asset Management. Shares of Nvidia dipped more than 1%. OpenAI CEO Sam Altman said the AMD deal will help his startup build enough AI infrastructure to meet its needs. It was not immediately clear how OpenAI would fund the massive deal. OpenAI, which is valued at $500 billion, generated around $4.3 billion in revenue in the first half of 2025 and burned through $2.5 billion in cash, according to media reports. Deal details As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chip deal. The warrant vests in tranches based on milestones that the two companies have agreed on. The first tranche will vest after the initial shipment of MI450 chips set for the second half of 2026. The remaining milestones include specific AMD stock price targets that escalate to $600 a share for the final installment of stock to unlock. In September, Nvidia announced a deal to supply OpenAI with at least 10 gigawatts worth of its systems. In contrast with the startup's deal with AMD where it will take a stake in the chipmaker, Nvidia will invest $100 billion in the ChatGPT parent under the terms of the agreement announced in September. Taking a stake in AMD could give OpenAI "the power to potentially influence corporate strategy. With Nvidia, OpenAI is simply the client and not a part-owner," said Dan Coatsworth, head of markets at A.J. Bell. OpenAI wants more GPUs OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips such as the MI300X. The San Francisco-based AI company has been taking a number of steps to ensure it has the chips needed for its future needs. Altman has floated expectations of reaching 250 gigawatts of compute in total by 2033, The Information has reported. OpenAI's deal last month with Nvidia includes the deployment of one gigawatt of the chip giant's next-generation Vera Rubin processors in late 2026. OpenAI is also in the process of developing its own silicon for AI use and has partnered with Broadcom AVGO.O, Reuters reported last year. The startup and its main backer, Microsoft MSFT.O, announced last month that they had signed a non-binding agreement to restructure OpenAI into a for-profit entity. A person familiar with the matter said the deal with AMD does not change any of OpenAI's ongoing compute plans, including that effort or its partnership with Microsoft. Reporting by Max A. Cherney in San Francisco; Additional reporting by Deepa Seetharaman in San Francisco and Arsheeya Bajwa and Sukriti Gupta in Bengaluru; Editing by Muralikumar Anantharaman and Anil D'Silva.

OpenAI signs deal for AMD chips after Nvidia agreement

OpenAI has signed a deal with chipmaker AMD to obtain six gigawatts' worth of the company's artificial intelligence (AI) chips, just weeks after unveiling a similar agreement with Nvidia. The ChatGPT maker will have the option to take up to 160 million shares, or a stake of about 10 percent, in AMD as part of the agreement announced Monday. "This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem," AMD Chair and CEO Lisa Su said in a statement. The first gigawatt of AMD chips, its Instinct MI450 graphics processing units (GPUs), are set to be deployed in the second half of 2026, according to a press release. OpenAI will receive its first tranche of shares once this initial step is completed. Additional shares will become available to the AI company as it continues to purchase AMD chips, while more shares are tied to AMD's share price and other milestones. "This partnership is a major step in building the compute capacity needed to realize AI's full potential," OpenAI CEO Sam Altman said in a statement. "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." Just two weeks earlier, OpenAI announced a partnership with Nvidia to deploy at least 10 gigawatts of its systems, equivalent to about 4 million to 5 million chips, Nvidia CEO Jensen Huang told CNBC. The chipmaker, in turn, is investing $100 billion in OpenAI. The series of deals comes as AI companies search out vast amounts of additional computing power in order to develop, train and use their models. OpenAI executives said last month that they see a need for at least 20 gigawatts of computing power to meet demand, The Wall Street Journal reported.

OpenAI and Chipmaker AMD Sign Chip Supply Partnership for AI Infrastructure

Semiconductor maker AMD will supply its chips to ChatGPT maker OpenAI as part of an agreement to team up on building artificial intelligence infrastructure, the companies said Monday. According to a joint statement announcing the deal, AMD will provide OpenAI with the latest version of its high performance graphics chips expected to debut next year. It calls for supplying 6 gigawatts of computing power for OpenAI's "next generation" AI infrastructure, with the first gigawatt coming online in the second half of 2026. AMD also issued OpenAI with a warrant allowing the AI company to buy up to 160 million shares of AMD's common stock, which amounts to about 10% of company. The warrant will vest based on two milestones tied to the amount of computing power deployed. "This partnership is a major step in building the compute capacity needed to realize AI's full potential," OpenAI CEO Sam Altman, said in a news release. "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." The agreement is a boost for Santa Clara, Calif.-based AMD, which has been left behind by rival Nvidia. The AI boom has fuelled demand for Nvidia's graphics processing chips, sending its shares soaring and making it the world's most valuable company.

OpenAI and AMD Partner to Deploy 6GW of AI Infrastructure

The stock investment is dependent on AMD meeting certain requirements AMD and OpenAI announced a partnership to develop artificial intelligence (AI) infrastructure on Monday. As part of a massive deal, the San Francisco-based AI firm will deploy 6GW of AMD GPUs over a period of multiple years and across multiple generations of chips. The new deal comes just weeks after the ChatGPT maker signed an agreement with Nvidia to deploy 10GW worth of its AI hardware. These deals highlight both OpenAI's increasing need for compute and the aftermath of reducing reliance on Microsoft. AMD, OpenAI Announce Multi-year Deal for Additional AI Infrastructure In separate newsroom posts, both AMD and OpenAI confirmed the 6GW agreement to develop the AI infrastructure. The first gigawatt deployment will include AMD's Instinct MI450 GPUs, and it is scheduled to be delivered starting in the second half of 2026. The agreement makes OpenAI a "core strategic compute partner" that will conduct large-scale deployment of AMD technology and scale AI solutions. While the deployment will begin with the AMD Instinct MI450 series GPUs, it also extends to future generations of chipsets that the company manufactures. This isn't the first time the two companies have partnered for AI infrastructure. AMD has provided both MI300X and MI350X series GPUs for its data centres in the past. "Our partnership with OpenAI is expected to deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI's AI infrastructure buildout," said Jean Hu, EVP, CFO and treasurer, AMD. On the other hand, AMD has issued a warrant that allows OpenAI to purchase up to 160 million shares of its common stock. However, this purchase is based on AMD completing certain deployment targets. The milestone for the first tranche of investment includes the deployment of the first gigawatt of GPUs, and further investments will occur as the chipmaker continues to fulfil the remaining portion of the 6GW worth of infrastructure. Additionally, these investments are also tied to the chipmaker reaching a certain share price target, which is said to be $600 (roughly Rs. 53,200). AMD stocks are trading at $203.71 (roughly Rs. 18,100) as of writing this. Interestingly, OpenAI has also signed a deal with Nvidia, which will see the chipmaker provide 10GW worth of GPUs to the ChatGPT maker to build out its AI infrastructure.

OpenAI and AMD Announce Massive AI Partnership, Sending AMD Shares Soaring

OpenAI, the world's most valuable startup, is making a big bet on Nvidia's rival. The ChatGPT owner is committing to buying several generations of artificial intelligence chips from Advanced Micro Devices (AMD), as part of a deal that could see the ChatGPT owner take a stake in the chip designer. AMD said in the companies' joint announcement that the deal would yield "tens of billions of dollars in revenue," though the companies didn't disclose the cost of the transaction. The news sent shares of the chip designer soaring over 30% shortly after the open Monday, bringing their year-to-date gains close to 80%. The computing deal comes just weeks after rival Nvidia (NVDA) said that it plans to invest in OpenAI, while the AI startup would buy the chip designer's next-generation chips for its data centers. Shares of Nvidia were 2% lower in recent trading. OpenAI is committing to buying 6 gigawatts worth of AMD's chips, with the first 1 gigawatt deployment planned to start in the second half of 2026. Under the deal, OpenAI will also work with AMD as a core strategic compute partner. "Any lingering fears around AMD should now be thrown out the window as this gives them a major platform to monetize the AI Revolution," Wedbush analysts said in a note following the announcement. AMD has issued OpenAI a warrant for up to 160 million AMD shares that would vest when certain milestones are hit, effectively giving the ChatGPT maker a stake in the chip designer. If the warrants are fully issued, OpenAI could hold 9.9% of AMD. The first tranche of AMD warrants that OpenAI is buying will vest when the startup deploys the first 1 gigawatt of chips, while additional tranches will vest "as purchases scale up to 6 gigawatts." AMD shares also have to reach certain targets, and OpenAI needs to hit some technical and commercial milestones that would help the AMD chips be deployed at scale for vesting to occur. "Our partnership with OpenAI is expected to deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI's AI infrastructure buildout," AMD CFO Jean Hu said. "This agreement creates significant strategic alignment and shareholder value for both AMD and OpenAI and is expected to be highly accretive to AMD's non-GAAP earnings-per-share." AMD CEO Lisa Su called the deal a partnership "to deliver AI compute at massive scale" and OpenAI CEO Sam Altman said that "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster."

AMD Inks Huge Compute Power Deal With OpenAI, Mirroring Nvidia's Move

Nvidia may be dominating the graphics processing unit (GPU) market right now, but its closest rival, AMD, is catching up. Today, (Oct. 6), AMD announced a landmark collaboration with OpenAI that mirrors a recent deal between OpenAI and Nvidia. Under the agreement, AMD will deploy six gigawatts of computing power to OpenAI, which will in turn have the option to acquire up to 10 percent of AMD's stock -- a stake worth roughly $33 billion now after the announcement sent AMD shares to soar 24 percent. Sign Up For Our Daily Newsletter Sign Up Thank you for signing up! By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. See all of our newsletters The partnership gives OpenAI a critical boost in computing resources as it continues to roll out new A.I. models and tools. "This partnership is a major step in building the compute capacity needed to realize A.I.'s full potential," OpenAI CEO Sam Altman said in a statement. OpenAI's first one-gigawatt deployment is scheduled for the second half of 2026 and will use AMD's MI450 chips. This initial rollout will coincide with a vesting schedule of AMD stock for OpenAI, allowing OpenAI to acquire up to 160 million shares as deployments scale to six gigawatts. The stock grant will vest based on OpenAI hitting technical and commercial milestones. The full deal will only be executed if AMD's stock reaches $600 per share. AMD shares are currently traded at $204 apiece. The AMD partnership is the latest in a string of blockbuster A.I. deals. Nvidia recently announced its own long-term pact with OpenAI, pledging up to $100 billion in investments over the next decade. In return, OpenAI will obtain as much as 10 gigawatts of computing power from Nvidia's systems. Global venture capital funding rose 38 percent year-over-year to $97 billion in the third quarter, according to Crunchbase, with nearly half of that money flowing into A.I. ventures. Analysts say the current boom evokes the early days of the internet. "We still believe we are in the early innings of this spending cycle," said Dan Ives, an analyst with Wedbush Securities, in a client note. AMD's new deal with OpenAI marks a "1996 moment" for the tech world, he added, likening today's A.I. momentum to the foundational years of the tech economy. Nvidia's shares slipped more than 1 percent today following AMD's announcement, but the company still holds a commanding lead with more than 90 percent of the global GPU market. Nvidia's early success in meeting A.I.-fueled GPU demand has propelled its market cap to $4.5 trillion and fueled $41 billion in data center revenue between May and July. AMD, in comparison, has a market cap of $334 billion and brought in $3.2 billion in data center revenue in its most recent quarter. Lisa Su, who has led AMD as CEO since 2014, is confident that the OpenAI deal will accelerate that growth. Her company has a "clear line of sight" to achieve tens of billions of dollars in data center revenue by 2027, Su told analysts today, adding that these numbers could grow even higher. "In addition to the OpenAI opportunity, and the very significant revenue addition there, we expect to generate well over $100 billion in the next several years," she said.

AMD stock skyrockets 25% as OpenAI looks to take stake through AI chip deal

AMD stock skyrocketed more than 25% Monday during premarket trading following the news. OpenAI will deploy 6 gigawatts of AMD's Instinct graphics processing units over multiple years and across multiple generations of hardware, the companies said Monday. It will kick off with an initial 1 gigawatt rollout of chips in the second half of 2026. As part of the tie-up, AMD has issued OpenAI a warrant for up to 160 million shares of AMD common stock, with vesting milestones tied to both deployment volume and AMD's share price. The first tranche vests with the first full gigawatt deployment, with additional tranches unlocking as OpenAI scales to 6 gigawatts and meets key technical and commercial milestones required for large-scale rollout. If OpenAI exercises the full warrant, it could acquire approximately 10% ownership in AMD, based on the current number of shares outstanding. The ChatGPT maker said the deal was worth billions, but declined to disclose a specific dollar amount. "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster," Altman said in a release announcing the partnership.

AMD stock soars following the landmark OpenAI AMD GPU partnership

AMD and OpenAI have announced a multi-year deal for a 6 GW AI infrastructure rollout, starting with AMD's MI450 GPUs in 2026 -- a partnership set to redefine the AI hardware market and send AMD stock soaring. In what is being hailed as the most significant AMD news of the year, AMD (NASDAQ: $AMD) and OpenAI have announced a definitive strategic partnership for a massive 6-gigawatt AI infrastructure deployment. The news sent the AMD stock price soaring in pre-market trading, signaling a major shift in the AI hardware market. Under the multi-year, multi-generational agreement, OpenAI will deploy AMD Instinct GPUs, starting with a 1-gigawatt deployment of the MI450 series in the second half of 2026. This OpenAI AMD collaboration positions the chipmaker as a core strategic partner in building out the next generation of AI systems. The market's reaction to the AMD OpenAI announcement was immediate and overwhelmingly positive. Investors tracking the AMD stock price on platforms like Yahoo Finance saw a significant jump, underscoring the deal's perceived value. The partnership is expected to generate tens of billions of dollars in revenue for AMD. Such monumental AMD stock news often triggers a surge in trading volume. The frenzy can test the infrastructure of trading platforms, and in the past, major market-moving events have led to service disruptions, creating a "robinhood down" scenario for some users unable to execute trades during peak volatility. Nvidia and OpenAI announce landmark $100 billion partnership, igniting global stock rally This deal also creates a halo effect across the AI sector. While it presents a direct challenge to competitors, reflected in movements in Nvidia stock, it also lifts sentiment for the entire industry. Related high-interest tech stocks, such as Palantir stock and Bitcoin miner IREN, often see increased activity during major AI announcements. To align strategic interests, AMD issued OpenAI a warrant for up to 160 million shares of AMD common stock, vesting as deployment and performance milestones are met. While there is no publicly traded OpenAI stock, this deal effectively positions AMD stock as a primary vehicle for investors looking to gain exposure to OpenAI's growth. The partnership extends a collaboration that began with AMD's earlier MI300X and MI350X series GPUs. Both companies will share technical expertise to co-optimize their hardware and software roadmaps for large-scale AI deployments. "We are thrilled to partner with OpenAI to deliver AI compute at massive scale," said Dr. Lisa Su, chair and CEO of AMD. "This partnership brings the best of AMD and OpenAI together to create a true win-win." Sam Altman, CEO of OpenAI, added, "This partnership is a major step in building the compute capacity needed to realize AI's full potential. AMD's leadership in high-performance chips will enable us to accelerate progress."

