Advanced Micro Devices has entered into a substantial multi-year agreement to supply artificial intelligence processors to OpenAI, a deal projected to generate tens of billions of dollars in annual revenue while providing the company behind ChatGPT with an option to acquire approximately 10% ownership in the semiconductor manufacturer.
The announcement triggered a remarkable market response on Monday, with AMD shares climbing more than 30%, marking the company’s most significant single-day gain in over nine years and adding approximately $80 billion to its market capitalization.
This partnership is the latest in a series of major investment commitments that highlight the extraordinary demand for computing resources within OpenAI and the broader artificial intelligence sector. As companies accelerate their efforts to develop AI systems capable of matching or surpassing human cognitive abilities, access to sufficient processing power has become increasingly critical.
AMD’s Position in the AI Chip Market
The agreement establishes a closer relationship between OpenAI, which remains central to the current AI revolution, and AMD, one of the primary competitors to Nvidia. While Nvidia recently committed to substantial investments in OpenAI, industry analysts view this AMD partnership as a significant endorsement of AMD’s AI chip technology and supporting software infrastructure. However, experts suggest the deal is unlikely to substantially diminish Nvidia’s market leadership, particularly as the company continues to operate at full production capacity for its AI processors.
The deployment outlined in the agreement includes hundreds of thousands of AMD graphics processing units over multiple years, beginning in the second half of 2026. The total capacity represents six gigawatts of computing power, which approximates the energy consumption of five million American households or roughly three times the electrical output of the Hoover Dam.
According to AMD, OpenAI plans to construct a one-gigawatt facility utilizing the forthcoming MI450 chip series, with development commencing next year and revenue recognition expected to begin at that time. Company executives anticipate the arrangement will generate tens of billions of dollars annually. Furthermore, AMD projects that the combined impact of this agreement and subsequent business opportunities will deliver more than $100 billion in new revenue over four years from OpenAI and additional clients.
For context, AMD’s expected revenue for the current year stands at $32.78 billion according to LSEG data, while analysts project Nvidia will report $206.26 billion in revenue for its current fiscal year. Leah Bennett, chief investment strategist at Concurrent Asset Management, noted that AMD has lagged behind Nvidia for a considerable period, making this deal an important validation of its technological capabilities. Nvidia shares declined slightly more than 1% following the announcement.
OpenAI Chief Executive Officer Sam Altman stated that the AMD partnership would enable his organization to establish sufficient AI infrastructure to satisfy its operational requirements. The funding mechanism for this extensive undertaking remains unclear. OpenAI, currently valued at $500 billion, generated approximately $4.3 billion in revenue during the first half of 2025 while utilizing $2.5 billion in cash, according to various media reports.
The arrangement includes a warrant provision granting OpenAI the right to purchase up to 160 million AMD shares at one cent each throughout the duration of the chip agreement. The warrant vests incrementally based on mutually agreed milestones between the two organizations.
The initial vesting will occur following the first shipment of MI450 processors scheduled for the second half of 2026. Subsequent milestones incorporate specific AMD stock price targets that escalate to $600 per share for the final tranche of equity to become available.
In September, Nvidia announced an agreement to provide OpenAI with at least 10 gigawatts of computing systems. Notably, while OpenAI will acquire an ownership position in AMD through this current deal, the Nvidia arrangement involves a $100 billion investment from Nvidia into the ChatGPT parent company rather than an equity stake for OpenAI.
Dan Coatsworth, head of markets at A.J. Bell, observed that obtaining a stake in AMD could provide OpenAI with influence over corporate strategy decisions, whereas the Nvidia relationship positions OpenAI purely as a customer without ownership involvement.
Long-Term Computing Strategy
OpenAI has maintained a collaborative relationship with AMD for several years, contributing design input for previous generations of AI processors, including the MI300X series. The San Francisco-based organization has undertaken numerous initiatives to secure adequate chip supplies for future requirements.
Altman has indicated expectations of reaching 250 gigawatts of total computing capacity by 2033. The recent Nvidia agreement includes the deployment of one gigawatt of the chip manufacturer’s next-generation Vera Rubin processors in late 2026.
The AMD agreement doesn’t alter any of OpenAI’s existing computing strategies, including its proprietary chip development efforts or its ongoing collaboration with Microsoft.
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