AMD stock skyrockets 25% as OpenAI looks to take stake through AI chip deal

In a groundbreaking development, OpenAI is poised to acquire a 10% stake in Advanced Micro Devices (AMD), sending AMD's stock soaring by over 25% in premarket trading on Monday. The partnership will see OpenAI deploy a substantial 6 gigawatts of AMD's Instinct graphics processing units over several years, with an initial rollout of 1 gigawatt scheduled for the latter half of 2026. An exciting live discussion featuring OpenAI President Greg Brockman and AMD CEO Lisa Su is set to air at 9 a.m. ET on CNBC TV, where they will delve into the details of their collaboration. As part of this agreement, AMD has granted OpenAI a warrant for up to 160 million shares of its common stock, contingent upon specific deployment milestones and AMD's stock performance. The first shares will vest with the initial gigawatt deployment, while further shares will become available as OpenAI progresses to the full 6-gigawatt plan, meeting crucial technical and commercial benchmarks. This stake could potentially give OpenAI about 10% ownership in AMD, based on current share counts. Although OpenAI has hinted that the deal represents billions in value, they have not disclosed an exact figure. Sam Altman, CEO of OpenAI, emphasized the significance of the partnership in a statement: "AMD's leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster." This collaboration marks a pivotal moment for AMD, establishing it as a key strategic ally to OpenAI and representing one of the most significant GPU deployment agreements in the AI sector to date. Moreover, this partnership could help alleviate supply chain pressures across the industry and lessen OpenAI's dependence on any single supplier. Just weeks prior, OpenAI had announced a monumental $100 billion equity-and-supply agreement with Nvidia, reinforcing Nvidia's critical role in supporting OpenAI's upcoming models. Following this latest news, Nvidia's stock experienced a slight decline of 1% in premarket trading. OpenAI's ambitious infrastructure roadmap now outlines a dedicated 10-gigawatt segment, contributing to an estimated $1 trillion investment in new construction costs over the past fortnight. In addition to its collaboration with AMD, OpenAI is reportedly in discussions with Broadcom to develop custom chips for future models. This partnership adds a new dimension to the interconnected corporate landscape of AI, where capital, equity, and computational power are exchanged among a select group of companies driving the technology forward. As AMD establishes itself as a leading supplier, the partnership signals a significant step in its journey towards competing with Nvidia in the AI accelerator market. Lisa Su, AMD's CEO, remarked on the deal's potential: "It creates a true win-win enabling the world's most ambitious AI buildout and advancing the entire AI ecosystem." OpenAI is rapidly emerging as a formidable player in infrastructure development, with its first operational site in Abilene, Texas, already utilizing Nvidia chips, while plans for additional facilities in New Mexico, Ohio, and the Midwest are underway, incorporating a diverse array of suppliers, including AMD.