AMD-OpenAI multi-billion-dollar deal challenges Nvidia's dominance - The Economic Times

According to a joint statement, AMD will provide OpenAI with the latest version of its high performance graphics chips expected to debut next year. It calls for supplying 6 gigawatts of computing power for OpenAI's next generation AI infrastructure, with the first gigawatt coming online in the second half of 2026.Advanced Micro Devices (AMD) on Monday announced a landmark multi-billion-dollar agreement with OpenAI and turned up the heat on Nvidia, which currently dominates the chips space. The partnership sent AMD shares rallying over 25% in early trading. Deal contours According to a joint statement, AMD will provide OpenAI with the latest version of its high performance graphics chips expected to debut next year. It calls for supplying 6 gigawatts of computing power for OpenAI's next generation AI infrastructure, with the first gigawatt coming online in the second half of 2026. AMD also issued a warrant that allows OpenAI to buy up to 160 million shares of AMD's common stock, which amounts to about 10% of company. The warrant will vest based on two milestones tied to the amount of computing power deployed. Challenging Nvidia This is a key deal for AMD which has been left behind Nvidia in the AI race, and comes weeks after Nvidia and OpenAI signed a contract for more than $100 billion worth of equipment intended to increase OpenAI's generative AI capabilities. Most importantly, this deal diversifies OpenAI's supply of AI hardware, cutting its reliance on Nvidia, which currently has an estimated 80% of the market in AI accelerators. By deploying 6 gigawatts of AMD's Instinct GPUs, OpenAI is putting its weight behind AMD's chips, making them competitive with Nvidia's in both scale and performance. This is expected to drive broader adoption of AMD's solutions, nibbling away some market from Nvidia's near-monopoly. From a technical perspective, AMD's latest Instinct GPUs now have greater memory and match or exceed Nvidia's equivalent Blackwell and Hopper series products in multiple benchmarks, including memory bandwidth, inference latency, and price-performance for large language models (LLMs). Through this five-year partnership, OpenAI will also help shape the design of future AMD chips, to make them more specific for advanced generative AI workloads. The deal's unique warrant mechanism makes OpenAI a potential strategic shareholder in AMD. This means tens of billions in projected revenue for AMD, building pressure on Nvidia to compete not just on hardware features, but supply, pricing, and strategic flexibility.

Analysis: How Two Big Decisions Helped AMD Win The OpenAI Deal

While AMD's decisions to accelerate its GPU road map and acquire ZT Systems played critical roles in helping it win the big OpenAI deal, AMD CEO Lisa Su indicated that these moves have also accelerated its broader efforts to challenge Nvidia's AI dominance. When AMD announced its blockbuster deal with OpenAI Monday morning, the agreement validated two critical decisions the chip designer made over the past two years: accelerating its GPU road map and acquiring ZT Systems. With Nvidia's continued dominance of the AI infrastructure market allowing the rival to generate multiples of AMD's revenue, time has not been on the company's side, so it has had to make bold moves in a bid to mount a serious challenge to Nvidia. [Related: Analysis: After Big Nvidia Win, Will Intel Ever Escape Its Rival's Shadow?] One of those decisions revolved around the pace at which AMD introduces new data center GPUs. While the company had previously introduced a new Instinct GPU roughly every two years, it announced in June of last year that it was moving to a one-year release cadence. At the time, Forrest Norrod, AMD's top data center executive, told CRN that it had "no choice" but to "dramatically" increase its investments in AI and release GPUs at a faster cadence in the face of unrelenting generative AI innovation and Nvidia's aggressive strategy. He said the move was partly in response to the announcement in late 2023 that Nvidia would release new data center GPUs every year instead of every two years. Norrod believed the rival's move was triggered by the growing viability of AMD's Instinct GPUs. "Nvidia, quite candidly, stepped on their accelerator pedal, and when they saw that -- 'holy crap. AMD has got a real part; they're going to be a real competitor' -- they very deliberately stepped on the accelerator trying to block us and everybody else out. And so we're responding to that as well," he said. This accelerated road map resulted in AMD releasing the Instinct MI325X in last year's fourth quarter, followed by the MI350X series this past summer. The company is now building up to its biggest moment yet in the AI computing space as a result of this sped-up cadence: next year's launch of the MI400 series. At its Advancing AI event in June, AMD CEO Lisa Su said the MI400 series was "built from the grounds up for leadership" in both large-scale training and distributed inference, and she revealed that OpenAI is a "very early design partner" for the GPU platform. To underline OpenAI's interest, Su brought out on stage the AI software giant's CEO, Sam Altman, who said he is "extremely excited for the MI450," referring the series' flagship GPU. "When you first started telling me what you're thinking about for the specs, I was like, there's no way. That just sounds totally crazy. It's too big. But it's really been so exciting to see you all get close to delivery on this. I think it's going to be an amazing thing," he added. Now AMD is planning to deploy one gigawatt of MI450 infrastructure for OpenAI beginning in the second half of 2026 as part of a project that is six gigawatts total. Su said this deal is worth tens of billions of dollars, which will allow AMD to achieve its data center AI revenue goal by 2027 and potentially prompt other substantial Instinct deals. What makes the MI450 special is the fact that it's the first Instinct GPU AMD is using to build rack-scale server platforms, which are designed to enable high-speed connections between dozens of GPUs to make the server rack act as a single supercomputer for the most computationally demanding AI workloads. AMD revealed its first rack-scale platform at the Advancing AI event in June, more than a year after Nvidia introduced its first product in the category, the Blackwell-based GB200 NVL72. These platforms now serve as the flagship vehicle for Nvidia's most powerful GPUs, enabling the fastest possible AI performance within a rack. For AMD's OpenAI project, these rack-scale solutions will serve a critical role in enabling the fastest possible AI computing it can provide. The chip designer likely wouldn't have been able to deliver these rack-scale platforms starting in late 2026 for OpenAI if it wasn't for the company's decision to acquire server designer and manufacturer ZT Systems last year. When AMD announced in August of last year that it reached a deal to buy ZT Systems for $4.9 billion, Su explicitly stated that the acquisition would give it "world-class systems design and rack-scale solutions expertise" to "significantly strengthen our data center AI systems and customer enablement capabilities." (The company's plans with ZT Systems didn't include its server manufacturing unit, for which AMD reached an agreement this past May to sell to U.S. electronics manufacturing services giant Sanmina for $3 billion.) While the ZT Systems acquisition closed in March, Norrod reportedly said roughly three months before that AMD was already working closely with ZT Systems' engineering team on "forward-looking products" based on upcoming Instinct GPUs. This included MI400 series products, for which ZT Systems was set to make a "major contribution." At the Advancing AI event in June, Norrod emphasized in a roundtable with CRN and other news outlets that AMD is using the ZT Systems acquisition to design rack-scale solutions "specifically for the very lead customers [who are going to] deploy a crazy high volume." While Norrod didn't name any of those lead customers at the time, it should be clear now that OpenAI is one of them with the deal AMD announced this week. While AMD's decisions to accelerate its GPU road map and acquire ZT Systems played critical roles in helping it win the big OpenAI deal, comments by Su in a Monday webcast indicated that these moves have also accelerated its broader efforts to challenge Nvidia's dominance of the AI infrastructure market. In addition to the tens of billions of dollars AMD expects to make from the OpenAI deal in the coming years, Su predicted that the big customer win will have a "compounding effect" that could result in the company making "well over $100 billion in revenue over the next few years" from other customers deploying Instinct infrastructure. With Su expecting this growing customer interest to put AMD on a "clear trajectory to capture a significant share of the global AI infrastructure build out," the CEO has shown how big, bold decisions can change the competitive dynamics of the semiconductor industry in a relatively short amount of time.

AI's $1.2 Trillion Growth Will Rest On Data Centers And Power, Not Financing Schemes - NVIDIA (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO), Advanced Micro Devices (NASDAQ:AMD)

Investor fears about vendor financing in the U.S. semiconductor industry are overstated, according to Bank of America Securities analyst Vivek Arya. The fundamental drivers of AI growth will be data center expansion and access to power, rather than financing gimmicks, he added. OpenAI's $100 billion deal with Nvidia (NASDAQ:NVDA) and its agreement with Advanced Micro Devices (NASDAQ:AMD) for up to 10% of shares have fueled concerns about a potential return to "circular" financing reminiscent of the dot-com bubble, the analyst noted. However, he emphasized that these arrangements likely account for only 5-10% of the $1.2 trillion in annual AI-related capital expenditures expected by 2030. Also Read: OpenAI's AMD, Nvidia Deals Are Huge, But Execution Is Key, Says Brad Gerstner Nvidia, AMD, and Broadcom (NASDAQ:AVGO) are among Arya's top semiconductor picks, alongside peers in the equipment, memory, and optics sectors. While OpenAI plans to deploy 250 gigawatts (GW) of compute power by 2033, Nvidia's 10 GW and AMD's 6 GW commitments represent only about 6% of that total. And OpenAI is just one of several major AI ecosystems, which include the four U.S. hyperscalers, Arya adds. Tesla's (NASDAQ:TSLA) xAI, for example, and numerous sovereign and neocloud initiatives in the Middle East and Asia involve little or no vendor financing. Even if the projected $1.2 trillion annual AI spend materializes, it would translate to about $5.2 trillion in cumulative investment from 2026 to 2030, he argues. That dwarfs Nvidia's and AMD's combined $200 billion in vendor-linked commitments. Arya also framed Nvidia's $100 billion OpenAI investment as a mutually beneficial structure, not a subsidy. For every $10 billion Nvidia commits, OpenAI must first secure data center space, reliable gigawatt-scale power, and $50-$60 billion in infrastructure capital. Nvidia then supplies the GPUs, generating $30-$40 billion in sales and potentially earning an equity stake in OpenAI as well. Price Actions: AMD stock was trading higher by 3.46% to $210.40 at last check Tuesday. NVDA was down 0.33% and AVGO was down 2.58%. Read Next: Broadcom's Big AI Move In Japan Could Slash Data Center Power Use By Half Image: Shutterstock AMDAdvanced Micro Devices Inc$210.073.12%OverviewAVGOBroadcom Inc$330.52-1.48%NVDANVIDIA Corp$185.700.09%TSLATesla Inc$446.74-1.44%Market News and Data brought to you by Benzinga APIs

OpenAI signs multibillion dollar chip deal with AMD

OpenAI signed a multiyear partnership Monday with chipmaker Advanced Micro Devices as the ChatGPT-maker continues an investment spree to secure massive amounts of computing power for rolling out generative artificial intelligence. The companies announced the plan to develop AI data centers that the chipmaker said would bring in tens of billions of dollars in new revenue over the next five years. AMD's share price surged 35% when markets opened on news of the agreement that would see the company deliver six gigawatts worth of chips to the ChatGPT-maker.

AMD's OpenAI Partnership Signals Massive Optimism Around Next-Gen Instinct MI450 AI GPUs, Setting Up Fierce Competition for NVIDIA

AMD has entered into a rather 'blockbuster' deal with OpenAI today, and while the internet is focused on the financial aspect, there's an interesting angle that we'll talk about. Team Red has been known as the 'underdogs' of the AI industry, as when you look at compute providers out there, there's little attention paid to alternatives to NVIDIA, especially from Big Tech. AMD has been battling for several years to establish itself as a viable counterpart to NVIDIA's AI offerings, and with OpenAI's collaboration, this may have just happened. We previously discussed the AMD-OpenAI partnership in a post, but based on the conference call held by AMD, as well as our own analysis, the Instinct MI450 is shaping up to be a massive platform, one of the most pivotal releases from the company. OpenAI and AMD have signed a comprehensive, multi-year, multi-generation definitive agreement to deploy six gigawatts of AMD Instinct GPUs. AMD and OpenAI will begin deploying the first gigawatt of Instinct MI450 series GPU capacity in the second half of 2026, making them a lead customer for both MI450 and Helios at massive scale. On the compute side, one of the main focuses of this announcement is the deployment of 1 GW of AI systems featuring the MI450 AI chip. Notably, OpenAI has become the first customer to announce the use of AMD's next-generation technology. Sam Altman's AI powerhouse has also become one of the early adopters of NVIDIA's Vera Rubin platform. Hence, the optimism around future AI generations is definitely there. Still, for the Instinct MI450 in particular, this opens up a new opportunity, in the form of customer adoption, and getting the spotlight from Big Tech. AMD's CEO, Lisa Su, expects the partnership to generate $100 billion in the upcoming years, positioning the firm as the second major AI compute supplier after NVIDIA. Now, let's talk a bit about the Instinct MI450. Internally, AMD categorizes the lineup as significant as their EPYC Milan CPUs, which were the company's breakthrough product in the DC CPU segment. Similarly, with the Instinct MI450, Team Red has expressed that customers won't hesitate to adopt the firm's tech stack. Revenue begins in the second half of 2026 and adds double-digit billions of annual incremental data center AI revenue once it ramps. This partnership... has the potential to generate well over $100 billion in revenue over the next few years. The MI450 features the 'latest' everything, whether it is process node, HBM, architectural design, TGPs, and other aspects, and more importantly, AMD also plans to ramp up its rack-scale solutions with the MI450 series as well, through their 'Helios' rack, which will feature MI400 AI chips, along with the next-gen EPYC Venice CPUs. While the firm is certainly late in pivoting to a robust rack-scale portfolio, AMD expects massive interest to come their way, with the OpenAI agreement likely being the highlight. For now, it won't be wrong to say that the AMD-NVIDIA competition is expected to become a lot fiercer moving ahead, and for the world of computing, the increasing rivalry is definitely a great sign.

Did OpenAI Just Ensure Nvidia Will Be The First $10 Trillion Stock? | The Motley Fool

The two companies now have a partnership to build massive data centers for artificial intelligence (AI) computing. Computing capacity is everything. At least, that is what CEO Sam Altman says about OpenAI. The artificial intelligence (AI) disruptor has been signing deals to help finance its increasing need for data centers to run its ChatGPT systems, which are growing rapidly and now have over 700 million weekly active users. The largest of these deals is with Nvidia (NVDA -4.84%). Nvidia will invest $100 billion incrementally into OpenAI, which will then spend the money on Nvidia chips to build 10 gigawatts or more of AI data centers. This could not only be a lucrative investment for Nvidia, but should lead to a huge revenue boost for the rest of the decade. Today, Nvidia has the largest market cap in the world, at $4.6 trillion as of this writing. Will this new OpenAI deal catalyze Nvidia to become the world's first $10 trillion stock? Let's take a closer look at the deal and find out. On Sept. 22, OpenAI and Nvidia jointly announced a potentially revolutionary strategic partnership. OpenAI is not like the giant cloud providers such as Alphabet, which spent years building infrastructure suited for AI. OpenAI is a large company, but its still not profitable and it needs a ton of capital to make its AI vision come true. Nvidia is the key supplier of graphics processing units (GPUs) for AI data centers. Without the big tech balance sheets, OpenAI has gotten creative with its financing structure. Nvidia is going to slowly invest around $100 billion into OpenAI, who will then take that cash and build data centers with Nvidia computer chips. This could represent millions of GPUs purchased from Nvidia to build 10 gigawatts of capacity. It is estimated that current data center capacity in the United States is just over 50 gigawatts. This means the proposed spending from OpenAI utilizing Nvidia GPUs could end up being a 20% boost to the total data center footprint in the United States today. This is a gargantuan scale that should put the $100 billion and 10-gigawatt claims in proper context. The AI data center boom already turned Nvidia into the largest company in the world by market cap. Its revenue over the last 12 months was $165 billion, which it turned into $86.6 billion in bottom-line net income. OpenAI is not going to add $100 billion to Nvidia's top line in 2026. However, through 2030, it could incrementally add tens of billions to Nvidia's annual revenue figures, which would be impactful versus its $165 billion current level. Remember that OpenAI is not Nvidia's only customer: It sells to the likes of Meta Platforms, Microsoft, and Amazon for their own data center expansion plans. We shouldn't forget the investment in OpenAI, either. Nvidia's $100 billion investment into OpenAI may not turn into trillions of dollars in value, but it could be quite lucrative if OpenAI turns into a trillion-dollar business itself and Nvidia owns 10% of the company (as an example, 10% isn't an exact figure). OpenAI is setting the standard in AI infrastructure spending, and it is not low. Other competitors will need to raise their spending in order to match what OpenAI is building to catch up in the AI race. All this will lead to more spending on Nvidia computer chips. If the company has a market cap of $4.6 trillion today versus $165 billion in revenue, it will likely need to hit $300 billion in annual revenue or more to hit a $10 trillion value. Today, Nvidia has a net income margin of 53%. If that margin is maintained with revenue of $350 billion that arrives because of huge spending levels from OpenAI and others, Nvidia will have $185.5 billion in net income at some point within this decade. That would give it an expensive price-to-earnings ratio (P/E) of 54, but that is not far off from Nvidia's current P/E of 53. It may seem unlikely, but there is a chance that OpenAI's deal spurs Nvidia to reach a market cap of $10 trillion by 2030. Just don't go investing in the stock thinking it is guaranteed to happen tomorrow.

