AMD Secures Landmark AI Chip Deal with OpenAI, Stock Soars
AMD has announced a multi-year agreement to supply AI chips to OpenAI, potentially worth over $100 billion in revenue over four years. The deal involves deploying hundreds of thousands of AMD's AI GPUs, equivalent to six gigawatts of capacity, starting from the second half of 2026. OpenAI has committed to building a one-gigawatt facility using AMD's upcoming MI450 series chips. AMD issued a stock warrant to OpenAI for up to 160 million shares, with vesting tied to milestones and stock price targets up to $600 per share. The announcement caused AMD's stock to surge 34% post-closing.
*this image is generated using AI for illustrative purposes only.
Advanced Micro Devices (AMD) has announced a groundbreaking multi-year agreement to supply artificial intelligence (AI) chips to OpenAI, a deal that could potentially reshape the AI hardware landscape. This partnership is expected to generate significant revenue for AMD, marking a milestone in the company's AI strategy.
Deal Highlights
- Duration: Multi-year agreement
- Scope: Supply of AI chips to OpenAI
- Deployment: Hundreds of thousands of AMD's AI GPUs
- Capacity: Equivalent to six gigawatts
- Commencement: Second half of 2026
Financial Implications
AMD projects substantial financial gains from this partnership:
| Metric | Value |
|---|---|
| Expected New Revenue | Over $100 billion |
| Timeframe | 4 years |
| Sources | OpenAI and influenced customers |
OpenAI's Commitment
As part of the agreement, OpenAI has committed to:
- Building a one-gigawatt facility using AMD's forthcoming MI450 series chips
- Facility construction to begin next year
Stock Warrant Details
AMD has issued a warrant to OpenAI with the following terms:
| Aspect | Detail |
|---|---|
| Shares | Up to 160 million AMD shares |
| Purchase Price | $0.01 per share |
| Vesting | Tied to milestones |
| Stock Price Targets | Up to $600.00 per share |
Market Response
The announcement has had a significant impact on AMD's stock:
- Closing Price (Friday): $164.67
- Post-Announcement Surge: 34%
Industry Context
This deal comes amidst OpenAI's efforts to secure chip supply through multiple partnerships:
- Previously announced $100 billion investment from Nvidia
- OpenAI's current valuation: $500 billion
The AMD-OpenAI partnership signifies a major shift in the AI chip market, potentially challenging Nvidia's dominance and opening up new avenues for competition in the rapidly evolving AI hardware space.
Conclusion
This landmark deal represents a significant revenue opportunity for AMD and positions the company as a formidable player in the AI chip market. As the AI industry continues to grow, partnerships like these are likely to play a crucial role in shaping the future of AI technology and its applications.
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