AMD expects the deal to generate billions of dollars annually and anticipates surpassing $100 billion in revenue over the next four years from OpenAI and other clients.
AMD has announced a multi-year agreement to provide AI chips to OpenAI. This is a deal that would create billions of dollars in revenue for OpenAI, and it also allows OpenAI to acquire 10% of AMD’s shares. After the announcement, AMD shares increased by 34%, marking the largest single-day gain in nine years.
The deal strengthens the dynamics between OpenAI and AMD, which is a key competitor to Nvidia. It has also committed to invest heavily in OpenAI. While analysts view this deal as a strong vote of confidence in AMD’s AI chips and software, they do not think it will threaten Nvidia‘s dominance, as it continues to be the market leader, selling every AI chip.
Under the deal, AMD will provide hundreds of thousands of its AI chips, equivalent to six gigawatts of computing power, to be deployed in the coming years, starting from the second half of 2026.
This energy could power five million US homes. The chipmaker states that OpenAI wants to build a one-gigawatt plant based on its upcoming MI450 series of chips.
AMD expects the deal to generate billions of dollars annually and anticipates surpassing $100 billion in revenue over the next four years from OpenAI and other clients. For comparison, AMD expects to earn $32.78 billion while Nvidia expects to earn $206.26 billion for the current fiscal year, according to LSEG data. Meanwhile, Nvidia’s shares dropped by over 1%.
OpenAI CEO Sam Altman stated that this deal will help the AI company build AI infrastructure, although it is unclear how OpenAI will fund such a massive deal.
OpenAI is valued at $500 billion. It is earning $4.3 billion in revenue during the first half of 2025 and has spent $2.5 billion in cash.
As part of the deal, AMD will issue a warrant that allows OpenAI to purchase up to 160 million shares at $0.01 each over the course of the deal.
The first portion of the MI450 chips will be shipped in the second half of 2026. The remaining tranches are based on AMD’s shares, which aim to reach specific price targets of up to $600 per share.
In September, Nvidia announced that it would give OpenAI systems of at least 10 gigawatts of computing power. In the AMD deal, OpenAI can get the ownership stake. Taking ownership in AMD would give OpenAI power to influence its company strategy. But the Nvidia deal with OpenAI will involve a $100 billion investment in OpenAI, making the company a customer rather than a customer, stated Dan Coatsworth, head of markets at AJ Bell.
OpenAI has collaborated with AMD for years, providing input on the design of its older-generation AI chips, such as the MI300X. The San Francisco-based AI company has taken several steps to ensure it has sufficient chips for its future needs. Its CEO, Altman, predicts a need to reach 250 gigawatts of computing power by 2023, according to The Information.
OpenAI made a deal with Nvidia last month. It includes the deployment of one gigawatt of the company’s next-generation Vera Rubin processors in late 2026.
OpenAI is also in the process of developing its own silicon for AI chips and has partnered with Broadcom. Last month, OpenAI and its main backer, Microsoft, announced that they had signed a non-binding deal to restructure OpenAI as a for-profit company.
A source familiar with the matter, who asked not to be identified, stated that the AMD deal will not affect OpenAI’s ongoing compute plans, including its deal with Microsoft or its efforts to develop its own chip plans.