OpenAI and AMD announce major computing deal - Top 10 points you need to know

OpenAI and AMD have joined forces in a massive computing deal. OpenAI will use 6 gigawatts of AMD GPUs to power new AI data centers. This multi-billion-dollar partnership begins with a 1-gigawatt rollout in 2026. OpenAI could also gain up to a 10% stake in AMD through this deal. This move challenges Nvidia's dominance in AI chips. OpenAI and AMD have announced a massive multibillion-dollar partnership to power the next generation of AI technology. Under the deal, OpenAI will deploy six gigawatts of AMD's high-performance Instinct GPUs starting with one gigawatt in the second half of 2026. This agreement will significantly increase AMD's revenue and marks a key moment in the AI boom. AMD will supply AI chips to OpenAI across several years. The deal is expected to generate tens of billions of dollars annually for AMD, potentially exceeding $100 billion in revenue from OpenAI and related customers over four years. This scale reflects the massive infrastructure needed to support advanced AI systems. The two companies will collaborate closely on the development and deployment of multi-generational hardware and software solutions. OpenAI will use AMD's latest MI450 series GPUs and rack-scale AI technologies. Their partnership builds on previous collaborations involving the MI300X and MI350X series chips, aimed at accelerating AI advancements. An important feature of the deal is a warrant allowing OpenAI to purchase up to 160 million AMD shares at a nominal price. This could give OpenAI a nearly 10% stake in AMD if deployment and AMD stock price milestones are reached. This stake aligns the interests of both companies as AI grows in importance. This landmark agreement challenges Nvidia's dominance in the AI chip market. OpenAI maintains separate agreements with Nvidia, including a $100 billion deal signed recently. However, the AMD partnership diversifies OpenAI's supply and highlights AMD's rising role in the sector. Following the announcement, AMD's stock surged over 24%, reflecting investor confidence in the deal's growth potential. The scale of the infrastructure involved is vast. A one-gigawatt deployment of AMD chips can consume energy equivalent to powering an entire state, underlining the massive resources required for AI compute. OpenAI's CEO Sam Altman emphasized the challenge of securing sufficient high-speed computing power to fuel AI breakthroughs. With this partnership, OpenAI gains critical support to scale AI infrastructure globally. AMD benefits from a long-term strategic customer that will boost its leadership in the high-performance computing market. This collaboration is a pivotal step in shaping the future of artificial intelligence and the entire computing ecosystem. OpenAI plans to deploy 6 gigawatts of AMD's new MI450 GPUs over the next few years. The first phase of this deployment, 1 gigawatt, is expected to go live in the second half of 2026. This massive computing capacity will allow OpenAI to run larger AI models faster and more efficiently. It also gives the company flexibility to scale operations as AI demand grows. Experts say this level of computing is among the largest single contracts in AI hardware history. For OpenAI, it's a way to secure performance and reliability while building its next-generation AI systems. The deal ensures OpenAI has a consistent supply of cutting-edge GPUs without relying on just one chipmaker. OpenAI is not just buying chips. The company also has an option to acquire a strategic stake in AMD. This means it could own up to 10% of AMD through stock warrants. These warrants will only vest after certain deployment milestones and AMD stock price targets are met. It aligns the two companies' interests for long-term collaboration. By holding a stake, OpenAI gains more influence over its chip supply. It also shows confidence in AMD's technology and strategy. Investors view this as a smart move, strengthening ties between AI development and semiconductor manufacturing. This partnership is expected to generate more than $100 billion in revenue for AMD over the next four years. That's a huge boost for the company and solidifies its position in the AI chip market. AMD will now compete more aggressively with other major AI chipmakers. Its role as a core partner for OpenAI enhances credibility and market visibility. The stock market reacted positively, with AMD shares rising sharply after the announcement. Analysts see this as a turning point in AMD's long-term growth story. This revenue is not just from the chips themselves. It comes from long-term contracts, potential future collaborations, and ongoing upgrades of AI infrastructure. Until now, OpenAI has relied heavily on Nvidia for its AI hardware. Partnering with AMD diversifies this supply chain. Diversification reduces risk. If one supplier faces shortages or delays, OpenAI can rely on its other partner. It also encourages competition, which could lead to better pricing and innovation. This step ensures that OpenAI can continue scaling AI systems without interruption. It also gives the company leverage in negotiating future deals. By spreading partnerships across multiple chipmakers, OpenAI is preparing for a long-term strategy in AI research and deployment. AMD's MI450 GPUs are designed specifically for AI workloads. They deliver high performance while being energy-efficient. These GPUs are optimized for large-scale AI model training. That includes natural language processing, computer vision, and generative AI tasks. The first deployment of these GPUs will help OpenAI test and scale its most complex models. It also signals the start of a broader transformation in AI computing infrastructure. Experts say having these chips ready in 2026 positions OpenAI ahead of competitors in the AI race. This is a multi-year collaboration designed to evolve over several generations of AI hardware. Both companies plan to expand and upgrade their AI infrastructure together. Long-term planning ensures that OpenAI will have reliable hardware as AI models grow larger and more complex. It also gives AMD a steady source of revenue and a chance to refine its products based on real-world AI needs. The partnership is more than just a supply agreement. It's a roadmap for building AI infrastructure for the next decade. This deal marks a major shift in AI chip supply dynamics. AMD is now a serious competitor to other chipmakers in the AI space. Companies across the sector will pay attention. The partnership may encourage other AI firms to diversify their hardware suppliers. It also highlights the importance of specialized AI chips. Standard computer chips cannot meet the growing demands of large-scale AI models. Industry analysts see this as a step toward more innovation and faster AI model development. By partnering with OpenAI, AMD solidifies its place as a key player in the AI ecosystem. The company now has access to real-world AI workloads that can help refine its technology. This makes AMD more competitive against other chipmakers. It also boosts investor confidence and brand recognition in the fast-growing AI market. With AI continuing to expand across industries, AMD is now positioned as a critical supplier of next-generation computing infrastructure. Looking ahead, this partnership could lead to further collaborations beyond GPU supply. Joint AI research, infrastructure development, and advanced computing projects are all possible. The evolving AI landscape presents opportunities for both companies to innovate together. This deal is not just about chips -- it's about shaping the future of AI. For OpenAI, reliable hardware and strategic partnerships are essential for continued growth. For AMD, working with OpenAI helps the company lead in the AI chip market.

AMD-OpenAI partnership 'major moment in AI revolution,' says Wedbush

Advanced Micro Devices' (NASDAQ:AMD) AI infrastructure and potential stake deal with OpenAI is a "majormoment in AI revolution," according to Wedbush. Earlier on Monday, Microsoft (NASDAQ:MSFT)-backed OpenAI and AMD announced a partnership to deploy six gigawatts of AMD's It positions AMD as a core player in the AI chip spending cycle and validates its relevance in the AI revolution. The 10% stake is seen as a major vote of confidence from OpenAI and Altman, further integrating AMD into the AI ecosystem. The analysts note that AI spending is now spreading to governments and enterprises globally, indicating the early stages of a massive infrastructure buildout.

AMD and OpenAI Partner to Deploy 6 Gigawatts of GPUs for Next-Generation AI Infrastructure

AMD's strong leadership in high-performance computing systems and OpenAI's pioneering research and advancements in generative AI places the two companies at the forefront of this important and pivotal time for AI. Under this definitive agreement, OpenAI will work with AMD as a core strategic compute partner to drive large-scale deployments of AMD technology starting with the AMD Instinct MI450 series and rack-scale AI solutions and extending to future generations. By sharing technical expertise to optimize their product roadmaps, AMD and OpenAI are deepening their multi-generational hardware and software collaboration that began with the MI300X and continued with the MI350X series. This partnership creates a true win-win for both companies, enabling very large-scale AI deployments and advancing the entire ecosystem.

AMD's OpenAI Deal A 'Major Validation Moment' For Chip Designer: Analyst

While a leading Wall Street analyst says AMD's new Instinct GPU deal with OpenAI should throw out 'any lingering fears around' the chip designer, a channel partner questions whether the company has much to gain right now from expanding Instinct into the channel. A leading Wall Street analyst on Monday called AMD's new multibillion-dollar Instinct GPU deal with OpenAI a "major validation moment" and said the agreement should throw out "any lingering fears around" the chip designer. "With a 10 [percent] stake in AMD this quickly brings [AMD CEO] Lisa Su and AMD right into the core of the AI chip spending cycle and is a huge vote of confidence from OpenAI and [OpenAI CEO Sam] Altman," wrote Daniel Ives, managing director and senior equity research analyst at Wedbush Securities, in a post to X. [Related: Analysis: After Big Nvidia Win, Will Intel Ever Escape Its Rival's Shadow?] AMD announced this morning that it landed a "multi-year, multi-generation" partnership with OpenAI that will see the ChatGPT maker deploy 6 gigawatts of Instinct GPUs. The company also said that it has issued OpenAI a warrant for up to 160 million shares of AMD common stock that will vest upon the completion of certain milestones. Lisa Su, AMD's CEO, said in a morning webcast that the deal -- which will begin with a one-gigawatt deployment of Instinct MI450 GPUs in the second half of 2026 -- will generate "tens of billions of dollars" in the coming years and could spur additional revenue of more than $100 billion from other customers during that period. The news sent AMD's stock price up by more than 28 percent Monday. While AMD debuted its Instinct GPUs all the way back in 2017, the company has spent the past few years significantly ramping up investments in research and development for its Instinct portfolio to take on Nvidia. The rival's dominance of the AI computing space was cemented in 2022 after OpenAI debuted ChatGPT, which at the time relied on Nvidia GPUs. Despite the major investments it has made in Instinct and related products, AMD's data center AI revenue has lagged Nvidia's by several magnitudes, having made more than $5 billion in Instinct sales last year in contrast to the $102.2 billion its rival made from data center compute products during roughly the same period. However, Su (pictured above) said on the Monday webcast that the OpenAI deal represents a "major inflection point for us," with each gigawatt of the planned six-gigawatt Instinct deployment amounting to "significant double-digit billions of revenue" for the chip designer. While this will allow AMD to achieve its goal of tens of billions of data center AI revenue by 2027, the agreement will also have a "compounding effect" that could result in the company making significantly more money from other customers, according to the CEO. "We also believe that with the massive scale of this deployment and the strong benefits to the overall AMD AI ecosystem, this partnership will enable additional revenue from existing and new customers deploying at scale and has the potential to generate well over $100 billion in revenue over the next few years," she said. Su expects this because the OpenAI deal is a "clear validation" of the company's data center AI road map, which AMD last year moved to an annual cadence of new GPU releases from its previous strategy of launching new products roughly every two years. An AMD executive told CRN earlier this year that the company is not ready yet to make Instinct a broader channel play as part of its expanded partner program. The reason for this is AMD is focused on "high-touch" engagements with its biggest customers -- including OpenAI, Microsoft and xAI -- to ensure they have an optimal experience, according to Kevin Lensing, who runs Americas and hyperscaler sales for AMD. The chip designer is also refining the software stack, including the recently launched ROCm Enterprise AI, to ensure channel partners can make repeatable sales and integration motions with Instinct-based systems, Lensing added. "The challenge with doing a channel enablement on Instinct is we can't enable a model where we have to go one-to-many if we can't touch them all and deliver a great experience," he said back in June. While Lensing couldn't commit to a timeline at the time for when Instinct GPUs will become a broad channel play, he said AMD's new partner program is set up to support the product line and expansions into other product categories in the future. "With this new overall structure that we've rolled out, it lends itself to extensibility, to other product lines and to new ways to incentivize on top of the base. That's the whole concept," he said. Alexey Stolyar, CTO of AMD systems integration partner International Computing Concepts, told CRN on Monday that there could be benefit from AMD making Instinct a channel-ready product sooner but questioned whether the chip designer has the resources to do so and if channel revenue would be enough to justify the investment for now. Based in Northbrook, Ill., International Computing Concepts has credited Nvidia and its strong partnership with the AI infrastructure giant as a major driver for the 376.5 percent revenue growth the systems integrator experienced over the past two years. This resulted in the partner debuting in the No. 1 spot on CRN's Fast Growth 150 list this year. Stolyar said his company has pushed AMD to go faster on making Instinct viable for the channel, but he understands why the chip designer needs to focus on large customers like OpenAI to develop its largest sources of revenue. "The channel will probably drive innovation, like different use cases, different tools and so on, because there's such a wide variety of things [happening in the space]. And so the question becomes: By driving this innovation, do they get a leg up or not? And can they afford to do it now or not?" he said.

AMD's $100 Billion OpenAI Deal Could Supercharge AI Chip Growth, Analyst Says, Projecting Massive Earnings Boost By 2030 - Advanced Micro Devices (NASDAQ:AMD)

Advanced Micro Devices' (NASDAQ:AMD) multi-year partnership with OpenAI could generate over $100 billion in revenue over the next four to six years, as the chipmaker prepares to supply up to six gigawatts of computing capacity using its next-generation Instinct MI450X GPUs starting in late 2026. The deal strengthens AMD's position in the AI hardware race against Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO), with OpenAI's massive infrastructure buildout expected to drive demand across the broader semiconductor, networking, and data center ecosystem. Bank of America Securities analyst Vivek Arya maintained a Buy rating on AMD and increased the price forecast from $200 to $250. Also Read: OpenAI's AMD, Nvidia Deals Are Huge, But Execution Is Key, Says Brad Gerstner Arya said AMD's new multi-year deal with OpenAI could generate over $100 billion in revenue across the next four to six years, marking one of the most transformative opportunities in the AI hardware landscape. Earlier this week, AMD announced an agreement to deliver up to 6 gigawatts (GW) of computing capacity to OpenAI, starting in late 2026, the analyst noted. The deployment will use AMD's next-generation Instinct MI450X GPUs and related rack-scale infrastructure under its Helios platform, he said. In return, OpenAI will receive performance-based warrants for up to 160 million AMD shares, investing in tranches tied to share price targets with the final tranche triggered if AMD stock reaches $600 per share, Arya noted The analyst estimated that each gigawatt of capacity could generate roughly $17.5 billion in revenue, translating to more than $100 billion across the whole deployment. He projected 30-35% EBIT margins and noted that every 1 GW of incremental revenue could add $0.67-$2.65 per share in annualized EPS by 2026-2027. By 2030, AMD could deliver earnings power exceeding $15 per share with full 6 GW deployment and a 35% margin assumption. Arya said the OpenAI partnership adds significant incremental upside to AMD's previously signed sovereign deals in the Middle East. The analyst highlighted that AMD's success positions it as a growing rival to Nvidia and Broadcom, both of which have also struck major AI infrastructure agreements with OpenAI. Nvidia's deal, valued at around $100 billion, involves 10 GW of deployment for its Vera Rubin systems starting in 2026, he said. Arya emphasized that OpenAI remains the most disruptive player in generative AI cloud computing, and its expanding infrastructure will drive a "rising tide" across the semiconductor supply chain -- benefiting chip, memory, networking, and foundry partners. The analyst added that OpenAI's ambition to deploy over 200 GW of compute capacity in the coming years underscores the early stage of the AI buildout. While acknowledging potential investor concerns over a future capacity glut, Arya said that constraints such as data center space, power access, and advanced chip cycle times will naturally regulate expansion. Arya projected 2025 sales of $32.88 billion and EPS of $3.85. Price Action: AMD stock was trading 3.39% higher at $210.55 as of the last check on Tuesday. Read Next: Super Micro Stock Soars After AMD's Big AI Deal With OpenAI Photo: Shutterstock AMDAdvanced Micro Devices Inc$210.733.45%OverviewAVGOBroadcom Inc$328.66-2.04%NVDANVIDIA Corp$184.88-0.35%Market News and Data brought to you by Benzinga APIs

One of Nvidia's Biggest Customers Just Struck a Massive Deal That Should Alarm Shareholders

