AMD Lands Major OpenAI Deal, Knocking Nvidia
AMD has secured a major deal with OpenAI, delivering a significant blow to rival Nvidia. The agreement, worth several billion dollars, involves the supply of 6 gigawatts of AI chips starting in late 2026. This news sent AMD's stock surging by about 25-29%, while Nvidia fell by 1%.
The deal, signed by AMD's CEO Lisa Su, is projected to bring tens of billions in revenue over the next four years. OpenAI, which is burning through capital at an unprecedented rate despite expected revenue of $12.7 billion in 2025, is set to receive AMD's next-generation Instinct MI450 AI chips. This agreement gives OpenAI the option to acquire up to 160 million AMD shares, roughly 10% of the company.
The agreement is a strategic move for both parties. For AMD, it enhances its position against Nvidia in AI chips and offers potential savings of 30-50% per compute unit compared to Nvidia's AI chips. For OpenAI, it provides a hedge against AI chip shortages and market risks, as OpenAI maintains a dual-supplier strategy with both AMD and Nvidia.
The AMD-OpenAI deal is a significant development in the AI chip market. While AMD's hardware promises competitive specs, the software platform ROCm remains a challenge for broader market share. Despite this, AMD shares surged to their highest price in at least a year and a half following the announcement, up over 25%. Nvidia, on the other hand, fell by 1% on the news.
