Shares of Advanced Micro Devices (AMD) soared sky-high on Monday after the chipmaker revealed a game-changing partnership with OpenAI that cements its role as a key rival to Nvidia in the high-stakes AI race. The deal, valued at tens of billions of dollars over several years, sent AMD’s stock up nearly 30% in early trading, marking one of its most impressive one-day rallies.
Inside the Agreement
Under the agreement, AMD will provide more than 6 gigawatts of graphics processors to OpenAI across multiple generations of chips, starting with the MI450 in 2026. In return, OpenAI has the option to take a stake of up to 160 million AMD shares, about 10% of the company, vesting as the chipmaker meets deployment milestones. Executives at both firms framed the deal as a strategic alignment that boosts OpenAI’s infrastructure capacity while giving AMD a powerful revenue stream for years to come.
AMD Chief Financial Officer Jean Hu said the agreement could generate “tens of billions of dollars” in annual sales and be highly accretive to earnings. For a company that has often struggled to keep pace with Nvidia in GPUs, the deal is a transformative moment.
A Growing Rivalry With Nvidia
The announcement comes just weeks after Nvidia disclosed its own $100 billion investment in OpenAI, an intentional move to secure its dominance in the data center market powering generative AI. Nvidia has been the undisputed leader in GPUs, with shares surging more than 50% over the past year compared to AMD’s low single-digit gain before this summer.
Yet with AMD shares already up 75% in the last six months, the OpenAI pact underscores how quickly the market sees the balance of power shifting. Analysts note that OpenAI diversifying its chip suppliers not only reduces dependency on Nvidia but also gives AMD an opening to scale rapidly in the most lucrative segment of computing.
AI Spending Frenzy Raises Questions
The partnership also adds fire to concerns that Wall Street and Silicon Valley may be entering bubble territory. Spending commitments across the industry now run into the hundreds of billions—Oracle recently signed a $300 billion deal to provide cloud infrastructure to OpenAI, and Amazon founder Jeff Bezos warned last week that the current boom resembles past speculative cycles. Still, he stated that AI will continue to reshape industries even if valuations pull back.
For AMD, the risks are twofold: the company must deliver hardware at scale on an ambitious timeline, and it must prove that long-term profitability can match the enormous upfront investment. But for now, the market is focused squarely on the upside.
Looking Ahead
The AMD-OpenAI partnership could be a turning point in the AI hardware landscape, signaling that Nvidia will no longer have the field to itself. Investors will be watching for execution details, particularly AMD’s rollout of the MI450 chips and the pace of OpenAI’s equity vesting. Earnings reports in the quarters ahead will provide clues about just how quickly revenue from this deal flows into AMD’s balance sheet.
More broadly, the agreement highlights both the promise and the peril of today’s AI boom. If AMD can meet delivery targets and sustain profitability, it may emerge as a true peer to Nvidia and one of the defining winners of this technological shift. But if timelines slip or the AI market cools, today’s euphoria could prove fleeting. For now, Wall Street is betting that AMD has secured its breakout moment.