Nvidia (NVDA 1.68%) has seen its fortunes rise on the back of surging demand for artificial intelligence compute. Its graphics processing units (GPUs) stand out as best in class when it comes to AI training and inference, which has resulted in soaring prices for its chips as big tech buys up supply as fast as Nvidia can make them. Thanks to its technology lead, Nvidia commands a market share of around 80% of all AI chips for rent on cloud computing platforms, according to estimates. And that might only be limited by its ability to supply enough chips to its biggest customers. But one of those major customers just signed a deal that could signal that dominant market share is under threat. And if Nvidia's other major customers follow suit, it could be reason to pump the brakes on Nvidia's stock. Nvidia is heavily reliant on just a handful of big tech names While Nvidia has exhibited extremely impressive revenue growth over the last few years, that sales growth stems from just a handful of customers. In fact, its customer concentration is increasing. Last quarter, just two customers accounted for 39% of its total sales. Its top six customers accounted for 85%. That's compared to 25% from its top two customers and less than 66% from its top six customers in the year-ago period. Those customers are very likely Microsoft, Amazon, Alphabet, Meta Platforms, OpenAI, and Oracle, not necessarily in that order. It's worth pointing out that not all of those customers are the end users for Nvidia's chips. Microsoft, Amazon, Alphabet, and Oracle are all building out public cloud platforms, renting out their compute capacity to third-party businesses. As a result, the customer base is a bit more diverse. That said, Oracle's cloud buildout is increasingly tied to demand of OpenAI services, while Microsoft has long been intertwined with the generative AI leader. But OpenAI is signaling it might not rely so much on Nvidia going forward. Despite signing a big deal to buy Nvidia GPUs in exchange for up to $100 billion in capital investment from the GPU leader, OpenAI just signed a huge deal with rival GPU maker Advanced Micro Devices (AMD -1.25%). The contract gives OpenAI warrants to buy shares of AMD at $0.01 per share upon meeting certain purchase requirements of AMD chips (among other requirements). OpenAI plans to deploy 6 gigawatts of AMD GPUs over a multiyear period. It receives a tranche of warrants to buy AMD stock for each gigawatt it buys. In effect, AMD is giving OpenAI a discount on its chips while further entrenching itself in the AI ecosystem. For reference, Nvidia's deal with AI will fully vest if OpenAI buys 10 gigawatts of GPUs. So Nvidia's still in a position to supply the majority of OpenAI's compute, but its dominant share is slipping. This could be just the start of a new trend OpenAI's deal with AMD could be one of many for the rival GPU maker. The deal hinges on AMD's forthcoming MI450 line of GPUs, which should come out around the same time as Nvidia's Rubin architecture. AMD is confident that the MI450 will outperform Nvidia in both training and inference, which is a bold claim. At the very least, analysts expect its performance to be competitive, which should be good enough to garner significant market share gains from Nvidia. Hyperscalers need AMD as a counterbalance to Nvidia, which currently holds tremendous pricing power. If the MI450 is as powerful as management claims, it could mean a huge shift in spending not just from OpenAI, but from Nvidia's other major customers as well. AMD is building rack-level systems that should make it easy for customers to make the switch. On top of that, Nvidia's customers are also making progress in developing custom silicon solutions. Microsoft is planning to make a significant investment in its next generation Maia300 chip, redesigning it this summer to take advantage of more advanced technology. Meta, likewise, is working to expand the use cases for its custom MTIA chips to generative AI use cases. And OpenAI is planning to develop a custom silicon solution. It's partnering with Broadcom, reportedly planning to spend $10 billion on a custom AI accelerator design. While investors shouldn't expect any of Nvidia's biggest customers to ditch it entirely, the push to move away from relying on Nvidia is gaining momentum. OpenAI's deal with AMD is likely just the start. With the stock trading at a forward P/E above 40, shares look expensive given the current potential to see a slowdown in revenue growth as customers move away from the GPU giant.

AMD signs AI chip-supply deal with OpenAI, shares surge 34%

AMD said on Monday it will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10% of the chipmaker. AMD said on Monday it will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10% of the chipmaker. The deal offers OpenAI an opportunity to take a stake in one of Nvidia's most formidable rivals and is a powerful endorsement of Advanced Micro Devices' (AMD's) AI chips and software. "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," AMD executive vice president Forrest Norrod told Reuters on Sunday. The agreement covers the deployment of hundreds of thousands of AMD's AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026. AMD said OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips beginning next year, and that it would begin to recognize revenue then. AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple effect of the agreement, AMD expects to receive more than $100 billion in new revenue over four years from OpenAI and other customers, they said. "Other people are going to come along with it because this is really the pioneer, a pioneer in the industry that has a lot of influence over the broader ecosystem," AMD strategy chief Mat Hein said. The deal with AMD will help OpenAI build enough AI infrastructure to meet its needs, OpenAI CEO Sam Altman said in a statement. Analysts, on average, estimate AMD will generate revenue of $32.78 billion this year, according to LSEG data. As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chips deal. The warrant vests in tranches based on milestones that the two companies have agreed on. The first tranche will vest after the initial shipment of MI450 chips set for the second half of 2026. The remaining milestones include specific AMD stock price targets that escalate to $600 a share for the final installment of stock to unlock. AMD has 1.62 billion shares outstanding and is valued at $267.23 billion, according to LSEG data. Its shares closed on Friday at $164.67. OpenAI has a valuation of $500 billion. OPENAI WANTS MORE GPUs OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips such as the MI300X. The San Francisco-based AI company has been taking a number of steps to ensure it has the chips needed for its future needs. In September, Nvidia announced an investment of up to $100 billion in OpenAI that included a plan to supply at least 10 gigawatts worth of Nvidia systems. The plan includes OpenAI deploying a gigawatt of Nvidia's next-generation Vera Rubin chips in late 2026. In addition to using Nvidia hardware, cloud computing giants such as Alphabet's Google and Amazon build their own in-house processors. Similarly, OpenAI is in the process of developing its own silicon for AI use and has partnered with Broadcom, Reuters reported last year. OpenAI and its main backer Microsoft also announced last month that they had signed a non-binding agreement to restructure OpenAI into a for-profit entity, signaling further changes in the governance of the fast-growing AI company. A person familiar with the matter said the deal with AMD does not change any of OpenAI's ongoing compute plans, including that effort or its partnership with Microsoft.

AMD signs AI chip-supply deal with OpenAI, shares surge over 34%

Analysts said it was a major vote of confidence in AMD's AI chips and software but is unlikely to dent Nvidia's dominance The agreement closely ties the startup at the centre of the AI boom to AMD, one of the strongest rivals of Nvidia. (Image credit: Getty Images) AMD will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10 per cent of the chipmaker. Shares of the chipmaker surged more than 34 per cent on Monday, putting them on track for their biggest one-day gain in over nine years and adding roughly $80bn to the company's market value. The deal, latest in a string of investment commitments, underscores OpenAI and the broader AI industry's voracious appetite for computing power as companies race toward developing AI technology that meets or exceeds human intelligence. "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," said AMD executive vice president Forrest Norrod. Read more: Sam Altman and G42's Peng Xiao to headline GITEX GLOBAL 2025 AI dialogue Vote of confidence The agreement closely ties the startup at the centre of the AI boom to AMD, one of the strongest rivals of Nvidia, which recently agreed to make substantial investments in OpenAI. Analysts said it was a major vote of confidence in AMD's AI chips and software but is unlikely to dent Nvidia's dominance, as the market leader continues to sell every AI chip it can make. It covers the deployment of hundreds of thousands of AMD's AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026. This is roughly equivalent to the energy needs of 5 million US households, or about thrice the amount of power produced by the Hoover Dam. AMD said OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips beginning next year, and that it would begin to recognise revenue then. AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple effect of the agreement, AMD expects to receive more than $100bn in new revenue over four years from OpenAI and other customers, they said. The chipmaker is expected to report revenue of $32.78bn this year, according to LSEG data. In contrast, analysts are expecting Nvidia to report revenue of $206.26bn for the current fiscal year. "AMD has really trailed Nvidia for quite some time. So I think it helps validate their technology," said Leah Bennett, chief investment strategist at Concurrent Asset Management. Shares of Nvidia dipped more than 1 per cent. OpenAI CEO Sam Altman said the AMD deal will help his startup build enough AI infrastructure to meet its needs. It was not immediately clear how OpenAI would fund the massive deal. OpenAI, which is valued at $500bn, generated around $4.3bn in revenue in the first half of 2025 and burned through $2.5bn in cash, according to media reports. Deal details As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chip deal. The warrant vests in tranches based on milestones that the two companies have agreed on. The first tranche will vest after the initial shipment of MI450 chips set for the second half of 2026. The remaining milestones include specific AMD stock price targets that escalate to $600 a share for the final installment of stock to unlock. In September, Nvidia announced a deal to supply OpenAI with at least 10 gigawatts worth of its systems. In contrast with the startup's deal with AMD where it will take a stake in the chipmaker, Nvidia will invest $100bn in the ChatGPT parent under the terms of the agreement announced in September. Taking a stake in AMD could give OpenAI "the power to potentially influence corporate strategy. With Nvidia, OpenAI is simply the client and not a part-owner," said Dan Coatsworth, head of markets at A.J. Bell. OpenAI wants more GPUs OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips such as the MI300X. The San Francisco-based AI company has been taking a number of steps to ensure it has the chips needed for its future needs. Altman has floated expectations of reaching 250 gigawatts of compute in total by 2033, The Information has reported. OpenAI's deal last month with Nvidia includes the deployment of one gigawatt of the chip giant's next-generation Vera Rubin processors in late 2026. OpenAI is also in the process of developing its own silicon for AI use and has partnered with Broadcom, Reuters reported last year. The startup and its main backer, Microsoft, announced last month that they had signed a non-binding agreement to restructure OpenAI into a for-profit entity. A person familiar with the matter said the deal with AMD does not change any of OpenAI's ongoing compute plans, including that effort or its partnership with Microsoft.

AMD Stock Skyrockets After Announcing 'Major' 6-Gigawatt OpenAI GPU Deal

In discussing AMD's new 'multi-year, multi-generation' partnership with OpenAI, CEO Lisa Su says the deal represents a 'major inflection point for us' and will generate 'tens of billions of dollars' over the coming years in its challenge to Nvidia's AI computing dominance. AMD's stock price increased by more than 30 percent in pre-market trading Monday after the company announced this morning a "multi-year, multi-generation" partnership with OpenAI that will see the ChatGPT maker deploy 6 gigawatts of Instinct GPUs. AMD Chair and CEO Lisa Su called the deal "a major inflection point for us" in a Monday morning webcast and said it will generate "tens of billions of dollars over the next number of years" as the Instinct GPU deployment begins in late 2026 and expands from there. [Related: AMD Lands Deal For AI Provider Cohere To Expand Use Of Its Instinct GPUs] "This unique structure tightly aligns OpenAI and AMD, driving significant revenue and earnings growth for AMD, while allowing OpenAI to accelerate their AI build-out and share directly in the upside of our mutual success," she said. The new partnership represents a significantly expanded relationship between the two companies after Su named OpenAI a "very early design partner" for AMD's Instinct MI450GPU at her Advancing AI keynote in June. The deal provides a major shot in the arm to AMD, which has spent the last few years mounting a significant challenge to Nvidia's dominance of the AI computing space. Less than a month ago, Nvidia announced that it is investing $100 billion into OpenAI as part of a plan for the AI software giant to deploy at least 10 gigawatts of Nvidia-based data centers. As part of the new partnership, AMD said it has issued OpenAI a warrant for up to 160 million shares of AMD common stock. This warrant will vest in conjunction with the achievement of "specific milestones," starting with the first gigawatt deployment of Instinct GPUs, which is expected to begin in the second half of 2026. Milestones for future tranches of the warrant include further expansion of AMD's Instinct GPU deployment with OpenAI, the chip designer's share price hitting certain targets and OpenAI "achieving the technical and commercial milestones required to enable AMD deployments at scale," according to the company. On the webcast, Su said the deal gives AMD "clear line of sight to achieve our initial goal of tens of billion dollars of annual data center AI revenue starting in 2027." She originally said in February that the company would achieve this goal in the "coming years" after disclosing that it had generated more than $5 billion from the segment last year. The deal could result in AMD generating significant magnitudes of additional revenue from other customers, according to the CEO. "We also believe that with the massive scale of this deployment and the strong benefits to the overall AMD AI ecosystem, this partnership will enable additional revenue from existing and new customers deploying at scale and has the potential to generate well over $100 billion in revenue over the next few years," she said. OpenAI's 6-gigawatt deployment will begin with AMD's Instinct MI450 and related rack-scale AI offerings, for which the company has a "significant number" of engagements with "other major companies," according to Su. This puts AMD "on a clear trajectory to capture a significant share of the global AI infrastructure build-out," she said.

AMD, OpenAI Deal Could Spark A New AI Arms Race With Nvidia - NVIDIA (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD)

Advanced Micro Devices Inc.'s (NASDAQ:AMD) multi-year deal with OpenAI could unlock $135 billion in revenue and mount a serious challenge to Nvidia Corp.'s (NASDAQ:NVDA) long-standing dominance, according to Goldman Sachs. In a note shared Tuesday, the bank's analyst James Schneider called the announcement "a strong positive" for the AMD's long-term GPU business and significantly raised its earnings estimates and price target. Goldman hiked its 12-month price target on AMD stock to $210, up from $150. The firm kept a "Neutral" rating due to funding risks and heavy customer concentration. See Also: Tom Lee Sees 'Powerful Tailwinds' Despite Goverment Shutdown, 'Most Hated V-Shaped Rally' How Big Is OpenAI's Opportunity For AMD? The AMD-OpenAI deal involves deploying a staggering 6 gigawatts (GW) of AMD GPUs -- graphics processing units -- to power OpenAI's expanding data center infrastructure over the next several years. In return, OpenAI could receive up to 160 million AMD shares -- valued at around $75 billion, or roughly 10% of the company -- through performance-based warrants that vest in stages as GPU deployments progress, with the final tranche triggered by the sixth gigawatt and a $600 AMD share price. According to Goldman Sachs, the OpenAI deal represents a $135 billion revenue opportunity for AMD based on projected average selling prices for GPU deployments. The bank now expects AMD's earnings per share (EPS), excluding stock-based compensation, to rise by 21% in 2026 and 62% in 2027. Goldman's new assumptions forecast staggered GPU deployments starting with 0.25GW in 2026 and scaling to 2GW by 2030. Based on this timeline and estimated GPU pricing of $22.5 billion per GW, AMD could see massive top-line growth while also capturing a meaningful share of the AI accelerator market currently dominated by Nvidia. The deal also gives AMD access to OpenAI's training stack -- previously a near-exclusive Nvidia stronghold -- signaling a potential shift in AI chip architecture preferences among leading developers. See Also: Dan Ives Reacts To OpenAI's 'Wild' $100B Deal With AMD: 'We're In The Second Inning of A Nine-Inning Game' AMD Partners With OpenAI: Is Nvidia Losing Ground? Nvidia remains the clear leader in AI chips, particularly for training large language models. But the AMD-OpenAI tie-up represents a "modest incremental negative" for Nvidia. According to Goldman Sachs, it reduces the firm's lock on OpenAI's training workloads. Still, the bank isn't signaling a massive transfer of market share just yet. Nvidia remains a key player, but it now faces an emboldened rival backed by one of the world's most prominent AI developers. What Are The Risks For AMD? Despite the upside, Goldman is not turning outright bullish. The bank maintains a neutral rating on AMD, citing "significant customer concentration," with OpenAI potentially accounting for more than 40% of AMD's revenue by 2027. There are also questions about OpenAI's ability to secure sufficient funding to support this multi-year GPU deployment plan. If OpenAI fails to meet its financing goals, AMD's projected revenue gains could be delayed or reduced. Upside Is Limited -- For Now Following AMD's 23% rally on Monday, the new target implies only a 3.1% upside from Monday's closing price of $203.71. This suggests that much of the optimism is already priced in. The risk-reward profile, however, could improve quickly if AMD executes well and OpenAI secures continued funding. In such a scenario, Goldman said it could become "more constructive" on AMD shares in future quarters. Now Read: Private Equity Stocks Burn While Wall Street Parties -- Is A Credit Crunch Brewing? Image: Shutterstock AMDAdvanced Micro Devices Inc$213.074.59%OverviewNVDANVIDIA Corp$186.550.54%Market News and Data brought to you by Benzinga APIs

