In a landmark move that underscores the escalating demand for computing power in artificial intelligence, OpenAI has announced a multiyear, multibillion-dollar partnership with Advanced Micro Devices (AMD).
The agreement, unveiled Monday, will see the ChatGPT-maker invest billions into AMD’s next-generation processors while acquiring up to a 10% stake in the semiconductor giant.
The deal represents a significant shift in the AI hardware landscape, signaling OpenAI’s strategic effort to diversify beyond Nvidia, which has dominated the AI chip market for years.
Under the agreement, AMD will supply OpenAI with up to 6 gigawatts of GPUs over several generations, beginning with its MI450 Instinct processors scheduled for deployment in the second half of 2026.
A Major Boost for AMD’s AI Ambitions
AMD shares surged more than 30% following the announcement, while Nvidia’s stock dipped slightly by about 1%, reflecting market optimism over AMD’s newfound foothold in the booming AI sector.
The partnership marks one of the largest AI hardware deals in history, potentially generating tens of billions of dollars in revenue for AMD.
“This agreement creates significant strategic alignment and shareholder value for both AMD and OpenAI,” said Jean Hu, AMD’s Chief Financial Officer, in a statement.
“It’s expected to be highly accretive to AMD’s non-GAAP earnings-per-share while accelerating OpenAI’s AI infrastructure buildout.”
OpenAI’s investment will be structured around performance-based milestones. The AI firm will receive AMD shares in tranches as the chipmaker meets specific production and deployment goals.
The first tranche will vest once AMD activates 1 gigawatt of its processors, setting the stage for the broader rollout of its 6-gigawatt target.
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Expanding Beyond Nvidia
OpenAI’s decision to back AMD represents a strategic diversification of its hardware supply chain.
The AI revolution’s hunger for advanced chips has strained the global supply of GPUs, prompting major players to secure long-term supply commitments.
While AMD and Nvidia both design cutting-edge chips, neither manufactures them directly; both rely heavily on Taiwan Semiconductor Manufacturing Company (TSMC) for production.
Meanwhile, Intel remains the chief U.S.-based chip manufacturer.
Interestingly, this development follows Nvidia’s recent $100 billion investment in OpenAI, part of a separate agreement to strengthen the startup’s data center capabilities.
It also comes amid the U.S. government’s growing involvement in the semiconductor industry most notably, the Trump administration’s decision to take a 10% stake in Intel under the CHIPS Act in exchange for billions in grants.
OpenAI’s Expanding Tech Footprint
The AMD deal is just the latest in a series of massive infrastructure investments by OpenAI.
The company, now valued at an astounding $500 billion, recently struck a $300 billion cloud equipment agreement with Oracle, according to The Wall Street Journal.
These moves reflect OpenAI’s commitment to scaling its AI models and maintaining leadership in the race to commercialize artificial intelligence.
Market Impact and Industry Outlook
AMD’s stock has underperformed compared to Nvidia over the past year, climbing just 1% compared to Nvidia’s 52% surge.
However, AMD’s performance has improved significantly in recent months, with shares rising 75% in the last six months.
Analysts believe the OpenAI partnership could further narrow the performance gap and establish AMD as a key player in the AI computing market.
The massive influx of spending on AI infrastructure, however, has also sparked concerns about a potential AI bubble.
During Italian Tech Week, Amazon founder Jeff Bezos cautioned that while the market may be overheating, AI will nonetheless deliver lasting value to businesses and consumers worldwide.
As OpenAI deepens its collaboration with AMD, the deal not only cements the two companies’ positions in the global AI ecosystem but also signals a broader shift toward a more competitive, diversified chip supply chain one that could reshape the future of artificial intelligence infrastructure.
Source: CNBC, Yahoo Finance,
