AMD Lands Big AI Chip Contract with OpenAI: Market Soars

Published Date : 7/10/2025 

United States chipmaker AMD has signed a multi-year deal to supply AI chips to OpenAI, the creators of ChatGPT. The deal includes an option for OpenAI to purchase up to 10% of AMD, significantly boosting AMD's market value and revenue expectations. 

United States chipmaker AMD has announced a multi-year deal to supply artificial intelligence (AI) chips to OpenAI, the creators of ChatGPT. This deal is expected to bring in tens of billions of dollars in annual revenue and gives the ChatGPT creators the option to buy up to roughly 10 percent of the company.

Shares of the chipmaker surged more than 34 percent on the day the deal was announced, marking its biggest one-day gain in over nine years and adding roughly $80 billion to the company’s market value.

The agreement is the latest in a series of investment commitments and underscores OpenAI and the broader AI industry’s growing demand for computing power. Companies are racing to develop AI technology that meets or exceeds human intelligence, driving the need for advanced and powerful AI chips.

“We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry,” AMD executive vice president Forrest Norrod told Reuters. The deal closely ties OpenAI, at the center of the AI boom, to AMD, one of the strongest rivals of Nvidia, which recently agreed to make substantial investments in OpenAI.

Analysts see this as a significant vote of confidence in AMD’s AI chips and software, although it is unlikely to significantly impact Nvidia’s dominance. Nvidia continues to sell every AI chip it can produce, maintaining its market leadership. AMD executives expect the deal to net tens of billions of dollars in annual revenue. Due to the ripple effect of the agreement, AMD anticipates receiving more than $100 billion in new revenue over four years from OpenAI and other customers.

For context, AMD is expected to report revenue of $32.78 billion this year, according to LSEG data. In contrast, analysts are expecting Nvidia to report revenue of $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,” said Leah Bennett, chief investment strategist at Concurrent Asset Management. Shares of Nvidia dipped more than 1 percent following the announcement.

OpenAI CEO Sam Altman stated that the AMD deal will help the startup build the necessary AI infrastructure to meet its needs. However, it is not immediately clear how OpenAI will fund the enormous deal. OpenAI, valued at $500 billion, generated approximately $4.3 billion in revenue in the first half of 2025 and burned through $2.5 billion in cash, according to media reports.

In September, Nvidia announced a deal to supply OpenAI with at least 10 gigawatts worth of its systems. In contrast with the startup’s deal with AMD, where it will take a stake in the chipmaker, Nvidia will invest $100 billion in the ChatGPT parent under the terms of the agreement announced in September.

Taking a stake in AMD could give OpenAI “the power to potentially influence corporate strategy. With Nvidia, OpenAI is simply the client and not a part-owner,” said Dan Coatsworth, head of markets at A J Bell. OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips.

The startup and its main backer, Microsoft, announced last month that they had signed a non-binding agreement to restructure OpenAI into a for-profit entity. A person familiar with the matter said the deal with AMD does not change any of OpenAI’s ongoing compute plans, including that effort or its partnership with Microsoft. 

Frequently Asked Questions (FAQS): 

Q: What is the main benefit of AMD's deal with OpenAI?

A: The main benefit of AMD's deal with OpenAI is the significant boost in revenue and market value for AMD, along with the potential for OpenAI to purchase up to 10% of AMD, giving them influence over AMD's corporate strategy.

Q: How much did AMD's shares surge when the deal was announced?

A: AMD's shares surged more than 34% when the deal was announced, marking its biggest one-day gain in over nine years.

Q: What is the expected revenue impact of the deal for AMD?

A: AMD expects the deal to net tens of billions of dollars in annual revenue and more than $100 billion in new revenue over four years from OpenAI and other customers.

Q: How does this deal compare to Nvidia's investment in OpenAI?

A: Unlike AMD's deal, which includes the option for OpenAI to purchase up to 10% of AMD, Nvidia will invest $100 billion in OpenAI but will not take a stake in the company, remaining a client rather than a part-owner.

Q: What is the current market valuation of OpenAI?

A: OpenAI is currently valued at $500 billion, having generated approximately $4.3 billion in revenue in the first half of 2025 and burned through $2.5 billion in cash. 

More Related Topics :