Market Outlook: AMD shares surge as OpenAI deal boosts competition in AI chip market

Advanced Micro Devices shares rose sharply after announcing a major deal with OpenAI to supply AI infrastructure, strengthening AMD's position in the rapidly expanding AI hardware market. BNN Bloomberg spoke with Romeo Alvarez, director and research analyst at William O'Neil + Co., about why the partnership is a major endorsement for AMD, how it could shift the balance of power among chipmakers, and what challenges remain around financing and implementation. Read the full transcript below: MERELLA: Big news in the tech world today. Chipmaker Advanced Micro Devices has announced a deal with OpenAI to roll out AI infrastructure. That deal could see OpenAI take a 10 per cent stake in the company. For perspective, let's go to Romeo Alvarez. He's a director and research analyst at William O'Neil + Co. Thanks for joining us today. ROMEO: Well, for the past several years -- since the AI trend really took off on the semiconductor side -- Nvidia has been the king of AI chips. They've been the main supplier to every hyperscaler trying to develop a large language model or any leading AI offering. And for the first time, AMD has signed a high-profile deal with one of these top-tier developers of AI technology. I think that's a massive endorsement for the company. MERELLA: OpenAI already buys from Nvidia. Why is it good for them to buy from AMD? Is diversification necessary here? ROMEO: Correct. I don't think any company wants to rely on a single vendor. The objective is to diversify across suppliers, even if the technologies aren't identical. We're not talking about a commodity-type offering, but AMD's technology is competitive enough for OpenAI to partner with them. OpenAI is also working with Broadcom for custom chips, so they're clearly exploring multiple alternatives. I don't believe just one company benefits here. The pie is so big that multiple players can benefit from the same trend. MERELLA: Is it clear how OpenAI is going to pay for this? ROMEO: That's the big question. And it doesn't just apply to the AMD contract -- it also applies to the Oracle partnership. We're all wondering the same thing. It will likely come from debt, given that OpenAI is still not profitable. So yes, it's a valid question how they plan to finance this. MERELLA: What's your take on the structure of the deal, where OpenAI can buy a stake in AMD? I think it's around a penny per share? ROMEO: Correct. Looking purely at the structure, I think it's beneficial for both AMD shareholders and OpenAI. There are incentives for both parties to make this partnership work. AMD benefits because the more chips it sells, the more revenue and profit it generates. For OpenAI, there's incentive as well, since it could eventually gain up to a 10 per cent ownership in AMD. MERELLA: What's your outlook for AMD at this point? Does this deal change your view? ROMEO: Definitely. We've been on the sidelines at William O'Neil on AMD. We always viewed AMD as the Pepsi-Cola to Nvidia's Coca-Cola, if I can use that analogy. But this is a significant endorsement. We still don't have AMD on our buy list -- we do have Nvidia and Broadcom -- but this is something we'll have to re-evaluate following this announcement. MERELLA: More broadly, we're seeing a ramp-up in AI infrastructure as more complex uses emerge. When you look at deployment right now, where is AI most widely being used? ROMEO: The clearest example we can all relate to is ChatGPT -- answering everyday questions. But going forward, it'll extend to health care and research and development. It's already being used for coding and software automation. Google is a leader in that space, and Microsoft is integrating co-pilots into its Office products. Apple is developing AI tools for video and photo editing. I think it's going to be everywhere, and we're still in the early stages of this AI trend. MERELLA: Got it. Romeo Alvarez, we'll have to leave it there. Thanks for joining us.

AMD shares soar 27% on OpenAI chip deal that could give Altman's firm...

AMD said Monday that it has reached a deal to supply OpenAI with hundreds of thousands of AI chips and offered the firm a potential 10% stake in the company. Shares in AMD soared 27% Monday morning, adding nearly $80 billion to the firm's market cap as investors cheered the firm's addition as one of OpenAI's key computing partners. The deployment agreement covers a whopping six gigawatts - enough to power 5 million US households - over several years beginning in the second half of 2026. AMD said the deal is expected to bring in tens of billions of dollars in revenue while accelerating OpenAI's push into AI infrastructure. "This partnership is a major step in building the compute capacity needed to realize AI's full potential," OpenAI CEO Sam Altman said in a statement Monday. "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." OpenAI plans to build a one-gigawatt facility based on upcoming AMD Instinct MI450 chips starting next year. As part of the deal, AMD has issued OpenAI a warrant for up to 160 million shares of common stock, structured to vest as specific milestones are achieved, like the initial 1 gigawatt deployment. If the ChatGPT owner exercises the full warrant, it will receive a roughly 10% stake in the chipmaker. "We are thrilled to partner with OpenAI to deliver AI compute at massive scale," AMD CEO Lisa Su said in a statement. "This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem." It's one of the largest GPU deployment agreements yet - and comes just two weeks after OpenAI unveiled a $100 billion chips deal with rival Nvidia. The new deal with AMD will help reduce OpenAI's reliance on a single vendor, putting a dent in Nvidia's industry-wide dominance. Shares in Jensen Huang's Nvidia dipped 1.1% Monday. OpenAI is also in talks with Broadcom to build custom chips for its next generation of GPUs. The deals have resulted in a broader, more complex supply chain, reminiscent of a larger trend across the AI sector. Nvidia is supplying the capital needed to buy chips while Oracle is helping build massive data centers to generate the required power. AMD and Broadcom are supplying the GPUs, while OpenAI is bringing in the demand. It's similar to the Stargate project, a $500 billion venture to quickly build AI infrastructure in the US involving OpenAI, Oracle and SoftBank that President Trump announced in January. OpenAI's first data center in the project is already up-and-running in Abilene, Texas, and using Nvidia chips. Construction is ongoing at the site to build up capacity. Planned data centers in New Mexico, Ohio and the Midwest are expected to rely on a mix of suppliers, including AMD. OpenAI also announced last month that it had signed an agreement to restructure OpenAI into a for-profit entity - despite legal action from Altman's rival, Elon Musk, who has attempted to thwart the restructuring.

Hold Your Horses: AMD's OpenAI Payday Starts in a Year (and Really Ramps Up in 2027) | The Motley Fool

AMD just scored a massive artificial intelligence (AI) deal with OpenAI. But there's a catch that investors need to understand. Chip designer Advanced Micro Devices (AMD 5.83%) just inked a headline-grabbing artificial intelligence (AI) partnership with ChatGPT maker OpenAI -- but investors shouldn't expect big sales right out of the gate. The OpenAI contract is indeed a big deal. However, the revenue clock doesn't start until the second half of 2026, with the real ramp-up to follow in 2027. Each gigawatt-scale tranche of AMD's Instinct MI450 and Helios rack installations could translate into double-digit billions of annual AI-related data center revenue once ramped. You just have to give AMD some time to get its number-crunching ducks in a row. AMD is finally getting the green light to build a 6-gigawatt AI superhighway with OpenAI. But it takes time to deliver on a project this big. The on-ramp opens in late 2026, when the first AMD MI450/Helios systems go live. Traffic really starts moving in 2027, when each new lane -- Instinct chips and Helios racks -- can add many billions of annual revenue once it's humming along at full scale. AMD's management expects the partnership to add more than $100 billion to the company's sales over "the next few years," including direct OpenAI shipments and a smattering of additional deals inspired by this week's announcement. The speed limit and mile markers are baked into a complex set of stock warrants: OpenAI unlocks vesting based on actual chip deployments and AMD share-price targets. If all targets are met, OpenAI could acquire up to 160 million AMD shares in five years. That's about 10% of the 1.6 billion shares AMD has in circulation today. The final tranche takes effect when AMD's stock reaches $600 per share. That's about triple the stock's closing price on Oct. 6. Whether OpenAI goes public or not, this structure gives the private company market-based performance incentives. It's a great road for AMD and a genuine route around Nvidia's pricey tollbooths -- but it's a long drive with scheduled maintenance, not an instant teleport. Crucially, this contract is nonexclusive. AMD can sell MI450/Helios to anyone, and OpenAI will keep buying AI accelerators from Nvidia (NVDA 1.62%) (and possibly others) because the world needs every ounce of AI compute it can get nowadays. You're watching the industry shift into a multivendor phase -- less obviously dominated by Nvidia, more about second-sourcing and managing the total cost of ownership. The AI accelerator industry suddenly looks more competitive. AMD's Instinct chips may not win many head-to-head performance comparisons against Nvidia's Blackwell family, but the math often changes when you include power consumption in those calculations. Will OpenAI rivals like Anthropic, X, Meta Platforms, or Alphabet's Google follow with big AMD orders? That's hard to tell, and some of it may already be happening behind closed doors. It's fair to say that OpenAI tends to set the tone in the AI market, and others tend to follow suit when the ChatGPT maker takes a big step. Wall Street was quick to embrace the news either way. AMD stock hit a fresh all-time high on the announcement, arguably for good reason: This deal is real validation and a clearer line of sight to big AI dollars for the chip-supplier underdog. You just need to give the top line some time to expand, since the OpenAI sales won't start flowing until the second half of 2026. But you know what they say about patience being a virtue, especially on Wall Street. Big, juicy AI revenue streams are coming AMD's way, just not right away.

AMD-OpenAI Deal: Wall Street's Missing the Real Story Behind the $100 Billion Deal | Investing.com UK

AMD's (NASDAQ:AMD) stock soared 25% on Monday after announcing a massive partnership with OpenAI, but while Wall Street cheers this David-versus-Goliath narrative against NVIDIA (NASDAQ:NVDA), they're missing the financial engineering buried in the deal structure. This goes way beyond a simple supply agreement. It's one of the most sophisticated customer-financing schemes in semiconductor history, and it shows something troubling about the AI infrastructure build-out. The headlines missed something big: AMD didn't just win a customer. They essentially became OpenAI's banker. The deal includes warrants for OpenAI to purchase up to 160 million AMD shares at just $0.01 per share, potentially giving the AI company a 10% stake worth $96 billion at the deal's $600 price target. Think about the mechanics here. AMD is financing OpenAI's massive compute infrastructure needs by offering shares at virtually zero cost, with vesting tied to both hardware purchases and AMD's stock performance. It's brilliant financial engineering, but it also shows that even OpenAI -- valued at $500 billion -- apparently can't finance this infrastructure build-out with traditional methods. This raises hard questions about AI economics that nobody wants to address. If the most valuable AI company in the world needs creative financing to buy chips, what does that say about the underlying cash flows in this industry? Analysts frame this as AMD versus NVIDIA, but the actual constraint isn't market share. It's power consumption. OpenAI is committed to deploying 6 gigawatts of AMD hardware, roughly equivalent to the electricity consumption of 4.5 million homes. For context, that's more power than entire U.S. states like Vermont or Wyoming consume. AMD's MI450 chips, launching in late 2026, promise better power efficiency than current alternatives. But even with these improvements, the power demands are staggering. OpenAI's 1-gigawatt initial deployment will require a dedicated power plant or substantial grid infrastructure investments that dwarf the chip costs themselves. The missing piece in every AI infrastructure story is grid capacity. While companies compete over chip performance and supply deals, the real bottleneck is electrical infrastructure. California already faces rolling blackouts during peak demand. How exactly will the grid handle thousands of gigawatts of new AI compute demand? AMD expects over $100 billion in new revenue from OpenAI and "other customers" over four years. That final phrase -- "other customers" -- deserves scrutiny. It suggests AMD is banking on this OpenAI deal triggering a broader rush to alternative AI hardware, essentially using OpenAI as a reference customer to break NVIDIA's dominance. But historical precedent suggests caution. During the dot-com boom, numerous companies signed massive multi-year deals that looked transformational on paper but proved unrealistic when business models collapsed. Enron had impressive long-term contracts, too. The warrant structure actually protects OpenAI more than AMD. If AI demand craters or OpenAI faces financial distress, they simply don't exercise the warrants. AMD, however, remains on the hook for manufacturing capacity and R&D investments sized for this massive deployment. AMD's OpenAI deployment requires more electricity than entire US states The contrarian take: we're witnessing the early stages of an AI infrastructure bubble that makes the dot-com crash look modest. Consider the mathematics: if Morgan Stanley's $3 trillion AI infrastructure spending forecast proves accurate, and if power consumption scales linearly, we're looking at electrical demand equivalent to adding several new countries to the global grid. The semiconductor industry learned painful lessons about demand forecasting during previous bubbles. In 2000, telecom equipment makers like Lucent and Nortel secured massive long-term contracts that evaporated when the fiber optic build-out exceeded actual demand by orders of magnitude. Today's AI infrastructure spending exhibits similar characteristics: massive capital investments based on exponential demand projections, financed through creative structures, with payback periods extending far into an uncertain future. Warren Buffett's famous quip about tide pools applies here: "You don't know who's swimming naked until the tide goes out." The AI boom's rising tide is lifting all boats, making AMD's warrant-heavy deal with OpenAI look brilliant. But what happens when electricity costs, grid constraints, or changing AI economics alter the landscape? Benjamin Graham would scrutinize the intrinsic value proposition. AMD is essentially betting their manufacturing capacity and balance sheet on sustained exponential growth in AI compute demand. The warrant structure means they're taking most of the execution risk while sharing much of the upside. AMD's stock surge reflects market enthusiasm for breaking NVIDIA's dominance, but the deal structure reveals deeper fragilities in AI economics. Companies are using increasingly creative financing to fund infrastructure investments that may not generate positive returns for years, if ever. Smart investors should ask: if AI is truly as transformative and profitable as claimed, why do deals require such complex warrant structures? Why can't traditional cash flows and credit markets finance this growth? The AMD-OpenAI partnership might indeed prove transformational. But it might also become a case study in how financial engineering masked fundamental economic uncertainties during the AI bubble of the mid-2020s. The difference between those two outcomes will determine whether today's 25% stock surge was the beginning of AMD's new chapter or the peak of unsustainable expectations. History suggests that when supply agreements require equity warrants to make economic sense, investors should pay closer attention to the underlying demand assumptions -- and have an exit strategy ready.

AMD stock soars 27% in pre-market today: Why AMD shares are exploding after OpenAI's massive AI chip deal -- is Nvidia's dominance at risk?

