AMD has signed a significant deal with OpenAI to supply artificial intelligence chips in a multi-year agreement worth tens of billions of dollars. This partnership will see AMD delivering hundreds of thousands of its AI chips, equivalent to six gigawatts, over several years starting from the second half of 2026. To put this into perspective, six gigawatts is roughly equivalent to the energy needs of 5 million US households or the electricity produced by the Hoover Dam three times over.
The agreement includes OpenAI building a one-gigawatt facility based on AMD's forthcoming MI450 series of chips beginning next year. AMD expects this deal to net tens of billions of dollars in annual revenue and over $100 billion in new revenue over four years from OpenAI and other customers. As part of the arrangement, AMD has issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chips deal.
This warrant vests in tranches based on milestones, including specific AMD stock price targets that escalate to $600 a share for the final installment of stock to unlock. OpenAI's stake will also be directly tied to increasing AMD's stock price milestones. The partnership is seen as transformative not just for AMD but for the dynamics of the industry, challenging Nvidia's dominance in the AI chip market.
AMD's shares surged more than 34% to touch a more than one-year high of $226.71, adding $80 billion to its market capitalization. OpenAI CEO Sam Altman stated that the deal will help OpenAI build enough AI infrastructure to meet its needs. Despite this partnership, OpenAI will continue to work with Nvidia and Broadcom on other chip projects, maintaining a close partnership with Microsoft.
