OpenAI-AMD Billion-Dollar AI Pact Boosts Shares

Published Date : 7/10/2025 

OpenAI, the world's most valuable startup, has entered a long-term deal to purchase several generations of AI chips from AMD, potentially taking a stake in the chip designer. The deal is expected to generate tens of billions in revenue for AMD. 

OpenAI, the world's most valuable startup, is making a significant move in the AI chip market by committing to a long-term deal with Advanced Micro Devices (AMD). The deal, announced on Monday, involves OpenAI purchasing several generations of AI chips from AMD, with the potential for OpenAI to take a stake in the chip designer. This strategic partnership is expected to generate tens of billions of dollars in revenue for AMD, although the exact financial details of the transaction were not disclosed.

The announcement sent AMD shares soaring, rising nearly 24% to post the top performance in the S&P 500 and Nasdaq on Monday. This brings AMD's year-to-date gains close to 70%. The deal comes just weeks after rival Nvidia announced its own investment in OpenAI, with the AI startup agreeing to buy Nvidia's next-generation chips for its data centers. Nvidia shares, however, slid about 1% in Monday's session.

The massive deal between AMD and OpenAI underscores the growing demand for AI chips and suggests increased competition for Nvidia, which has long dominated the AI chip market. According to Wedbush analysts, “Any lingering fears around AMD should now be thrown out the window as this gives them a major platform to monetize the AI Revolution.”

OpenAI is committing to purchasing 6 gigawatts worth of AMD’s chips, with the first 1 gigawatt deployment planned to start in the second half of 2026. As part of the deal, OpenAI will also work with AMD as a core strategic compute partner. This partnership is expected to deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI’s AI infrastructure buildout.

AMD has issued OpenAI a warrant for up to 160 million AMD shares, which will vest when certain milestones are hit, effectively giving the ChatGPT maker a stake in the chip designer. If the warrants are fully issued, OpenAI could hold 9.9% of AMD. The first tranche of AMD warrants that OpenAI is buying will vest when the startup deploys the first 1 gigawatt of chips, while additional tranches will vest “as purchases scale up to 6 gigawatts.” AMD shares also have to reach certain targets, and OpenAI needs to hit some technical and commercial milestones for the warrants to vest.

AMD CFO Jean Hu expressed confidence in 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. This agreement creates significant strategic alignment and shareholder value for both AMD and OpenAI and is expected to be highly accretive to AMD's non-GAAP earnings-per-share.”

AMD CEO Lisa Su emphasized the significance of the deal, calling it a partnership “to deliver AI compute at massive scale.” OpenAI CEO Sam Altman echoed this sentiment, stating, “AMD’s leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster.”

This strategic alliance between OpenAI and AMD not only highlights the growing importance of AI technology but also positions AMD as a formidable player in the AI chip market, challenging the dominance of Nvidia. The deal is a clear indication of the rapidly evolving landscape in AI and the high stakes involved in securing a leading position in this critical technology sector. 

Frequently Asked Questions (FAQS): 

Q: What is the main purpose of the partnership between OpenAI and AMD?

A: The main purpose of the partnership is for OpenAI to purchase several generations of AI chips from AMD, potentially taking a stake in the chip designer. This deal is expected to generate tens of billions of dollars in revenue for AMD and accelerate OpenAI’s AI infrastructure buildout.

Q: How much did AMD shares increase after the announcement?

A: AMD shares increased nearly 24% after the announcement, posting the top performance in the S&P 500 and Nasdaq on the day of the announcement.

Q: What is the total amount of AI chips OpenAI is committing to purchase from AMD?

A: OpenAI is committing to purchasing 6 gigawatts worth of AMD’s chips, with the first 1 gigawatt deployment planned to start in the second half of 2026.

Q: What are the conditions for OpenAI to take a stake in AMD?

A: AMD has issued OpenAI a warrant for up to 160 million AMD shares, which will vest when certain milestones are hit. These include deploying the first 1 gigawatt of chips, AMD shares reaching certain targets, and OpenAI hitting technical and commercial milestones.

Q: How does this deal affect the competition between AMD and Nvidia?

A: This deal underscores the growing demand for AI chips and suggests increased competition for Nvidia, which has long dominated the AI chip market. It positions AMD as a formidable player in the AI chip market, challenging Nvidia's dominance. 

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