AMD stock is soaring today. Shares jumped 27% in pre-market trading. The surge comes after OpenAI announced a $10 billion AI chip deal with AMD. Investors are watching closely. Analysts say this partnership could challenge Nvidia's dominance in the AI chip market. Market excitement is at an all-time high. AMD stock surged sharply in pre-market trading on Monday. Shares jumped 27% to $210 after the company announced a multibillion-dollar deal with OpenAI. The AI chip partnership is valued at around $10 billion and is expected to span multiple years. Investors reacted quickly, pushing the stock higher amid optimism about AMD's role in AI infrastructure. OpenAI will deploy up to six gigawatts of AMD Instinct MI450 GPUs over the coming years. The initial rollout of one gigawatt is scheduled for 2026. Analysts say this could generate tens of billions in revenue for AMD, boosting the company's long-term growth prospects. OpenAI also secured a warrant to acquire up to 160 million AMD shares at a nominal price. If exercised, this could give OpenAI roughly a 10% stake in AMD, aligning the company's success with AMD's performance. The market interpreted this deal as a major validation of AMD's AI strategy. Nvidia has dominated the AI chip market for years, but OpenAI's choice to partner with AMD signals growing competition. Experts believe this could gradually challenge Nvidia's market share and influence. Investor sentiment is positive, and many see AMD's technology as capable of supporting next-generation AI workloads at scale. AMD stock is predicted to rise in the near term following its recent surge from the OpenAI deal announcement. For October 2025, forecasts show the stock starting at around $164 with a potential maximum price of $193 and an average price near $171, closing the month near $179, reflecting a 9.1% gain. Longer-term predictions suggest steady growth, with November's forecast averaging around $185 and reaching $195 by the end of that month. Analyst consensus and forecast models project continued upside driven by strong demand for AI infrastructure and AMD's strategic partnerships, including the OpenAI deal. The stock is currently trading around $164.67 with some volatility, and the general outlook remains positive for the rest of 2025. Some analysts caution that execution risk remains. Meeting deployment targets and production timelines for large-scale GPU orders is complex. Any delays or setbacks could temper investor enthusiasm. However, the overall market view is that AMD's partnership with OpenAI positions it as a serious competitor in the AI chip space. Advanced Micro Devices (AMD) stunned investors this week as its stock surged more than 25% in pre-market trading, reaching $210.08 per share -- its highest level ever. The rally came right after AMD announced a multibillion-dollar partnership with OpenAI, the company behind ChatGPT, marking one of the largest and most influential AI hardware deals to date. This collaboration positions AMD at the center of the growing AI revolution. Investors quickly reacted, viewing this deal as a turning point that could reshape the competitive landscape of the semiconductor industry. In a single trading session, AMD added billions of dollars to its market capitalization, signaling how deeply the market believes in the potential of AI-driven growth. AMD has long been seen as the closest competitor to Nvidia in the high-performance computing space. But with this deal, it's not just competing -- it's securing a seat at the core of the AI infrastructure powering next-generation technologies. Under the new agreement, AMD will deliver up to 6 gigawatts of AI computing power to OpenAI over the next few years. This massive supply will help OpenAI expand its infrastructure to support larger and more complex artificial intelligence models. The first 1 gigawatt is expected to be deployed in the second half of 2026, setting the stage for continued growth in AI research and product development. In simpler terms, AMD will provide the high-performance chips that train and run AI systems -- the same kind of technology used to power tools like ChatGPT. As AI demand skyrockets worldwide, this partnership ensures OpenAI gets the compute power it needs while giving AMD a long-term revenue stream from one of the biggest names in technology. Executives from AMD expect the deal could generate tens of billions of dollars in future revenue. That potential has made this announcement one of the most exciting developments in the tech sector this year. One of the most surprising parts of the deal is that OpenAI now holds a warrant to buy up to 160 million AMD shares, representing about a 10% ownership stake. The option comes with a nominal exercise price -- reportedly just one cent per share -- but it only becomes valid once AMD meets specific performance and supply goals. This structure ties OpenAI's success directly to AMD's growth. The better AMD performs in delivering on its commitments, the more OpenAI benefits financially. It's a rare form of partnership that goes beyond a typical supply contract -- it creates a shared incentive for both companies to scale faster, innovate more, and expand their presence in the AI ecosystem. For investors, this setup signals confidence from both sides. OpenAI's willingness to take an ownership position shows strong belief in AMD's technology and future. Meanwhile, AMD gains credibility as a trusted supplier capable of delivering at massive scale. This partnership comes at a crucial time for AMD. For years, Nvidia has dominated the AI chip market, with its GPUs becoming the backbone of machine learning systems worldwide. But AMD has been steadily investing in AI hardware, particularly through its MI300 series GPUs, which are designed for high-efficiency, large-scale AI workloads. Now, with OpenAI choosing AMD as a key partner, the company's role in the global AI supply chain just became much stronger. The deal effectively positions AMD as an alternative to Nvidia for companies building advanced AI models and cloud infrastructure. Investors are also viewing this as a strategic victory. AMD's technology now has the opportunity to be deployed in one of the most demanding AI environments in the world -- OpenAI's data centers. That exposure could help AMD attract more major AI clients in the coming years, expanding its influence far beyond the consumer and gaming markets where it's been traditionally strong. While the market reaction has been overwhelmingly positive, experts note that this deal comes with big challenges. Delivering 6 gigawatts of AI compute capacity is an enormous task, requiring large-scale chip production, manufacturing expansion, and robust supply chain coordination. Any delays or technical issues could impact revenue timelines and investor confidence. Another concern is shareholder dilution. If OpenAI exercises its full warrant option, AMD will need to issue new shares, potentially reducing the value of existing ones. However, analysts suggest the long-term benefits -- including revenue growth and market positioning -- outweigh the short-term dilution risk. Still, success will depend on flawless execution. AMD must ramp up production, deliver high-performance chips on schedule, and maintain competitive pricing against Nvidia, which remains a dominant force in AI. Analysts view this deal as transformative for AMD, positioning it as a stronger competitor against Nvidia in the AI infrastructure market. The partnership highlights AMD's growing role in powering AI workloads, and investors have responded with enthusiasm given the long-term revenue potential. OpenAI CEO Sam Altman emphasized the collaboration's importance in scaling AI infrastructure, while AMD CEO Lisa Su expressed excitement about delivering compute at massive scale in AI development. The deal significantly enhances AMD's growth outlook, leading to the sharp surge in stock price today.

OpenAI and chipmaker AMD sign chip supply partnership for AI infrastructure

Semiconductor maker AMD will supply its chips to ChatGPT maker OpenAI as part of an agreement to team up on building artificial intelligence infrastructure, the companies said Monday. According to a joint statement announcing the deal, AMD will provide OpenAI with the latest version of its high performance graphics chips expected to debut next year. It calls for supplying six gigawatts of computing power for OpenAI's "next generation" AI infrastructure, with the first gigawatt coming online in the second half of 2026. AMD also issued OpenAI with a warrant allowing the AI company to buy up to 160 million shares of AMD's common stock, which amounts to about 10 per cent of company. The warrant will vest based on two milestones tied to the amount of computing power deployed. "This partnership is a major step in building the compute capacity needed to realize AI's full potential," OpenAI CEO Sam Altman, said in a news release. "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." The agreement is a boost for Santa Clara, Calif.-based AMD, which has been left behind by rival Nvidia. The AI boom has fuelled demand for Nvidia's graphics processing chips, sending its shares soaring and making it the world's most valuable company.

OpenAI's AMD, Nvidia Deals Are Huge, But Execution Is Key - NVIDIA (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD)

Investor Brad Gerstner warned on Monday that OpenAI's recent deals with Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) remain announcements rather than actual deployments. Therefore, he urged caution. Speaking to CNBC, the Altimeter Capital founder said, "Now we will see what gets delivered. Ultimately, the best chips will win," emphasizing that execution, not hype, will determine which companies dominate the next phase of the artificial intelligence race. For context, AMD surged in premarket trading Monday after striking a deal with OpenAI to deploy up to 6 gigawatts of AMD Instinct GPU power for the AI company's next-generation infrastructure. Also Read: Nvidia Becomes The $4.5 Trillion Giant Driving AI's Biggest Deals The rollout begins in late 2026 with a 1-gigawatt deployment of MI450 GPUs, followed by multi-phase expansions across future AMD data center chip generations. Under the agreement, OpenAI named AMD a core compute partner, extending their collaboration into next-generation hardware and software development. As part of the deal, AMD issued warrants for up to 160 million shares, vesting as infrastructure and performance milestones are achieved. CFO Jean Hu said the partnership could generate "tens of billions in revenue" and be "highly accretive" to earnings. The announcement came shortly after Nvidia unveiled a $100 billion OpenAI partnership to deploy 10 gigawatts of Vera Rubin systems beginning in the second half of 2026. Bank of America analyst Vivek Arya estimated the move's potential to deliver $300 billion to $500 billion in long-term revenue. Gerstner noted that these agreements demonstrate more evidence that the world will remain compute-constrained despite best efforts to bring massive supply online. The AI boom has deep geopolitical implications as well. China's DeepSeek has drawn attention for developing cost-efficient AI models powered by domestic chips that claimed to beat bigger rivals like OpenAI. The U.S. government recently flagged the firm as a potential national security concern. OpenAI executives, meanwhile, maintain that expanding chip partnerships is crucial to meet surging global demand for AI services. AMD stock gained 69% year-to-date, topping the Nasdaq 100 index's 19% returns (which includes both AMD and Nvidia). NVDA is up over 38%. Price Actions: AMD stock was trading higher by 3.99% to $211.83 premarket at last check Tuesday. NVDA was up 0.40%. Read Next: OpenAI Taps Samsung And SK Hynix For Massive AI Data Push, Including New Korea Data Center Photo by Meir Chaimowitz via Shutterstock AMDAdvanced Micro Devices Inc$211.803.97%OverviewNVDANVIDIA Corp$186.370.45%Market News and Data brought to you by Benzinga APIs

OpenAI and AMD sign chip supply partnership for AI infrastructure | BreakingNews

Semiconductor maker AMD will supply its chips to artificial intelligence company OpenAI as part of an agreement to team up on building AI infrastructure, the companies said. OpenAI will also get the option to buy as much as a 10% stake in AMD, according to a joint statement announcing the deal. It is the latest deal for the ChatGPT maker as it races to beef up its AI computing resources. Under the terms of the deal, OpenAI will buy the latest version of the company's high performance graphics chips, the Instinct MI450, which is expected to debut next year. This partnership is a major step in building the compute capacity needed to realise AI's full potential The agreement calls for supplying six gigawatts of computing power for OpenAI's "next generation" AI infrastructure, with the first batch of chips worth one gigawatt to be deployed in the second half of 2026. AMD also issued OpenAI with a warrant allowing the AI company to buy up to 160 million shares of AMD's common stock. That amounts to about 10% of company based on AMD's 1.6 billion outstanding shares. The warrant will vest based on two milestones tied to the amount of computing power deployed, as well as unspecified "share-price targets". Shares of AMD spiked 25% before the opening bell on Monday. Shares of Nvidia, which have repeatedly set new record-highs this year, fell slightly. "This partnership is a major step in building the compute capacity needed to realise AI's full potential," said OpenAI chief executive Sam Altman. "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." The deal is a boost for California-based AMD, which has been left behind by rival Nvidia. But it also hints at OpenAI's desire to diversify its supply chain away from Nvidia's dominance. The AI boom has fuelled demand for Nvidia's graphics processing chips, sending its shares soaring and making it the world's most valuable company. Last month, OpenAI and Nvidia announced a 100 billion-dollar partnership that will add at least 10 gigawatts of data centre computing power.

OpenAI Partnership Pushes AMD Into the Spotlight | Investing.com UK

When Lisa Su became CEO of Advanced Micro Devices (NASDAQ:AMD) in 2014, the chipmaker was valued at less than $3 billion. A decade later, its market capitalization exceeds $330 billion, a more than hundredfold leap that reflects a strategic transformation from gaming and PC chips to the core of the artificial intelligence revolution. The latest catalyst came this week when AMD shares rose 24 percent after the company announced a major partnership with OpenAI. Under the agreement, OpenAI will purchase tens of thousands of AMD data center chips to power six gigawatts of inference capacity, the computing process that allows large AI models to generate real-time responses. The deal strengthens AMD's presence in the AI ecosystem and signals a turning point in the market's perception of who can challenge Nvidia's (NASDAQ:NVDA) dominance in high-performance semiconductors. The partnership gives OpenAI the right to acquire up to 160 million AMD shares at a symbolic price once deployment and performance targets are met, with the final tranche issued if AMD's stock reaches $600 per share. Such a milestone would value the company at roughly one trillion dollars. Nvidia's current market capitalization stands near $4.5 trillion, almost fourteen times AMD's size, yet the symbolic importance lies in the momentum rather than the ratio. Investors increasingly see AMD as a genuine competitor instead of a secondary option. Over the past decade, AMD's rise has been driven by strategic timing and disciplined management. While Intel struggled with the high costs of reviving its manufacturing business, AMD's earlier decision to spin off its foundry operations into GlobalFoundries allowed it to focus on chip design and product innovation. Its move toward cloud computing in 2018 with the launch of the Instinct GPU line positioned it to capture growing demand from data centers. Nvidia still holds an advantage through its software and developer ecosystem, but AMD has proven that architectural innovation and efficiency can narrow the gap. The artificial intelligence hardware market is shifting focus from training to inference. Training requires immense computing power to build models using massive data sets. Inference involves running those trained models in real-world applications and is becoming the main source of commercial demand. As Jacob Feldgoise of Georgetown University's Center for Security and Emerging Technology explains, compute capacity has historically favored training, but future growth will come from inference as businesses integrate AI into their operations. AMD's recent developments align closely with this shift. The company's chips are now designed to deliver consistent performance in inference workloads, an area expected to expand as more enterprises deploy AI tools across sectors. Nvidia still controls more than three-quarters of the GPU market, but the surge in demand has left many customers unable to secure enough of its chips. This supply constraint creates a strong opening for AMD, whose products are less expensive and becoming more efficient with each generation. The growing shortage of high-end chips means that availability and cost are now as critical as raw performance. Broadcom (NASDAQ:AVGO) is also gaining ground with custom accelerators built for clients such as OpenAI, while major technology firms are developing their own in-house silicon. The result is a more diverse and competitive supply chain that limits Nvidia's pricing power and opens new market space for AMD. The AMD-OpenAI agreement highlights a key reality in the AI economy: the world lacks sufficient computing capacity to meet surging demand. OpenAI co-founder Greg Brockman recently noted that the industry continues to underestimate the scale of this shortage. If that assessment is accurate, every credible supplier of inference chips stands to benefit, and AMD is well-positioned to capture a meaningful share. For investors, AMD's evolution reflects a broader shift in the semiconductor sector. The company has moved from cyclical dependence on consumer electronics toward structural growth driven by AI infrastructure. The near-term market may fluctuate, but the long-term story remains compelling. As global demand for AI applications grows, the companies that supply the computing backbone will define the next decade of technological progress, and AMD is now clearly among them.

AMD Pays a High Price for Blockbuster OpenAI Deal | The Motley Fool

Shares of Advanced Micro Devices (AMD 23.61%) rocketed higher on Monday after the chip company announced a megadeal with OpenAI. The agreement will see OpenAI deploy AI data centers totaling 6 gigawatts of power consumption using AMD's Instinct AI GPUs. The first gigawatt deployment is scheduled to start in the second half of 2026 using AMD's next-generation Instinct MI450 GPUs. The deal is more complicated than OpenAI simply buying AMD's AI GPUs. As part of the arrangement, AMD issued OpenAI a warrant for up to 160 million shares of AMD stock. The warrant will vest in tranches based on specific milestones, and the full amount can be exercised once all 6 gigawatts of capacity has been deployed, once AMD has reached certain share-price targets, and once OpenAI has reached certain technical and commercial milestones. The warrant allows OpenAI to purchase shares of AMD at $0.01 per share. At the stock price as of late Monday morning, 160 million shares of AMD are worth about $34 billion. At the $600 price target that is attached to the final tranche of the warrant, those shares would be worth $96 billion. OpenAI will pay essentially nothing for those shares, so this deal is effectively a trade: OpenAI buys AMD's GPUs, and AMD hands over a minority stake. Based on the current share count and factoring in the impact of the warrants, OpenAI could own as much as 9% of AMD's outstanding shares if the warrant is fully exercised. Is this a good deal for AMD? Nvidia CEO Jensen Huang has said that a 1 GW AI datacenter requires around $35 billion worth of its chips and systems. Nvidia sells more than just GPUs, so it's hard to estimate how much the AMD deal is really worth. "Our partnership with OpenAI is expected to deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI's AI infrastructure buildout," said AMD CFO Jean Hu in the press release announcing the deal. AMD is effectively handing over tens of billions of dollars worth of stock to generate tens of billions of dollars of revenue. We don't know how much OpenAI will be paying per GPU, but the deal likely involves some volume discounts. We also don't know what AMD's gross margin will be for these sales. This deal doesn't look like a slam dunk for AMD financially, but it does get the company's foot in the door as OpenAI embarks on an enormous buildout of AI capacity. There are some complications with this deal. AMD needs to source enough semiconductor manufacturing capacity to make all these GPUs, and foundry leader Taiwan Semiconductor Manufacturing Company only has so much to offer. A rumor has been circulating that AMD is in early talks with Intel for a foundry partnership. Those talks could be related to a future AI GPU beyond the MI450. With Nvidia undoubtedly securing as much manufacturing capacity as it can, AMD may have to get creative to actually produce enough chips to fulfill its side of the bargain with OpenAI. There's also the matter of whether OpenAI will really need the AI computing capacity it's committed to building out. The company has some 700 million weekly users, most of whom use the company's free offering. OpenAI will almost certainly try to monetize those free users, but the risk is that the company is counting its chickens before they hatch at an epic scale. The stock market certainly sees this deal as a huge positive for AMD. Reality, though, might be more complicated as the company pays a high price to participate in the AI boom.

AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake - The Economic Times

The agreement covers the deployment of hundreds of thousands of AMD's AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026.AMD said on Monday it will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10% of the chipmaker. The deal offers OpenAI an opportunity to take a stake in one of Nvidia's most formidable rivals and is a powerful endorsement of Advanced Micro Devices' (AMD's) AI chips and software. Shares of AMD jumped more than 23% in premarket trading. "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," AMD executive vice president Forrest Norrod told Reuters on Sunday. The agreement covers the deployment of hundreds of thousands of AMD's AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026. AMD said OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips beginning next year, and that it would begin to recognize revenue then. AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple effect of the agreement, AMD expects to receive more than $100 billion in new revenue over four years from OpenAI and other customers, they said. "Other people are going to come along with it because this is really the pioneer, a pioneer in the industry that has a lot of influence over the broader ecosystem," AMD strategy chief Mat Hein said. The deal with AMD will help OpenAI build enough AI infrastructure to meet its needs, OpenAI CEO Sam Altman said in a statement. Analysts, on average, estimate AMD will generate revenue of $32.78 billion this year, according to LSEG data. As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chips deal. The warrant vests in tranches based on milestones that the two companies have agreed on. The first tranche will vest after the initial shipment of MI450 chips set for the second half of 2026. The remaining milestones include specific AMD stock price targets that escalate to $600 a share for the final installment of stock to unlock. AMD has 1.62 billion shares outstanding and is valued at $267.23 billion, according to LSEG data. Its shares closed on Friday at $164.67. OpenAI has a valuation of $500 billion. OpenAI want more GPUs OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips such as the MI300X. The San Francisco-based AI company has been taking a number of steps to ensure it has the chips needed for its future needs. In September, Nvidia announced an investment of up to $100 billion in OpenAI that included a plan to supply at least 10 gigawatts worth of Nvidia systems. The plan includes OpenAI deploying a gigawatt of Nvidia's next-generation Vera Rubin chips in late 2026. In addition to using Nvidia hardware, cloud computing giants such as Alphabet's Google and Amazon build their own in-house processors. Similarly, OpenAI is in the process of developing its own silicon for AI use and has partnered with Broadcom, Reuters reported last year. OpenAI and its main backer Microsoft also announced last month that they had signed a non-binding agreement to restructure OpenAI into a for-profit entity, signaling further changes in the governance of the fast-growing AI company. A person familiar with the matter said the deal with AMD does not change any of OpenAI's ongoing compute plans, including that effort or its partnership with Microsoft.

The problem with the circular AI ecosystem

AMD has committed to providing up to 6 gigawatts of GPU capacity to OpenAI over several years, starting with an initial gigawatt in 2026. But more notably, AMD has granted OpenAI a warrant (a call option) for 160 million shares, representing approximately 10% of the capital, if various milestones are reached (delivery, performance, share price up to $600). In other words, OpenAI pays AMD for chips, but also obtains the right to become an AMD shareholder. This type of transaction creates a financial loop (or "circularity") in which revenue streams, investments, and technical transactions intertwine. This mechanism incentivizes AMD to deliver and succeed so that its stock price rises, which benefits OpenAI - both as a customer and as a shareholder. But it also creates mutual dependency: AMD's performance becomes critical to OpenAI, and vice versa. Such a structure signals a form of implicit vertical integration in AI: those who consume "compute" become co-owners of the "compute provider." It's another way of locking down the ecosystem. Nvidia, already known for building a "moat" around its architecture (hardware, software, interconnections), follows a similar logic to make its customers captive to its technological environment. For AMD, giving up shares or warrants in exchange for a contract may reduce immediate profitability, but it is betting on future valuation. For OpenAI, paying for chips while receiving shares is tantamount to partially subsidizing its purchase, but this bet is only profitable if AMD's share price reaches the set milestones. By feeding off itself, this type of arrangement can create loops of financial dependency. If AMD's share price stagnates or declines, certain milestones will not be reached, undermining the profitability of the deal for OpenAI. This creates a "circular dance" in which companies are simultaneously customers, suppliers, and investors, making their financial stability more sensitive to external shocks. AMD is gaining legitimacy in the field of GPUs for AI: its stock jumped over 20% after the announcement. Nvidia, meanwhile, is reconfiguring its role: it recently signed a massive agreement with OpenAI to supply its own GPU systems, while also investing in the company. OpenAI is thus seeking to diversify its suppliers (Nvidia, AMD, Broadcom) in order to reduce its dependence on a single player and obtain better supply conditions. Finally, the AI ecosystem as a whole seems to be moving towards greater interdependence, through cross-alliances, reciprocal equity investments, and multi-year contracts that combine financing, technology, and capital.

Analysts React To OpenAI's 'Wild' $100 Billion Deal With AMD: 'We're In The Second Inning of A Nine-Inning Game,' Says Dan Ives - Advanced Micro Devices (NASDAQ:AMD)

Leading analysts are hailing Advanced Micro Devices Inc.'s (NASDAQ:AMD) new partnership with OpenAI as a breakthrough moment for the chipmaker, one that could propel it to the center of the AI arms race. Just The Start For AMD Analyst Dan Ives of Wedbush Securities said that the deal, which involves ChatGPT parent OpenAI deploying up to 6 gigawatts of AMD Instinct GPU power, brings the chipmaker "right into the AI revolution," and that "any lingering fears around AMD should now be thrown out the window," while speaking on CNBC's Closing Bell on Monday. Ives also termed the partnership as a "validation moment for AI" and said the "street is still massively underestimating the spending on the AI revolution." See Also: AMD Stock's Sellerless Surge: Cramer's Crystal Ball Says Bubble Or Boom? Ives added that he believes this market is still in its early stages. "We're in the second inning of a nine-inning game," he said. "I think this is actually just the start for AMD, before this next stage of the AI revolution takes hold." OpenAI's Getting GPUs At A Discount New Street Research analyst, Pierre Ferragu, described the deal as "wild," saying that "OpenAI is getting GPUs at an average 40% discount." He also said that the deal increases AMD's chances of becoming a "sustainable challenger" to NVIDIA Corp. (NASDAQ:NVDA). OpenAI's Planned Build-Out 'Roughly The Size of Mexico's Economy' The Chief Market Strategist at Futurum Equities, Shay Boloor, notes that with the backing of Nvidia and AMD, OpenAI's planned AI infrastructure buildout reaches $1.5 trillion, which he said was "roughly the size of Mexico's economy." "Wild times," he said. Vulcan Stock Research, an equity research firm, has since responded to Boloor's comments, saying that the $1.5 trillion outlay will include the entire infrastructure, such as power, cooling, and facilities, among several other things, and not just chips. In a post on X, the firm notes that the figure falls short of Mexico's GDP, which currently stands at $1.789 trillion, but acknowledges it as an "unprecedented scale" of investment for AI. Shares of AMD were up 23.71% on Monday, closing at $203.71, after the deal was announced, and are up another 1.99% after hours. The stock scores high across the board in Benzinga's Edge Stock Rankings, apart from Value, and has a favorable price trend in the short, medium and long terms. Click here for deeper insights into the stock. Read More: Famed Short-Seller Jim Chanos Questions AMD's Revenue Forecast Following OpenAI Deal: 'Shouldn't This Deal Bring In More... For $AMD?' Photo courtesy: Svet foto / Shutterstock.com AMDAdvanced Micro Devices Inc$207.651.93%OverviewNVDANVIDIA Corp$186.110.31%Market News and Data brought to you by Benzinga APIs

AMD shares soar on OpenAI chip deal worth billions By Investing.com

Investing.com -- AMD shares jumped over 22% in early Monday trading after the company announced a multi-year agreement to supply artificial intelligence chips to OpenAI. The deal is expected to generate tens of billions of dollars in annual revenue for Advanced Micro Devices and includes an option for OpenAI to acquire up to approximately 10% of AMD's equity. Under the agreement, AMD will supply hundreds of thousands of graphics processing units equivalent to six gigawatts over several years beginning in the second half of 2026. OpenAI plans to construct a one-gigawatt facility using AMD's upcoming MI450 series chips starting next year, with AMD expecting to recognize revenue at that time. The chipmaker projects the agreement will contribute to more than $100 billion in new revenue over four years from OpenAI and other customers. "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," said AMD executive vice president Forrest Norrod. OpenAI CEO Sam Altman stated the partnership will help the company build sufficient AI infrastructure to meet its requirements.

AMD-OpenAI Massive Artificial Intelligence (AI) Deal: What Investors Should Know | The Motley Fool

Just two weeks after its rival Nvidia struck a massive AI deal with ChatGPT owner OpenAI, AI chipmaker Advanced Micro Devices did the same. On Monday, chipmaker Advanced Micro Devices (AMD 23.61%) announced a huge artificial intelligence (AI) strategic partnership with OpenAI, the AI model developer best known for its ChatGPT chatbot. Not only did this news send shares of AMD up a whopping 23.7%, but it also gave a boost to many other AI stocks and the market in general. AMD's news came exactly two weeks after its rival Nvidia (NVDA -1.10%), whose graphics processing units (GPUs) dominate the AI chip market, announced a massive deal with OpenAI. The AMD-OpenAI strategic partnership involves AMD supplying 6 gigawatts of its Instinct series GPUs to power OpenAI's next-generation AI infrastructure. The first 1 gigawatt deployment of AMD Instinct MI450 GPUs is set to begin in the second half of 2026. That's the same time frame involved in the Nvidia-OpenAI deal. Moreover -- and this is big for AMD -- "AMD has issued OpenAI a warrant for up to 160 million shares of AMD common stock, structured to vest as specific milestones are achieved," according to the press release. AMD has a total of about 1.62 billion shares outstanding, so 160 million shares is about 10% of total shares. For context, before the deal was announced, AMD had a market cap of about $267 billion. Ten percent of that is $26.7 billion. Six gigawatts equates to a ton of computing power. Here are a couple of stats to put 6 gigawatts of power in context: On Sept. 27, Nvidia announced its massive deal with OpenAI. The highlights of this strategic partnership: This seems like a win-win deal for both AMD and OpenAI. OpenAI secures a large supply of AI-enabling GPUs over multiple years. This is no small thing, as GPUs are in great demand, so supply has been tight. That's especially true of Nvidia's GPUs, but no doubt, also true to some extent for AMD. On AMD's part, it secures a huge multiyear customer for its GPUs, and it is poised to get a hefty inflow of cash as OpenAI buys up to 10% of AMD's shares. The partnership "is expected to deliver tens of billions of dollars in revenue for AMD," CFO Jean Hu said in the release. Moreover, it's "expected to be highly accretive to AMD's non-GAAP [generally accepted accounting principles] earnings per share, " she added. Taken together with the recent Nvidia-OpenAI humongous AI deal and other big deals in the space, there are positive implications for the broader AI market. The main implication, in my opinion, is that these massive AI chip and infrastructure deals should accelerate the race to move beyond generative AI to achieve artificial general intelligence (AGI) and then artificial superintelligence (ASI), as I wrote about after the Nvidia-OpenAI deal was announced. Nvidia and AMD should be two of the big beneficiaries of this race, as companies rush to buy even more of their AI-enabling GPUs.

AMD enters into strategic partnership with OpenAI

AMD and OpenAI announce a 6 gigawatt agreement to power OpenAI's next-generation AI infrastructure across multiple generations of AMD Instinct GPUs. The first deployment of AMD Instinct MI450 GPUs for 1 gigawatt is expected to begin in H2 2026. NB: pmt +35.4%. AMD's strong leadership in high-performance computing systems and OpenAI's pioneering research and advances in generative AI place both companies at the forefront of this important and pivotal period for AI, they say. As part of the agreement, to further align their strategic interests, AMD has issued to OpenAI a warrant for up to 160 million AMD common shares, structured to be acquired as specific milestones are achieved. The first tranche is acquired with the initial deployment of 1 gigawatt, and additional tranches are acquired as purchases reach 6 gigawatts, both tech companies add. The acquisition is also contingent upon AMD achieving certain share price targets and OpenAI completing the technical and commercial milestones necessary to enable AMD's large-scale deployments.

Lisa Su Isn't Worried About AI Hype Fears, Says Big Bet With OpenAI Could Pay Off 'Tens Of Billions Of Dollars' -- AMD Stock Spikes 1.5% After Hours - Advanced Micro Devices (NASDAQ:AMD), Amazon.com (NASDAQ:AMZN)

Shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) extended their momentum in after-hours trading on Monday, rising 1.53% following a nearly 24% surge during the regular session. AMD CEO Lisa Su Dismisses AI Hype Concerns On Monday, AMD CEO Lisa Su said the AI boom is just beginning, dismissing concerns that the current investment surge is overblown. "I would say that's probably thinking too small. You have to really look at what the power of this technology can do for the world," she told Yahoo Finance on Monday. Her comments came after AMD announced a landmark deal with ChatGPT-maker OpenAI to provide up to six gigawatts of Instinct GPU power for the company's next-generation AI infrastructure. The multi-year agreement begins in 2026 with AMD's new MI450 chips and could generate "tens of billions of dollars" in revenue, according to Su. See Also: Gold Will Reach $5,000 Next Year, $10,000 By 2030: Ed Yardeni OpenAI CEO Sam Altman Says The World Needs Much More Compute OpenAI CEO Sam Altman confirmed the partnership on X, formerly Twitter, saying it complements his company's ongoing work with Nvidia Corporation (NASDAQ:NVDA). "The world needs much more compute," he wrote. Last month, Nvidia pledged $100 billion to OpenAI, including plans to roll out at least 10 gigawatts of its Vera Rubin systems beginning in the second half of 2026. OpenAI co-founder and president Greg Brockman shared Alman's post and said, "The world continues to underestimate AI demand: we're already compute bottlenecked on launching new features." AMD ranks highly in Benzinga's Edge Stock Rankings, showing strong medium and long-term price trends despite short-term weakness. Click here for a closer look at the stock, its peers and competitors. Read Next: Nvidia's Multi-Trillion Dollar AI Playground: McKinsey Quantifies 3.5x Surge In AI Data Center Demand, Presenting $6.2 Trillion Opportunity For NVDA Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga Photo Courtesy: jamesonwu1972 On Shutterstock.com AMDAdvanced Micro Devices Inc$206.8425.6%OverviewAMZNAmazon.com Inc$220.700.54%METAMeta Platforms Inc$715.000.62%NVDANVIDIA Corp$185.65-1.05%Market News and Data brought to you by Benzinga APIs

AMD Stock Skyrockets on Massive Deal With OpenAI. Could This Be a Game Changer for AMD? | The Motley Fool

Since the advent of artificial intelligence (AI) in early 2023, Advanced Micro Devices (AMD 26.19%) has been something of a wild card. The increasing demand for graphics processing units (GPUs) that can handle the rigors of AI has been unparalleled, but not all AI chipmakers are created equal. There's no denying that Nvidia (NVDA -1.06%) has been the biggest beneficiary of the accelerating adoption of AI, given its status as a market share leader in the data center space, where most AI processing occurs. Nvidia has ridden this unprecedented demand to new heights, becoming the largest publicly traded company in the world when measured by market cap. While Nvidia stock has soared 1,180% since the dawn of AI, AMD stock has only risen 154% during the same period (as of market close on Friday). The company has been working diligently to stake its claim in the windfall that is AI. Shareholders were elated when AMD announced a groundbreaking deal with OpenAI that could be a game changer. As a result, the stock gained 30% Monday morning (as of this writing) -- and that could be just the beginning. OpenAI is largely credited with kick-starting the AI revolution, thanks to its development of ChatGPT, the generative AI system that took the technology to the next level. In a press release that dropped Monday morning, AMD announced a far-reaching strategic partnership with OpenAI. Under the terms of the multiyear, multigenerational agreement, OpenAI will install 6 gigawatts of AMD GPUs. The rollout will begin with 1 gigawatt of AMD Instinct MI450 series chips and rack-scale AI solutions in the second half of 2026. Beyond simply supplying GPUs, AMD will work side by side with OpenAI as a "core strategic compute partner" to create future generations of AI chips optimized for AI applications. The companies noted that the partnership began with the MI300X and continued with the MI350X series of chips. Many experts believe these processors are a competitive alternative to Nvidia's advanced AI chips at a lower price, making them ideal for use with the large language models that underpin generative AI. Perhaps the most eye-opening development is that, as part of the agreement, AMD has issued OpenAI a warrant to purchase up to 160 million shares of AMD stock -- equal to a roughly 10% stake in the company -- contingent upon the company achieving specific share price targets and OpenAI reaching certain technical and commercial milestones. The first tranche is scheduled to vest on the completion of the deployment of the first gigawatt of GPUs, with additional milestones at the completion of each successive gigawatt. In many cases, saying a deal is a game changer is hyperbole, but in this case, I don't believe it's an exaggeration. In its recent financing deal, OpenAI was valued at roughly $500 billion, making it the world's most valuable start-up. Furthermore, the company has quickly ascended the ranks to become one of the largest buyers of high-end AI-centric chips as it works to development its next-generation AI systems. Assuming things go as planned, this deal provides AMD with a relatively secure revenue stream that the company estimates will be worth tens of billions of dollars. For context, the company generated revenue of nearly $26 billion in 2024, which helps to illustrate the magnitude of the opportunity. Furthermore, this deal acts as a ringing endorsement for AMD's processors. For potential buyers of AMD chips sitting on the fence, this could be the catalyst for taking the plunge and adopting the company's AI solutions. Some investors have been concerned that the adoption of AI will hit a wall, but there's simply no evidence to support these assertions. Furthermore, estimates regarding the addressable market for generative AI continue to climb. Big Four accounting firm PwC estimates the market could be worth as much as $15.7 trillion annually by 2030. If AMD can carve out just a small piece of that massive opportunity, today's stock price move could be just the beginning. Furthermore, at roughly 35 times next year's sales, AMD stock is attractively priced relative to the burgeoning opportunity.

