AMD Inc. has secured a multi-year agreement to supply artificial intelligence (AI) chips to OpenAI in a deal likely to reshape the competitive landscape of the AI hardware industry.
The partnership, which AMD executives hailed as “transformative” on Monday, will see the deployment of hundreds of thousands of AMD graphics processing units (GPUs) equivalent to six gigawatts of computing power beginning in the second half of 2026. The deal positions AMD as a serious challenger to industry leader NVIDIA Corp. while providing OpenAI crucial diversification in its chip supply chain.
“The deal with AMD will help OpenAI build enough AI infrastructure to meet its needs,” OpenAI CEO Sam Altman said in a statement.
Investors responded enthusiastically to the news, driving AMD shares up more than 23% in premarket trading Monday, putting the stock on track to reach its highest level since March 2024.
Under terms of the agreement, AMD issued a warrant allowing OpenAI to purchase up to 160 million AMD shares at just 1 cent each, potentially giving the ChatGPT creator a stake of roughly 10% in the chipmaker. The warrant vests in tranches tied to milestones including chip shipments and AMD stock price targets that escalate to $600 per share. AMD has a current market valuation of $267.2 billion.
“The demand for compute continues to outpace the energy and capacity available,” Daniel Newman, CEO of The Futurum Group, said. “This is super bullish for AMD.”
OpenAI, valued at $500 billion, will build its first one-gigawatt facility using AMD’s forthcoming MI450 chip series beginning next year, with AMD expecting to recognize revenue at that time.
“This is really the pioneer, a pioneer in the industry that has a lot of influence over the broader ecosystem,” said Mat Hein, AMD’s strategy chief.
AMD executives project the agreement will generate tens of billions of dollars in annual revenue directly, with ripple effects expected to bring more than $100 billion in new revenue over four years from OpenAI and other customers combined.
The AMD partnership marks OpenAI’s latest move to secure the massive computing infrastructure needed for its AI operations. The company has collaborated with AMD for years, providing input on earlier chip designs including the MI300X.
“This is a major win for AMD and shows that it has been putting the right strategy in place to take advantage of the AI mega-wave with its advanced GPUs. It’s also an endorsement that AMD has become competitive with NVIDIA processing power, as well as enhancing its software strategy to compete, much as it did in the data center market earlier against Intel,” longtime tech analyst Jack Gold said in a statement.
“But this is also an indication that OpenAI recognizes a need to diversify its processor supplies, as it continues to expand its data centers,” Gold said. “The most advanced NVIDIA GPUs are on allocation, with build outs outpacing supplies. By solidifying AMD chip supplies through this commitment and investment, OpenAI can continue its massive build out campaign.”
In September, NVIDIA announced an investment of up to $100 billion in OpenAI that included supplying at least 10 gigawatts of NVIDIA systems, including plans to deploy the chipmaker’s next-generation Vera Rubin chips in late 2026.
OpenAI is also developing proprietary silicon in partnership with Broadcom Inc.
A person familiar with the matter said the AMD agreement does not alter OpenAI’s existing compute plans or its partnership with Microsoft Corp., the AI company’s primary backer. Last month, OpenAI and Microsoft announced a non-binding agreement to restructure OpenAI into a for-profit entity, signaling ongoing changes in the AI company’s governance structure.
It’s highly likely other major AI players will follow suit and deploy AMD powered datacenters, even more so than with the current movement with AMD GPUs seen as the secondary supplier, analyst Gold noted. “Ultimately this is a huge win for AMD and its ability to become a true competitor to NVIDIA in AI and first choice in AI processors. Additionally it’s a major win for TSMC as they make the chips for both NVIDIA and AMD, so they profit when either powers new data centers.”
