KEY TAKEAWAYS
- OpenAI is committing to buying several generations of AI chips from AMD in a long-term deal that could see it take a stake in the Nvidia rival, the two companies announced Monday.
- AMD said the deal would yield “tens of billions in revenue,” though the companies didn’t disclose the cost of the transaction.
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.
Why This Matters
The massive deal between AMD and OpenAI underscores both the strength of demand for AI chips, and suggests Nvidia could face more competition threatening its dominance in the space.
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.
OpenAI Could Hold Nearly 10% of AMD if Warrants Vest
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.”
