AMD Shares Surge 36% on OpenAI Deal, Set to Generate Billions
AMD shares surged over 36% in pre-market trading on Monday, following a multi-year deal with AI giant OpenAI. The agreement, expected to generate double-digit billion-dollar revenues annually for AMD, has been hailed as 'transformative' by AMD executives.
OpenAI CEO Sam Altman confirmed that the deal will enable the company to build sufficient AI infrastructure to meet its growing demands. This involves the construction of a one-gigawatt facility based on AMD's upcoming MI450 chip generation as early as next year. The facility will be equipped with hundreds of thousands of AI chips (GPUs) from AMD, with deliveries set to begin in the second half of 2026.
In addition to the chip supply, OpenAI has acquired options to purchase up to 160 million AMD shares, potentially giving it a 10% stake in the company. This option will be exercised in tranches based on agreed milestones. The deal has sparked a significant response in the market, with AMD shares surging while competitors Nvidia's and Broadcom's shares fell by 2% and 3% respectively. This marks a strategic expansion for OpenAI, which previously invested up to $100 billion with Nvidia and partnered with Broadcom for in-house chip development.
The deal between AMD and OpenAI is set to reshape the AI landscape, with AMD expecting over $100 billion in additional revenues from OpenAI and other customers over four years. OpenAI, meanwhile, secures the AI infrastructure it needs to drive its innovations forward.
