AMD’s Bold Move: Multi-Billion Dollar AI Chip Deal with OpenAI

Picture Credit: OpenAI

Chipmaker AMD has signed a multi-year partnership with OpenAI, the creator of ChatGPT, to supply advanced artificial intelligence (AI) chips, a deal which is expected to generate tens of billions of dollars annually and give OpenAI the option to acquire up to 10% of AMD.

The announcement sent AMD’s shares soaring more than 34%, adding about $80 billion to its market value in a single day, its biggest one-day jump in almost a decade. The deal marks a major step for AMD as it challenges long-time rival Nvidia, which continues to dominate the AI chip market.

“This agreement is transformative, not just for AMD but for the broader AI industry,” said Forrest Norrod, AMD’s Executive Vice President. Analysts say the deal validates AMD’s AI technology and strengthens its position in one of the fastest-growing sectors in tech.

The partnership highlights the enormous demand for computing power as companies race to develop AI systems capable of human-like intelligence. AMD expects to gain over $100 billion in new revenue within four years, driven by OpenAI and other clients building AI infrastructure.

OpenAI CEO Sam Altman said the collaboration will help the company meet its massive compute needs as AI models become increasingly complex. The move follows OpenAI’s $100 billion partnership with Nvidia announced last month, though this time the company will take an ownership stake in AMD, potentially giving it a say in strategic decisions.

For AMD, which is projected to earn about $33 billion this year, the deal represents both financial momentum and symbolic validation after years of trailing Nvidia. It also reinforces the company’s position as a credible alternative supplier for the world’s largest AI labs.

As the AI race intensifies, this deal signals a new phase in competition, one where collaboration and investment intertwine to power the next wave of intelligent computing.