OpenAI is shaking up the AI chip race with a multi-year partnership that gives Advanced Micro Devices (AMD) a massive boost. This partnership potentially reshapes the battle for computing dominance. The deal, valued in the tens of billions of dollars annually, grants OpenAI the option to buy up to 10% of AMD’s stock for just one cent per share. It also includes the delivery of hundreds of thousands of AMD’s cutting-edge AI graphics processing units (GPUs) beginning in the second half of 2026.
What’s Happening & Why This Matters
The deal gives OpenAI access to 6 gigawatts of computing power. It starts with 1 gigawatt next year as AMD rolls out its MI450 chip series. AMD expects this partnership to generate over $100 billion in revenue across four years. This is a direct challenge to Nvidia, which has long dominated the AI hardware market.
In a statement to Reuters, Forrest Norrod, AMD’s Executive Vice President, called the agreement “transformative, not just for AMD, but for the dynamics of the industry.” This is one of the largest single deals ever in AI infrastructure. It underscores AMD’s leap from challenger to a core player in the AI ecosystem.
Meanwhile, OpenAI CEO Sam Altman emphasised that this partnership is “incremental” to OpenAI’s existing work with Nvidia, not a replacement. OpenAI has previously announced a $100 billion collaboration with Nvidia. This is to deliver 10 gigawatts of computing systems powered by next-generation Vera Rubin chips. The AMD alliance allows the company to scale operations while diversifying its chip supply.
Why It’s a Win-Win for OpenAI and AMD
AMD has steadily regained relevance under CEO Lisa Su, who described the OpenAI deal as a “win-win.” The company issued OpenAI warrants for 160 million shares, valued at roughly $26 billion based on recent prices. These shares vest over time as AMD and OpenAI hit milestones in AI performance and share growth.
For OpenAI, the deal reduces dependence on Nvidia’s limited GPU supply. It also contributes to the design of future high-performance computing systems. Analysts say this dual strategy ensures OpenAI can keep pace with surging AI demand. Chip diversity is especially relevant as it deploys ChatGPT, Sora, and new AI models.
“AMD’s leadership in high-performance chips will enable us to accelerate progress. It will also help bring the benefits of advanced AI to everyone faster,” said Altman.
Market analysts, such as Dan Ives of Wedbush Securities, view this as a landmark move. “This brings Lisa Su and AMD right into the core of the AI chip spending cycle. It is a huge vote of confidence from OpenAI,” he wrote Monday.
AI Ripple Effect
Shares of AMD surged 36% in premarket trading after the announcement, while Nvidia’s stock dipped 2%. This reflects Wall Street’s sense that AMD is finally encroaching on Nvidia’s territory.
The deal also comes amid widespread AI infrastructure spending. OpenAI recently signed a $300 billion, five-year contract with Oracle for 4.5 gigawatts of data centre capacity. There is also a $10 billion chip design deal with Broadcom.
This diversification reflects an arms race in AI computing power. Data centres, chipmakers, and cloud providers all compete for position. According to Ben Barringer of Quilter Cheviot, “This is a logical move from OpenAI and great news for AMD. The demand for AI hardware is so high that no single supplier can meet it.”
TF Summary: What’s Next
MY FORECAST: The AMD–OpenAI partnership will dramatically reshape the AI hardware economy. Expect accelerated competition from Nvidia, price fluctuations in the GPU market, and increased investments in energy-efficient compute infrastructure. With AI data centres expanding globally and new chip generations already in the pipeline, the race for AI processing supremacy is just getting started.
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