AMD stock rockets as ChatGPT creator secures alternative to Nvidia dominance
Advanced Micro Devices has scored a landmark deal with OpenAI to supply 6 gigawatts of AI computing power across multiple hardware generations. The announcement sent shockwaves through Wall Street on 6th October 2025.
AMD shares surged 24% to $203.71, adding approximately $97 billion to the company’s market value in a single trading session. The chipmaker’s total valuation now stands at roughly $507 billion, exceeding household names like Coca-Cola and General Electric.
OpenAI AMD Partnership Reshapes Computing Landscape
The multi-year agreement marks a pivotal shift in AI infrastructure development. OpenAI will begin deploying 1 gigawatt of AMD Instinct MI450 GPUs in the second half of 2026, with capacity expanding to 6 gigawatts over subsequent years.
Today, we’re announcing a multi-year, multi generation strategic partnership with @OpenAI that puts AMD compute at the center of the global AI infrastructure buildout.
✅ 6GW of AI infrastructure
✅ Initial 1GW deployment of AMD Instinct MI450 series GPU capacity beginning 2H… pic.twitter.com/AVRgSePB0m— AMD (@AMD) October 6, 2025
Sam Altman, OpenAI’s co-founder and CEO, called the partnership “a major step in building the compute capacity needed to realise AI’s full potential.”
Key details of the OpenAI collaboration with AMD for AI infrastructure include:
- Performance-based equity: AMD issued OpenAI a warrant for up to 160 million shares, potentially giving the ChatGPT creator roughly 10% ownership
- Revenue impact: AMD executives expect the deal to generate tens of billions of dollars in annual revenue
- Technology focus: Deployment begins with AMD Instinct MI450 series chips and extends to future generations
- Timeline: First revenue recognition expected from H2 2026
Why This Deal Matters for OpenAI Next-Generation AI Processors
The agreement arrives at a crucial moment for OpenAI’s infrastructure ambitions. Through its Stargate project, the company has committed approximately $1.5 trillion in buildout spending over the past two weeks.
OpenAI recently signed a $154 billion equity-and-supply agreement with Nvidia, cementing multiple chip partnerships. However, the AMD deal offers strategic advantages:
- Supply chain diversification: Reducing dependence on single vendors mitigates bottleneck risks in the rapidly expanding AI sector.
- Pricing leverage: Multiple suppliers provide negotiating power for future procurement.
- Strategic alignment: Unlike the Nvidia arrangement, where the chip giant took an ownership stake in OpenAI, the AMD structure allows OpenAI to acquire equity in the chipmaker.
Market Reaction and Analyst Perspectives
Wall Street responded enthusiastically to the announcement. UBS raised its AMD price target to $265 from $210 while maintaining a Buy rating. Jefferies upgraded AMD to Buy from Hold, lifting the price target to $300 from $170.
Daniel Ives from Wedbush Securities declared, “With a 10% stake in AMD, this quickly brings Lisa Su and AMD right into the core of the AI chip spending cycle. Any lingering fears around AMD should now be thrown out the window.“
Nvidia shares dipped slightly following the announcement, falling 1% as investors digested the increased competition.
AMD Stock Price
Technical Validation for AMD’s AI Strategy
OpenAI has worked with AMD for years, providing input on previous generations like the MI300X chip design. This long-standing collaboration has now evolved into a strategic partnership.
Dr. Lisa Su, AMD’s chair and CEO, emphasised: “This partnership brings the best of AMD and OpenAI together to create a true win-win, enabling the world’s most ambitious AI buildout.”
AMD’s AI-related revenue is expected to reach approximately $10 billion in 2025, a fraction of Nvidia’s $177 billion data center division sales. However, this deal positions AMD to capture significant market share.
OpenAI’s Trillion-Dollar Infrastructure Push
The AMD partnership represents just one piece of OpenAI’s aggressive hardware strategy. Recent moves include:
- Memory chips: Agreements with Samsung and SK Hynix for DRAM supply and South Korean data center development
- Custom silicon: Partnership with Broadcom to develop proprietary AI chips
- Cloud infrastructure: Previous $462 billion agreement with Oracle for cloud equipment
Sam Altman has projected expectations of reaching 250 gigawatts of compute by 2033, underscoring the massive scale of OpenAI’s infrastructure ambitions.
Investor Outlook: What This Means
For AMD, this agreement validates years of AI chip investment and narrows the competitive gap with Nvidia. Melius analyst Ben Reitzes called the deal “about five times better” than expected.
The performance-based warrant structure aligns both companies’ interests. Vesting is tied to deployment milestones and AMD achieving specific share price targets, with the final tranche unlocking at $600 per share.
However, questions remain about OpenAI’s funding capacity. The company generated approximately $6.6 billion in revenue during the first half of 2025 while burning through $3.8 billion in cash.
The Bigger Picture
This deal underscores the AI industry’s insatiable appetite for computing power. As companies race toward artificial general intelligence, massive infrastructure investments have become the price of entry.
For AMD, it’s a transformative validation. For OpenAI, it’s another chess piece in building the world’s most advanced AI infrastructure. And for the broader tech sector, it signals that the AI computing wars are intensifying beyond a single-vendor market.
The real test begins in 2026 when the first AMD chips go online in OpenAI data centres.
Also Read: Rio Tinto Doubles Down on Pilbara Iron Future with $1.1 Billion West Angelas Bet
FAQs
Q: How much is the OpenAI AMD partnership worth?
A: The deal is expected to generate tens of billions of dollars in annual revenue for AMD over multiple years.
Q: When will OpenAI start using AMD chips?
A: The first 1 gigawatt deployment of AMD Instinct MI450 GPUs is scheduled for the second half of 2026.
Q: Can OpenAI acquire a stake in AMD?
A: Yes, AMD issued OpenAI a warrant for up to 160 million shares, potentially representing roughly 10% ownership if fully exercised.
Q: Does this affect OpenAI’s Nvidia partnership?
A: Sam Altman confirmed the AMD deal is “incremental” to OpenAI’s work with Nvidia, and the company plans to increase Nvidia purchasing over time.
Q: Why did AMD stock surge?
A: The partnership validates AMD’s AI chip strategy and positions the company as a core strategic supplier to one of the world’s leading AI companies.
