An OpenAI Deal Worth Tens of Billions of Dollars Fuels AMD's Rise

Advanced Micro Devices Inc. (AMD) saw its shares soar after announcing a landmark agreement with OpenAI to provide AI infrastructure that could unlock tens of billions in new revenue for the chipmaker.

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According to a joint statement released Monday, the two companies finalized a multiyear deal under which OpenAI will deploy 6 gigawatts of AMD graphics processing units (GPUs). The partnership underscores AMD’s growing presence in the AI hardware space as demand for computing power surges globally.

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As part of the agreement, AMD granted OpenAI a warrant for up to 160 million shares at just one cent each representing roughly 10% of its outstanding stock. These shares will vest gradually as performance milestones are met, with some tied to AMD’s future share price milestones, including one tranche linked to a $600 share price target. For context, AMD closed last Friday at $164.67 per share.

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“OpenAI actually has to do a lot of work to make sure our deployments succeed,” AMD CEO Lisa Su said during a Monday call. “We structured this in a way that keeps them motivated to help AMD succeed. The more OpenAI builds, the more revenue AMD earns and they get to share in that upside.”

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Investors welcomed the news enthusiastically. AMD shares surged as much as 38% in New York trading to reach $226.71 their biggest intraday jump in over nine years — while rival Nvidia Corp. slipped as much as 2.3%.

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This agreement marks another massive data center investment by OpenAI as the AI leader ramps up its computing infrastructure. It reflects the tech industry’s belief that demand for powerful, energy-intensive AI systems will continue to explode. Just last month, Nvidia announced plans to invest up to $100 billion in OpenAI to build advanced data centers capable of generating at least 10 gigawatts of power equivalent to New York City’s peak electricity demand.

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Still, questions remain about how OpenAI will finance the immense costs tied to AI chips and large-scale data centers. OpenAI CEO Sam Altman recently said he intends to spend “trillions” on infrastructure to ensure the company has the computing power needed for future AI growth. To fund that vision, Altman mentioned developing a “new kind” of financial instrument, though details have yet to be disclosed.

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As the race to scale AI infrastructure accelerates, concerns about a potential AI investment bubble reminiscent of the late 1990s dot-com frenzy have grown louder. With billions pouring into AI chips and cloud infrastructure from venture capital, corporate debt, and unconventional financing arrangements, many on Wall Street are starting to question how sustainable this rapid expansion will be.

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For AMD, however, the OpenAI partnership positions its technology at the center of the next wave of AI development. While Nvidia remains the dominant player in the market for accelerator chips, AMD’s AI GPU business is on track to generate $6.55 billion in revenue this year. Company executives expect the OpenAI deal to become meaningfully profitable starting in 2025, with growth accelerating through 2027. Over time, AMD believes the collaboration could lift AI-related revenue to over $100 billion, though it has not specified an exact timeline.

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“We’re thrilled to partner with OpenAI to deliver AI compute at unprecedented scale,” CEO Lisa Su said in a statement. Altman echoed the sentiment, calling the deal “a major step in building the compute capacity needed to realize AI’s full potential.” He added that AMD’s leadership in high-performance chip design would help OpenAI bring its technologies to more users faster.

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The move also offers OpenAI an opportunity to diversify away from Nvidia’s near-total dominance of the AI hardware market. Today, most data center operators rely heavily on Nvidia’s chips, software, and networking systems, which together have helped the company’s data center division generate more than $115 billion in annual revenue more than any other chipmaker earns in total.

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AMD’s steady progress in high-performance processors particularly its competition with Intel Corp. has won over investors and propelled its market value to record highs. With this newfound financial strength, the company is well-positioned to pursue ambitious growth opportunities in the AI sector.

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“Our partnership with OpenAI is expected to generate tens of billions of dollars in revenue for AMD while accelerating OpenAI’s AI infrastructure expansion,” said AMD Chief Financial Officer Jean Hu. “This agreement creates deep strategic alignment and will enhance our earnings per share over time.”

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However, the partnership also places AMD in the middle of a growing debate within the tech world: how will the enormous costs of AI infrastructure be recouped, and is the current rate of spending sustainable?

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Under the deal, the first tranche of warrants will vest when the initial gigawatt of computing power is deployed a process expected to begin in the second half of next year. These systems will be powered by AMD’s Instinct MI450 chips, with additional tranches vesting as OpenAI continues to scale its hardware deployment.

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Nvidia remains the global leader in GPUs the cornerstone of AI computing and has built an ecosystem of software and networking tools that make it easier for clients to deploy large-scale AI systems. Yet AMD is closing the gap, rapidly enhancing its product lineup to compete more directly with Nvidia and capture a larger share of the booming AI hardware market.

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In short, AMD’s groundbreaking deal with OpenAI could mark a turning point in the AI arms race one that not only boosts the chipmaker’s financial prospects but also reshapes the balance of power in the global semiconductor industry.

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