Shares of Advanced Micro Devices (AMD) surged in early trading on Monday following the announcement of a significant partnership with artificial intelligence powerhouse OpenAI. This multibillion-dollar deal marks a strategic alignment between the two companies, with AMD committed to supplying over 6 gigawatts of graphics processing units (GPUs) to OpenAI over multiple generations, starting with its MI450 chips set to be deployed in the latter half of 2026.
As part of the agreement, OpenAI will acquire a stake in AMD, amounting to up to 160 million shares, which represents approximately 10% of the chipmaker. The shares will be gradually released in tranches contingent on AMD achieving specific performance milestones, with the first tranche becoming available once AMD successfully deploys its initial 1 gigawatt of chips.
AMD’s Chief Financial Officer, Jean Hu, expressed optimism about the partnership, stating, “Our partnership with OpenAI is expected to deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI’s AI infrastructure buildout.” Hu emphasized that the collaboration would create substantial strategic benefits and shareholder value for both firms and would be significantly positive for AMD’s earnings in terms of non-GAAP metrics.
This collaboration arrives shortly after AMD’s primary competitor, Nvidia, announced a staggering $100 billion investment in OpenAI. This investment aims to bolster OpenAI’s capacity to expand its data centers that underpin its AI solutions.
OpenAI, currently valued at an astounding $500 billion, holds the title of the world’s most valuable startup. In a recent development, the company also entered into a substantial agreement to procure cloud equipment from Oracle, totaling $300 billion, as reported by The Wall Street Journal.
In terms of stock performance, AMD has experienced mixed results in the past year, with its shares increasing by a modest 1%. In contrast, Nvidia’s stock soared by 52% during the same timeframe. However, in the last six months, AMD has seen a notable climb of 75%, compared to an 84% increase for Nvidia.
The massive financial commitments being made in AI projects have fueled concerns regarding a potential bubble in the sector. Recently, during Italian Tech Week, Amazon founder Jeff Bezos suggested that an AI bubble might be forming, but he remained confident that AI technologies would ultimately yield valuable benefits for various industries and consumers worldwide.
