AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

AMD will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10% of the chipmaker.

Shares of the chipmaker surged more than 34% on Monday, putting them on track for their biggest one-day gain in over nine years and adding roughly $80 billion to the company's market value.

The deal, latest in a string of investment commitments, underscores OpenAI and the broader AI industry's voracious appetite for computing power as companies race toward developing AI technology that meets or exceeds human intelligence.

"We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," AMD executive vice president Forrest Norrod told Reuters on Sunday.

VOTE OF CONFIDENCE

The agreement closely ties the startup at the center of the AI boom to AMD, one of the strongest rivals of Nvidia, which recently agreed to make substantial investments in OpenAI.

Analysts said it was a major vote of confidence in AMD's AI chips and software but is unlikely to dent Nvidia's dominance, as the market leader continues to sell every AI chip it can make.

It covers the deployment of hundreds of thousands of AMD's AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026. This is roughly equivalent to the energy needs of 5 million US households, or about thrice the amount of power produced by the Hoover Dam.

AMD said OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips beginning next year, and that it would begin to recognize revenue then.

AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple effect of the agreement, AMD expects to receive more than $100 billion in new revenue over four years from OpenAI and other customers, they said.

The chipmaker is expected to report revenue of $32.78 billion this year, according to LSEG data. In contrast, analysts are expecting Nvidia to report revenue of $206.26 billion for the current fiscal year.

"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.

Shares of Nvidia dipped more than 1%.

OpenAI CEO Sam Altman said the AMD deal will help his startup build enough AI infrastructure to meet its needs.
It was not immediately clear how OpenAI would fund the massive deal.

OpenAI, which is valued at $500 billion, generated around $4.3 billion in revenue in the first half of 2025 and burned through $2.5 billion in cash, according to media reports.

DEAL DETAILS

As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chip deal. The warrant vests in tranches based on milestones that the two companies have agreed on.

The first tranche will vest after the initial shipment of MI450 chips set for the second half of 2026. The remaining milestones include specific AMD stock price targets that escalate to $600 a share for the final installment of stock to unlock.

In September, Nvidia announced a deal to supply OpenAI with at least 10 gigawatts worth of its systems.

In contrast with the startup's deal with AMD where it will take a stake in the chipmaker, Nvidia will invest $100 billion in the ChatGPT parent under the terms of the agreement announced in September.

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.

OPENAI WANTS MORE GPUs

OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips such as the MI300X.

The San Francisco-based AI company has been taking a number of steps to ensure it has the chips needed for its future needs.

Altman has floated expectations of reaching 250 gigawatts of compute in total by 2033, The Information has reported.

OpenAI's deal last month with Nvidia includes the deployment of one gigawatt of the chip giant's next-generation Vera Rubin processors in late 2026.

OpenAI is also in the process of developing its own silicon for AI use and has partnered with Broadcom, Reuters reported last year.

The startup and its main backer, Microsoft, announced last month that they had signed a non-binding agreement to restructure OpenAI into a for-profit entity.

A person familiar with the matter said the deal with AMD does not change any of OpenAI's ongoing compute plans, including that effort or its partnership with Microsoft.