News

AMD surges after signing a multiyear AI chip-supply deal with OpenAI

• By John K. Waters
• 10/07/2025

Advanced Micro Devices (AMD) announced on Monday that it will supply artificial intelligence chips to OpenAI under a multi-year agreement that could generate tens of billions of dollars in annual revenue and give the ChatGPT maker the option to acquire up to 10% of the chipmaker.

AMD shares jumped more than 34%, on track for their biggest one-day gain since 2016, adding roughly $80 billion to the company's market value.

Under the deal, OpenAI will deploy hundreds of thousands of AMD graphics processing units (GPUs) — equivalent to six gigawatts of computing capacity — over several years starting in the second half of 2026. The agreement includes a warrant that allows OpenAI to purchase up to 160 million AMD shares at $0.01 each, contingent upon deployment and share price milestones.

AMD expects to begin recognizing revenue next year, when OpenAI launches a one-gigawatt facility powered by its forthcoming MI450 series of chips. The company projected more than $100 billion in additional revenue over four years from OpenAI and other customers as a result of the deal.

"This partnership brings the best of AMD and OpenAI together to enable the world's most ambitious AI buildout," AMD Chief Executive Lisa Su said in a statement. OpenAI CEO Sam Altman stated that the agreement would enable the startup to secure the computing power necessary to expand its AI capabilities.

The deal positions AMD as a key strategic supplier to one of the fastest-growing players in the AI industry, bolstering its challenge to market leader Nvidia (NVDA.O). Still, analysts said the partnership was unlikely to erode Nvidia's dominance, as it continues to sell every AI chip it can produce.

"This is a major validation of AMD's technology," said Leah Bennett, chief investment strategist at Concurrent Asset Management. Nvidia shares slipped about 1%.

OpenAI has been racing to expand its computing infrastructure, recently reaching a separate $100 billion partnership with Nvidia to build AI data centers with a total capacity of 10 gigawatts. The AMD pact represents roughly half that scale, reflecting OpenAI's effort to diversify suppliers amid soaring demand for AI chips.

It was not immediately clear how OpenAI plans to finance the massive infrastructure build-out. Altman has previously stated that the company is exploring new funding models, including debt and equity, to support what he referred to as "trillions" in long-term infrastructure spending.

AMD reported revenue of $32.8 billion last year, far below Nvidia's $206 billion projection for its current fiscal year. The OpenAI deal marks a significant step in AMD's bid to capture a larger share of the fast-growing AI accelerator market.