AMD lands multibillion-dollar AI chip deal with OpenAI

• AMD’s stock jumped after a multi-year AI chip deal with OpenAI.
• The deal could bring in tens of billions and give OpenAI up to a 10% stake.

AMD has reached a multi-year agreement to supply artificial intelligence chips to Openaia deal expected to bring in tens of billions of dollars in annual revenue and give the ChatGPT maker the option to acquire a stake of about 10 per cent in the chip company.

As reported by ReutersAMD’s stock jumped more than 34 per cent on Monday, its biggest one-day gain in over nine years, adding roughly $80 billion to the AI chip maker’s market value.

The agreement highlights the soaring demand for computing power as companies push to build AI systems that match or surpass human intelligence. “We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry,” said Forrest Norrod, AMD’s executive vice president.

Deepening ties

The deal strengthens OpenAI’s ties with one of Nvidia’s strongest competitors. Nvidia, the current market leader in AI chips, recently announced a separate investment agreement with OpenAI.

Analysts see the partnership as a strong endorsement of AMD’s technology, though they believe it will not threaten Nvidia’s dominant position. Nvidia continues to sell every AI chip it can produce.

The contract involves deploying hundreds of thousands of AMD’s AI chips, equal to six gigawatts of capacity, starting in the second half of 2026. That amount of power matches the electricity use of about five million U.S. homes—roughly three times the output of the Hoover Dam.

OpenAI plans to build a one-gigawatt facility using AMD’s upcoming MI450 chip series starting next year. AMD expects to start booking revenue then. Over four years, the company forecasts more than $100 billion in new revenue from OpenAI and other customers linked to the deal. AMD’s revenue is projected to reach $32.78 billion this year, compared with Nvidia’s expected $206.26 billion.

“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. Nvidia’s shares fell more than 1 per cent.

Openai chief executive Sam Altman said the deal will help the company secure the infrastructure it needs for its AI ambitions. How OpenAI will finance the massive agreement is still unclear. The company, valued at $500 billion, generated $4.3 billion in revenue in the first half of 2025 and spent $2.5 billion in cash, according to media reports.

Stock warrant included

As part of the arrangement, AMD issued a warrant giving OpenAI the right to buy up to 160 million AMD shares for one cent each. The warrant will vest in stages, tied to agreed-upon milestones. The first milestone is the shipment of MI450 chips in late 2026. Later milestones involve AMD share price targets, with the final stage unlocking if the stock hits $600.

Nvidia’s deal with OpenAI, announced in September, involves supplying at least 10 gigawatts of its systems. Unlike the AMD deal, Nvidia will invest $100 billion in OpenAI, while OpenAI will take an ownership stake in AMD.

“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.

Push for more chips

OpenAI has collaborated with AMD for years, offering input on older chip designs like the MI300X. The company has been moving aggressively to secure enough computing power to support future growth. Altman has previously said OpenAI could need up to 250 gigawatts of compute by 2033.

The company’s deal with Nvidia last month includes one gigawatt of next-generation Vera Rubin processors, to be deployed in late 2026. OpenAI is also working with Broadcom to develop its own AI chips.

OpenAI and Microsoft, its largest backer, recently signed a non-binding agreement to restructure the startup into a for-profit entity. A source familiar with the matter said the AMD deal does not affect those plans or its partnership with Microsoft.

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