AMD will supply AI chips to OpenAI in a multi-year deal that will bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10% of the chip maker.
Shares in AMD surged more than 34% on Monday, putting them on track for their biggest one-day gain in over nine years and adding roughly US$80-billion to the company’s market value.
The deal, latest in a string of investment commitments, underscores OpenAI and the broader AI industry’s voracious appetite for computing power as companies race towards developing AI technology that meets or exceeds human intelligence.
“We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry,” AMD executive vice president Forrest Norrod said on Monday. The agreement closely ties the start-up at the centre of the AI boom to AMD, one of the strongest rivals of Nvidia.
Analysts said it was a major vote of confidence in AMD’s AI chips and software but is unlikely to dent Nvidia’s dominance, as the market leader continues to sell every AI chip it can make.
It covers the deployment of hundreds of thousands of AMD’s AI chips, or GPUs, equivalent to 6GW, over several years beginning in the second half of 2026.
AMD said OpenAI would build a 1GW facility based on its forthcoming MI450 series of chips beginning next year, and that it would begin to recognise revenue then.
Tens of billions of dollars
AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple effect of the agreement, AMD expects to receive more than $100-billion in new revenue over four years from OpenAI and other customers, they said.
The chip maker is expected to report revenue of $32.8-billion this year, according to LSEG data. In contrast, analysts are expecting Nvidia to report revenue of $206.3-billion for the current fiscal year.
“AMD has really trailed Nvidia for quite some time, so I think it helps validate their technology,” said Leah Bennett, chief investment strategist at Concurrent Asset Management. Shares of Nvidia dipped more than 1%.
Read: Nvidia bets $100-billion on OpenAI
OpenAI CEO Sam Altman said the AMD deal will help his start-up build enough AI infrastructure to meet its needs. It was not immediately clear how OpenAI would fund the massive deal.
OpenAI, which is valued at $500-billion, generated around $4.3-billion in revenue in the first half of 2025 and burned through $2.5-billion in cash, according to media reports.
As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for $0.01 each over the course of the chip deal. The warrant vests in tranches based on milestones that the two companies have agreed on.
The first tranche will vest after the initial shipment of MI450 chips set for the second half of 2026. The remaining milestones include specific AMD stock price targets that escalate to $600/share for the final instalment of stock to unlock.
In September, Nvidia announced a deal to supply OpenAI with at least 10GW worth of its systems.
In contrast with the start-up’s deal with AMD where it will take a stake in the chip maker, Nvidia will invest $100-billion in the ChatGPT parent under the terms of the agreement announced in September.
Taking a stake in AMD could give OpenAI “the power to potentially influence corporate strategy. With Nvidia, OpenAI is simply the client and not a part-owner,” said Dan Coatsworth, head of markets at AJ Bell.
OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips such as the MI300X. The San Francisco-based AI company has been taking a number of steps to ensure it has the chips needed for its future needs.
Altman has floated expectations of reaching 250GW of compute in total by 2033, The Information has reported. — Max A Cherney, with Deepa Seetharaman, Arsheeya Bajwa and Sukriti Gupta, (c) 2025 Reuters
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