AMD soars after major strategic partnership with OpenAI

AMD's stock jumped 25% on Monday morning following the announcement of a major agreement with OpenAI, which includes a potential 10% stake in the chipmaker. The startup led by Sam Altman will deploy up to 6 gigawatts of AMD Instinct GPUs across multiple generations of hardware, including 1 gigawatt by 2026. The deal, one of the largest ever in the AI sector, marks a key step in OpenAI's diversification strategy in the face of Nvidia's dominance. To finalize the agreement, AMD issued OpenAI a warrant for 160 million common shares, exercisable in several tranches as the project progresses. If all warrants are exercised, OpenAI will hold approximately 10% of AMD's capital. Sam Altman praised the group's technological leadership, while Lisa Su, CEO of AMD, described a "win-win" partnership supporting unprecedented industrial expansion in AI. This collaboration is part of OpenAI's massive investment plan, estimated at nearly $1 trillion, which already includes a 10-gigawatt contract with Nvidia. The partnership illustrates the high degree of interdependence in the sector, where a small circle of players -- OpenAI, AMD, Nvidia, Oracle and Broadcom -- concentrate capital, production, and infrastructure. While this circularity strengthens the power of the ecosystem, it also increases systemic risks. For AMD, the agreement represents a strategic breakthrough and a major validation of its Instinct range, as the company aims to establish a lasting presence in the AI accelerator market.

Why Is AMD Stock Skyrocketing Monday? - Advanced Micro Devices (NASDAQ:AMD)

Advanced Micro Devices (NASDAQ:AMD) shares surged premarket Monday following a landmark agreement with OpenAI to deploy up to 6 gigawatts of AMD Instinct GPU power for the tech giant's next-generation AI infrastructure. The initial phase will see a 1-gigawatt rollout of AMD Instinct MI450 GPUs in the second half of 2026, with plans for subsequent expansions across multiple generations of AMD's data center chips. Under the agreement, OpenAI will designate AMD as a core compute partner, leveraging the MI450 series and rack-scale AI solutions. Also Read: AMD Expands Cohere Partnership To Power Enterprise AI On Instinct Chips The collaboration will also extend into next-generation hardware and software development. Both companies will share technical expertise to align product roadmaps and optimize performance, building on a partnership that began with AMD's MI300X accelerators and continued through the MI350X series. As part of the deal, AMD issued OpenAI a warrant for up to 160 million AMD shares, vesting in tranches tied to deployment milestones. The first tranche coincides with the initial 1-gigawatt rollout, with further vesting linked to expansions up to 6 gigawatts, as well as share-price and infrastructure benchmarks. AMD Chief Financial Officer Jean Hu described the partnership as having the potential to generate "tens of billions of dollars in revenue" and be "highly accretive" to AMD's adjusted earnings per share. AMD stock breached its 52-week high of $186.65 on Monday, trading at $219.99 at the time of publication, a 33.59% increase. The announcement follows Nvidia's (NASDAQ:NVDA) recent $100 billion commitment to OpenAI, which includes plans to deploy at least 10 gigawatts of Nvidia's Vera Rubin systems starting in the second half of 2026. Bank of America Securities analyst Vivek Arya described Nvidia's move as both a bold financial commitment and a strategic moat expansion, estimating the partnership could generate $300 billion to $500 billion in long-term revenue, a potential three- to five-fold return on investment. Arya noted that Nvidia's collaboration with OpenAI strengthens its position in the global AI buildout while intensifying competitive pressure on peers such as Broadcom (NASDAQ:AVGO) and AMD. He also highlighted that Nvidia's $100 billion deployment represents a strategic use of its free cash flow, with projected margins of 40-50% on future AI-driven revenue streams. Photo by Poetra.RH via Shutterstock AMD Price Action: Advanced Micro Devices shares were trading higher by 33.59% to $219.99 premarket at last check Monday. Read Next: Nvidia, Broadcom, Marvell Poised To Gain Big From $1.2 Trillion AI Spending Wave By 2030: Analyst AMDAdvanced Micro Devices Inc$210.0927.6%OverviewAVGOBroadcom Inc$335.20-0.94%NVDANVIDIA Corp$186.24-0.74%Market News and Data brought to you by Benzinga APIs

Advanced Micro Devices, Inc. and OpenAI Announce Strategic Partnership to Deploy 6 Gigawatts of AMD GPUs

Advanced Micro Devices, Inc. and OpenAI announced a 6 gigawatt agreement to power OpenAI?s next-generation AI infrastructure across multiple generations of AMD Instinct GPUs. The first 1 gigawatt deployment of AMD Instinct MI450 GPUs is set to begin in the second half of 2026.AMD?s strong leadership in high-performance computing systems and OpenAI's pioneering research and advancements in generative AI places the two companies at the forefront of this important and pivotal time for AI. Under this definitive agreement, OpenAI will work with AMD as a core strategic compute partner to drive large-scale deployments of AMD technology starting with the AMD Instinct MI450 series and rack-scale AI solutions and extending to future generations. By sharing technical expertise to optimize their product roadmaps, AMD and OpenAI are deepening their multi-generational hardware and software collaboration that began with the MI300X and continued with the MI350X series. This partnership creates a true win-win for both companies, enabling very large-scale AI deployments and advancing the entire ecosystem. Through this partnership, AMD and OpenAI are building the infrastructure to meet the world?s growing AI demands, by combining world-class innovation and execution to accelerate the future of high-performance and AI computing.

Why AMD Stock Was Skyrocketing Today | The Motley Fool

Shares of Advanced Micro Devices (AMD 26.59%) catapulted higher today after the chipmaker signed a blockbuster deal with OpenAI, coming on the heels of a similar partnership between OpenAI and AMD rival Nvidia. As of 9:59 a.m. ET, AMD stock was up 26.6% on the news after opening up 35%. On Monday morning, AMD and OpenAI announced an agreement for OpenAI to deploy 6 gigawatts of AMD GPUs over several years and several generations of chips. For context, 6 gigawatts could power more than 1 million homes. The partnership will start with an initial deployment of 1 gigawatt of AMD's Instinct MI450 Series GPUs in the second half of next year. The deal will make AMD a core compute partner of OpenAI, and the two companies are deepening a partnership that began with earlier editions of the MI GPU series. As part of the agreement, OpenAI will receive a warrant of 160 million shares of AMD stock, which is structured to vest as specific milestones are reached in the deployment. Fully converted, those shares would be worth roughly $32 billion now. OpenAI CEO Sam Altman said, "This partnership is a major step in building the compute capacity needed to realize AI's full potential. AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." The deal with OpenAI not only creates a huge customer for AMD, but it also acts as validation for its data center GPUs, as the company has long played second fiddle behind Nvidia in that category. Six gigawatts is a huge amount of demand to fulfill, and AMD said the deal was "expected to deliver tens of billions of dollars in revenue for AMD," and to be "highly accretive to AMD's non-GAAP [generally accepted accounting principles] earnings per share." Based on that statement, it's not a surprise that AMD stock is having one of its best days in its history.

AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

SAN FRANCISCO (Reuters) -AMD said on Monday it will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10% of the chipmaker. The deal offers OpenAI an opportunity to take a stake in one of Nvidia's most formidable rivals and is a powerful endorsement of Advanced Micro Devices' (AMD's) AI chips and software. Shares of AMD jumped more than 23% in premarket trading. "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," AMD executive vice president Forrest Norrod told Reuters on Sunday. The agreement covers the deployment of hundreds of thousands of AMD's AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026. AMD said OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips beginning next year, and that it would begin to recognize revenue then. AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple effect of the agreement, AMD expects to receive more than $100 billion in new revenue over four years from OpenAI and other customers, they said. "Other people are going to come along with it because this is really the pioneer, a pioneer in the industry that has a lot of influence over the broader ecosystem," AMD strategy chief Mat Hein said. The deal with AMD will help OpenAI build enough AI infrastructure to meet its needs, OpenAI CEO Sam Altman said in a statement. Analysts, on average, estimate AMD will generate revenue of $32.78 billion this year, according to LSEG data. As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chips deal. The warrant vests in tranches based on milestones that the two companies have agreed on. The first tranche will vest after the initial shipment of MI450 chips set for the second half of 2026. The remaining milestones include specific AMD stock price targets that escalate to $600 a share for the final installment of stock to unlock. AMD has 1.62 billion shares outstanding and is valued at $267.23 billion, according to LSEG data. Its shares closed on Friday at $164.67. OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips such as the MI300X. The San Francisco-based AI company has been taking a number of steps to ensure it has the chips needed for its future needs. In September, Nvidia announced an investment of up to $100 billion in OpenAI that included a plan to supply at least 10 gigawatts worth of Nvidia systems. The plan includes OpenAI deploying a gigawatt of Nvidia's next-generation Vera Rubin chips in late 2026. In addition to using Nvidia hardware, cloud computing giants such as Alphabet's Google and Amazon build their own in-house processors. Similarly, OpenAI is in the process of developing its own silicon for AI use and has partnered with Broadcom, Reuters reported last year. OpenAI and its main backer Microsoft also announced last month that they had signed a non-binding agreement to restructure OpenAI into a for-profit entity, signaling further changes in the governance of the fast-growing AI company. A person familiar with the matter said the deal with AMD does not change any of OpenAI's ongoing compute plans, including that effort or its partnership with Microsoft. (Reporting by Max A. Cherney in San Francisco; Additional reporting by Deepa Seetharaman in San Francisco; Editing by Muralikumar Anantharaman)

After NVIDIA, OpenAI chooses AMD chips for ChatGPT's future: But why?

Sam Altman's 250-gigawatt data plan drives global AI infrastructure race It's not every day that two of Silicon Valley's biggest names sign a deal that could alter the physics of the AI universe. But that's exactly what happened, when OpenAI and AMD announced a multibillion-dollar partnership to power the next generation of ChatGPT and other AI models. Under the terms of the deal, OpenAI will purchase up to 6 gigawatts of AMD's Instinct GPUs - starting with the forthcoming MI450 chip in 2026 - either directly or through cloud partners. AMD, in return, gains something even more valuable from OpenAI, which is much needed validation as a major player in powering cutting-edge AI and frontier models in the cloud. Make no mistakes, this isn't just a simple chip sale - for AMD, it's a seat at the most exclusive table in tech. For the last few years, Nvidia has owned the AI semiconductor conversation. With this OpenAI deal, AMD finally has its breakout AI moment. The scale of this arrangement is staggering. Six gigawatts of compute is enough to power entire hyperscale data centers across continents. Industry insiders estimate that the deal could generate tens of billions of dollars in revenue for AMD over the next five years. And in an unexpected twist, OpenAI also secured warrants to acquire up to 160 million AMD shares - which is roughly 10 percent of the company - if certain performance and deployment milestones are hit. Also read: AMD Challenges NVIDIA with MI350 Series, ROCm 7, and Free Developer Cloud For AMD, it's a rare alignment of timing and opportunity. After years of living in Nvidia's shadow, Lisa Su's company is now supplying silicon for the very organization that arguably kicked off the AI revolution. On the other hand, for OpenAI, it's all about powering on and matching the scale of its ambition in silicon. The AMD partnership comes just weeks after OpenAI's massive alliance with Nvidia, announced earlier in 2025. That deal was almost cinematic in its scale, in case you don't remember, where Nvidia pledged a $100 billion investment in OpenAI, including the construction of AI data centers delivering at least 10 gigawatts of compute. Unlike traditional chip supply contracts, Nvidia's agreement was part infrastructure, part investment, and part bet on OpenAI's dominance. The AMD deal, by contrast, feels more like strategic diversification. Where OpenAI's hedging the risk of relying on one supplier, while driving down the cost of compute. Also read: NVIDIA becomes first company ever to hit $4 trillion mark, spurred by AI If the Nvidia partnership was OpenAI's insurance policy, the AMD deal is its wildcard. AMD's new MI450 chip - successor to the MI300 - has been touted as a serious contender for AI inference workloads. These are the processes that actually run models like ChatGPT once they've been trained. Unlike training, which demands brute-force power, inference is about efficiency - doing more with less energy and latency. That's where AMD has a real shot at differentiation. For OpenAI, deploying AMD chips for inference could significantly cut operational costs while freeing Nvidia hardware for training larger models. It's a smart form of compute workload management. Sam Altman, OpenAI's restless CEO, has been transparent about this calculus. "If we had more GPUs," he admitted recently, "we'd be able to handle demand surges better." He had also famously said in July 2025 that "more compute means we can give you more AI" That line says everything about Altman's current mindset. That the biggest constraint on AI isn't algorithms, it's hardware. With that background, you can make more sense of OpenAI's recent moves, which read like a shopping spree across the semiconductor supply chain. Beyond Nvidia and AMD, the company has inked letters of intent with Samsung Electronics and SK Hynix to lock down the high-bandwidth memory (HBM) and DRAM needed to keep its data centers fed. Reports suggest future OpenAI facilities could consume nearly 900,000 DRAM wafers per month, accounting for as much as 40 percent of global output. Also read: GPT-5 launched: Sam Altman's 3 key claims on AI, AGI and India There's also the $10 billion partnership with Broadcom, where both companies are exploring custom AI chip development - part of Altman's long-term strategy to "drive down the cost of compute" and reduce dependency on any single supplier. Together, these deals represent not isolated partnerships but a coordinated attempt to build an end-to-end AI compute pipeline - from GPUs to memory to networking. For Altman, it's not just ambition, it comes down to bare necessity - if you think about it. OpenAI's internal projections for data center growth are almost unfathomable. An internal memo from September 2025 revealed plans to build 250 gigawatts of data center capacity by 2033 - a scale roughly equivalent to 250 nuclear power plants or just shy of 10 percent of the total power consumption of the world right now. Even with corporate understatement, Altman called that goal "astronomical." But there's a logic to the madness. With AGI on the horizon, OpenAI believes compute will be the single greatest determinant of progress - and access to it, the single greatest source of inequality. As Altman warned in one forum: "Without enough infrastructure, AI will become a limited resource that wars get fought over and that becomes mostly a tool for rich people." The demand for AI compute is growing exponentially, and the bottleneck isn't going away anytime soon - something that OpenAI knows acutely. The Stargate project in Texas - a half-trillion-dollar infrastructure initiative with six sites planned - was only the opening act. The AMD partnership is the next movement in that same symphony. For AMD, this is the validation moment it has chased for years in the Age of GenAI. For OpenAI, it's another brick in the wall of a future that Altman's racing to secure against all odds.