AMD Strikes AI Partnership Deal with OpenAI, Stock Surges

In a move that sent shockwaves through the tech world, Advanced Micro Devices (AMD) has forged a major partnership with OpenAI, the creator of ChatGPT. The deal, mirroring a similar agreement between OpenAI and Nvidia, promises to bolster AMD's position in the burgeoning artificial intelligence market.

AMD Joins the AI Race

Just two weeks after Nvidia's deal with OpenAI, AMD announced its own strategic alliance. The news immediately boosted AMD's stock by nearly 24%, signaling strong investor confidence. Other AI stocks also saw gains, reflecting optimism about the sector's growth.

Massive GPU Supply Agreement

AMD will supply 6 gigawatts of its Instinct series GPUs to power OpenAI's next-generation infrastructure. The initial deployment of 1 gigawatt of AMD Instinct MI450 GPUs is scheduled for the second half of 2026. This timeline aligns with the Nvidia-OpenAI agreement, intensifying the competition in AI hardware.

Significant Equity Incentive for OpenAI

AMD has granted OpenAI warrants for up to 160 million shares of AMD common stock. These shares will vest as OpenAI achieves specific milestones, creating a strong incentive for collaboration. To put this in perspective, 160 million shares represent roughly 10% of AMD's total outstanding shares, which had a pre-deal market value of approximately $26.7 billion.

Win-Win for Both Companies

OpenAI secures a substantial, multiyear supply of crucial GPUs. GPUs are in high demand, so securing supply is critical. AMD gains a major, long-term customer for its GPUs. Moreover, the deal promises significant revenue as OpenAI potentially acquires up to 10% of AMD's shares.

Financial Upsides and Market Impact

AMD's CFO, Jean Hu, anticipates the partnership will generate tens of billions of dollars in revenue. She also expects it to significantly boost AMD's earnings per share. Taken together with Nvidia's deal and others, the AMD-OpenAI partnership implies positive developments for the broader AI market.

Accelerating the Path to Advanced AI

In my opinion, these massive AI chip and infrastructure deals should accelerate the pursuit of artificial general intelligence (AGI) and artificial superintelligence (ASI). As companies invest heavily in AI, Nvidia and AMD stand to benefit as demand for their AI-enabling GPUs surges.