Advanced Micro Devices Inc. (AMD) has seen a remarkable surge in its stock price, climbing 11% on Wednesday, following a significant announcement from OpenAI. Earlier this week, OpenAI revealed plans to purchase billions of dollars in AI equipment from AMD, marking a transformative partnership aimed at strengthening AMD’s position in the competitive AI chip market.
The deal, announced on Monday, includes a potential agreement for OpenAI to acquire a 10% stake in AMD, contingent upon the stock price and the achievement of partnership milestones. This collaboration has injected investor confidence into AMD, lifting its market capitalization to approximately $380 billion. Following a 4% increase in stock value on Tuesday and a substantial 24% rise on Monday, AMD shares have surged by 43% within the week, marking the best performance for the company since April 2016.
Lisa Su, AMD’s chair and CEO, characterized the collaboration with OpenAI as a “win-win,” emphasizing the capability of AMD’s AI chips for “at-scale deployments.” These deployments are crucial for large data centers, such as those operated by OpenAI and other cloud service providers, illustrating AMD’s readiness to compete fiercely against established players in the AI sector.
The response from industry competitors has been notable. Nvidia CEO Jensen Huang commented on the deal during an appearance on CNBC’s “Squawk Box,” describing it as “surprising.” Huang noted the unique nature of the arrangement, especially in light of OpenAI’s previous enthusiasm for its next-generation AI technology. He acknowledged the cleverness of the deal while expressing skepticism over OpenAI’s decision to secure a stake in AMD before the full realization of their next-generation products.
As AMD continues to gain traction in the AI market, the partnership with OpenAI could pave the way for further innovations and strengthen its footprint in an area historically dominated by Nvidia. The significant stock movement reflects broader investor optimism and could potentially signal a turning point in the competitive dynamics of the AI chip industry.
