AMD, OpenAI Sign Multi-Year AI Chip Deal; Shares Surge

AMD will supply artificial intelligence chips to OpenAI in a multi-year deal, projected to generate tens of billions of US dollars in annual revenue. The agreement also gives OpenAI, creator of ChatGPT, the option to acquire up to approximately 10% of the chipmaker.

Credit: AMD

On Monday, shares of the chipmaker surged more than 34%, marking its largest one-day gain in over nine years. This increase added approximately USD 80 billion to the company’s market value.

This deal, the latest in a string of investment commitments, highlights OpenAI’s and the wider AI industry’s voracious appetite for computing power as companies race toward developing AI technology that meets or exceeds human intelligence.

“We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry,” Executive Vice President Forrest Norrod told Reuters on Sunday.

The agreement connects OpenAI, a key AI startup, with AMD, a prominent rival of Nvidia. Nvidia also recently agreed to make significant investments in OpenAI.

Analysts noted the agreement signals confidence in AMD’s AI chips and software. However, they suggested it is unlikely to diminish Nvidia’s market dominance, as the company continues to sell all available AI chips.

The deal involves the deployment of hundreds of thousands of AMD’s AI chips, or graphics processing units (GPUs), equivalent to six gigawatts. This deployment is scheduled over several years, commencing in the second half of 2026.

AMD stated OpenAI plans to build a one-gigawatt facility based on its upcoming MI450 series of chips starting next year. AMD expects to begin recognising revenue from this initiative at that time.

AMD executives anticipate the deal will generate tens of billions of US dollars in annual revenue. Due to the agreement’s broader impact, AMD expects to acquire over USD 100 billion in new revenue from OpenAI and additional customers over four years.

The chipmaker is projected to report revenue of USD 32.78 billion this year, based on LSEG data. In comparison, analysts forecast Nvidia to report revenue of USD 206.26 billion for the current fiscal year.

“AMD has really trailed Nvidia for quite some time. So I think it helps validate their technology,” Chief Investment Strategist Leah Bennett of Concurrent Asset Management said.

Shares of Nvidia dipped more than 1%.

OpenAI Chief Executive Officer Sam Altman stated the AMD deal would assist his company in building sufficient AI infrastructure to meet its requirements.

It was not immediately clear how OpenAI would finance the substantial deal.

OpenAI is valued at USD 500 billion, and media reports indicate it generated approximately USD 4.3 billion in revenue in the first half of 2025. During the same period, the company used USD 2.5 billion in cash.

As part of the agreement, AMD issued a warrant allowing OpenAI to purchase up to 160 million shares of AMD for 1 cent each throughout the chip deal. The warrant vests in tranches, contingent on agreed-upon milestones between the two companies.

The initial tranche will vest following the first shipment of MI450 chips, scheduled for the second half of 2026. Subsequent milestones involve specific AMD stock price targets, reaching USD 600 per share for the final stock installment to unlock.

In September, Nvidia announced a separate deal to provide OpenAI with at least 10 gigawatts worth of its systems.

Unlike its arrangement with AMD, where it will take a stake in the chipmaker, Nvidia’s deal with OpenAI involves a USD 100 billion investment in the ChatGPT parent. This investment is under the terms of the agreement announced in September.

Taking a stake in AMD could grant OpenAI “the power to potentially influence corporate strategy,” according to Head of Markets Dan Coatsworth of A.J. Bell. Coatsworth added, “With Nvidia, OpenAI is simply the client and not a part-owner.”

OpenAI has collaborated with AMD for years, contributing to the design of earlier AI chip generations, including the MI300X.

The San Francisco-based AI organisation has undertaken several measures to secure the necessary chips for its future requirements.

Altman has publicly stated expectations of achieving 250 gigawatts of total compute by 2033, as reported by The Information.

OpenAI’s deal with Nvidia last month includes deploying one gigawatt of the chip giant’s next-generation Vera Rubin processors in late 2026.

OpenAI is also developing its own silicon for AI applications and has partnered with Broadcom, Reuters reported last year.

Last month, OpenAI and its primary backer, Microsoft, announced a non-binding agreement to restructure OpenAI into a for-profit entity.

A person familiar with the situation stated the AMD deal does not alter any of OpenAI’s current compute plans. This includes the restructuring effort or its partnership with Microsoft.

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• AMD secured a multi-year deal to supply AI chips to OpenAI.

• The deal is projected to generate tens of billions of US dollars in annual revenue and provides OpenAI an option to acquire up to 10% of AMD.

• AMD's shares surged more than 34% on Monday, adding approximately USD 80 billion to its market value.

Source: REUTERS