A Groundbreaking Partnership Emerges
In a significant move that could reshape the landscape of artificial intelligence technology, OpenAI has entered into a multi-billion dollar agreement with Advanced Micro Devices (AMD) to utilize their computer chips. This deal, announced on October 6, comes on the heels of a $100 billion agreement with Nvidia, the current leader in AI chip supply. OpenAI's decision to partner with AMD signals a strategic diversification in its infrastructure plans as it aims to meet the soaring demand for AI computing power.
The agreement involves deploying up to 6 gigawatts of AMD Instinct GPUs over multiple years, starting with a 1-gigawatt rollout in 2026. This massive computing power, equivalent to the energy consumption of a small country like Singapore, will be used in data centers separate from those planned with Nvidia in Texas, New Mexico, Ohio, and another undisclosed Midwest location. OpenAI CEO Sam Altman emphasized the importance of this partnership, stating, 'The AMD deal will help his startup build enough AI infrastructure to meet its needs.'
AMD's Market Boost and Nvidia's Challenge
The announcement of this deal has sent AMD's stock soaring by over 34%, reflecting investor confidence in the chipmaker's ability to compete in the AI sector. AMD, which has long trailed Nvidia in this space, is expected to generate tens of billions of dollars in new revenue from this partnership. Leah Bennett, chief investment strategist at Concurrent Asset Management, noted, 'AMD has really trailed Nvidia for quite some time. So I think it helps validate their technology.'
Meanwhile, Nvidia, which dominates the AI chip market with an expected revenue of $206.26 billion for the current fiscal year compared to AMD's $32.78 billion, saw its shares dip by more than 1% following the news. This deal also includes a unique provision where AMD has issued a warrant allowing OpenAI to purchase up to 160 million shares at a nominal price of 1 cent each over the course of the agreement, potentially giving OpenAI a stake of up to 10% in AMD. This financial arrangement underscores the depth of the collaboration and the mutual benefits anticipated.
AMD CEO Lisa Su has been vocal about the company's ambitions in the AI space, unveiling new AI chips like the MI350 and MI400 series earlier this year at a developer conference. The MI400 series will power a new server named 'Helios' set for release next year, further positioning AMD as a formidable competitor to Nvidia's Blackwell line of processors.
Future Implications for AI Infrastructure
The partnership between OpenAI and AMD is poised to accelerate the development of AI technologies by providing the necessary computational resources to power innovations like ChatGPT. With OpenAI valued at $500 billion and having generated $4.3 billion in revenue in the first half of 2025, the financial underpinnings of this deal remain a point of curiosity, especially given reports of the company burning through $2.5 billion in cash during the same period.
As the AI race intensifies, this deal marks a pivotal moment for AMD to challenge Nvidia's dominance and for OpenAI to secure the infrastructure needed for its ambitious projects. The rollout of AMD chips in the second half of next year will be a critical test of this partnership's impact on the broader tech industry, potentially setting a precedent for how AI companies source their hardware in an increasingly competitive market.