Advanced Micro Devices (AMD) shares surged by more than 20% following news of a landmark, multibillion-dollar chip supply deal with OpenAI. The agreement signals AMD’s growing influence in the artificial intelligence (AI) hardware sector and gives OpenAI the option to acquire a 10% stake in the chipmaker.
Key Takeaways
AMD shares spiked over 20% after the OpenAI deal
OpenAI set to deploy 6 gigawatts of AMD AI chips over several years
OpenAI holds warrants to purchase up to 10% of AMD’s stock
The partnership represents one of the largest GPU deals in AI to date
The deal is expected to generate tens of billions in revenue for AMD annually
Details Of The AMD–OpenAI Partnership
OpenAI, the company behind ChatGPT, has entered a multi-year agreement with AMD to secure massive GPU resources essential for AI scaling. Under the agreement, OpenAI will roll out 6 gigawatts of AMD's Instinct GPUs across multiple generations, beginning with an initial deployment of 1 gigawatt in late 2026. This hardware will be key for developing and powering the next wave of generative AI applications.
Strategic Equity Component
In a move validating AMD's technology, the deal grants OpenAI warrants to purchase up to 160 million AMD shares at a symbolic price, potentially translating to a 10% stakeholder position if exercised fully. The warrants vest in stages linked to deployment achievements and share price milestones, starting with completion of the first hardware rollout.
Transformative Sector Impact
The chip supply agreement could net AMD more than $100 billion in new revenue streams over four years, not only from OpenAI but also from auxiliary industry demand. Executives from both firms described the partnership as transformative—cementing AMD as a viable alternative to Nvidia in the fiercely competitive AI chip market.
The deal follows recent high-profile agreements between OpenAI and Nvidia, as well as broad moves among cloud and AI providers to secure chip supply amid surging demand. Analysts say this diversification will ease supply pressures and reduce reliance on any single vendor.
Market & Industry Response
AMD’s stock soared to a record high, boosting its market capitalisation by over $100 billion in a single day. The deal drove a rally in semiconductor shares across global markets and helped push major indices such as the Nasdaq and S&P 500 to new record closes. Conversely, Nvidia’s shares dipped slightly as investors weighed the new competitive landscape.
Broader AI Ecosystem Developments
OpenAI’s aggressive infrastructure buildout, dubbed the “Stargate project,” now includes sites expected to use a blend of chips from AMD, Nvidia, and other suppliers. This rapidly evolving ecosystem marks an unprecedented scale of capital and hardware investment in AI, with further custom chip initiatives also underway.
What Happens Next?
With AMD now a critical supplier to OpenAI, the broader AI hardware sector faces heightened competition and a wave of investment. The ripple effect is likely to encourage further partnerships, new technology development, and competitive pricing—as AI adoption accelerates globally.