AMD stock rises significantly after securing contract to provide AI chips to OpenAI.
United States chipmaker Advanced Micro Devices (AMD) has secured a significant multi-year agreement to supply artificial intelligence (AI) chips to OpenAI, the organization renowned for its pioneering technology, including the ChatGPT platform. This partnership is expected to generate substantial revenue, with projections estimating tens of billions of dollars annually. Furthermore, the deal includes an option for OpenAI to acquire up to 10 percent of AMD, demonstrating a unique alignment of interests between the two entities.
Upon the announcement of this partnership, AMD’s stock experienced a remarkable surge of over 34 percent, marking its largest single-day gain in nearly a decade and adding approximately billion to the company’s market capitalization. This shift reflects investor confidence in AMD’s prospects and the escalating demand for AI technologies that require advanced computational power.
This agreement not only reinforces AMD’s position in the competitive landscape dominated by its rival Nvidia but also emphasizes the aggressive pursuit of transformative AI technologies that aim to surpass human-level intelligence. AMD’s executive vice president, Forrest Norrod, expressed that the collaboration is “transformative,” not just for AMD but also for the semiconductor industry as a whole.
Analysts interpret the deal as a substantial endorsement of AMD’s AI capabilities, although it is anticipated that Nvidia will maintain its market leadership given its ongoing robust demand for AI chip production. AMD is optimistic about the financial benefits the partnership will yield, forecasting upwards of 0 billion in new revenue over the next four years from both OpenAI and additional clients. Current estimates suggest that AMD will report revenues of approximately .78 billion this year, while Nvidia is projected to reach around 6.26 billion.
OpenAI, now valued at 0 billion, reported revenues of about .3 billion in the first half of 2025 but faced significant cash expenditures of .5 billion. Their recent deals, including the one with Nvidia that involves a substantial 0 billion investment, further underscore the growing ecosystem surrounding AI technology.
The strategic investment in AMD could empower OpenAI to play a more influential role in corporate decisions, contrasting with its relationship with Nvidia, where it remains a client rather than a stakeholder. OpenAI and AMD have a history of collaboration, having previously provided valuable insights for the development of earlier AI chip models.
Overall, this partnership represents a noteworthy advance in the AI sector, illustrating the dynamic interplay between technology creators and semiconductor producers, and highlighting the future trajectory of artificial intelligence development.
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