AMD Partners with OpenAI to Rival Nvidia in AI Chips
▼ Summary
– AMD is partnering with OpenAI to provide six gigawatts of processors for AI data centers, challenging Nvidia’s market dominance.
– The five-year deal starts with deploying one gigawatt of AMD Instinct MI450 GPUs in late 2026 to support AI applications like ChatGPT.
– AMD expects the agreement to generate tens of billions in revenue, with its stock rising 24% after the announcement.
– OpenAI also has a pending deal with Nvidia for 10 gigawatts of AI data centers and up to $100 billion in investment.
– The AMD partnership includes an option for OpenAI to acquire up to 160 million AMD shares at a nominal price upon achieving milestones.
A major strategic alliance between AMD and OpenAI is set to reshape the competitive dynamics of the artificial intelligence chip market, directly challenging Nvidia’s established dominance. This five-year collaboration commits AMD to supply six gigawatts of processing capacity for OpenAI’s AI data centers. The initial phase will see a one gigawatt deployment of AMD’s high-performance Instinct MI450 GPUs, scheduled for the second half of 2026. This substantial infrastructure boost is designed to help OpenAI meet the escalating computational demands of its services, including the widely used ChatGPT.
The financial implications for AMD are significant, with the company projecting the agreement will generate tens of billions of dollars in revenue over its duration. Investor reaction was immediately positive, driving AMD’s stock price up by 24 percent in pre-market trading following the official announcement.
This new partnership arrives shortly after OpenAI disclosed a separate strategic arrangement with Nvidia. That earlier letter of intent outlined plans for OpenAI to deploy at least 10 gigawatts of AI data center capacity powered by Nvidia GPUs, a deal that could also involve an investment from Nvidia into OpenAI of up to $100 billion. The language used to describe the partnerships differs slightly; Nvidia was previously termed a “preferred strategic compute and networking partner,” while AMD is now designated a “core strategic compute partner.”
A notable component of the AMD deal includes an option for OpenAI to acquire up to 160 million AMD shares, representing an approximate ten percent stake in the company, for just one cent per share. This equity incentive is contingent upon OpenAI achieving specific, pre-determined performance milestones.
OpenAI’s CEO, Sam Altman, emphasized the importance of the collaboration, stating that it represents a critical move in assembling the computational power required to unlock AI’s complete capabilities. He highlighted that AMD’s leadership in high-performance chip technology will be instrumental in accelerating development and disseminating the advantages of sophisticated AI more rapidly.
These recent agreements with both AMD and Nvidia follow a significant shift in OpenAI’s exclusive partnership with Microsoft earlier this year. The January adjustment permitted OpenAI to forge compute power deals with other cloud providers. Furthermore, OpenAI and Microsoft are now progressing toward a new understanding, having announced a non-binding memorandum of understanding that could potentially pave the way for a future initial public offering by OpenAI.
Lisa Su, the CEO of AMD, expressed enthusiasm about the partnership, noting that it combines the strengths of both organizations to enable an unprecedented scale of AI computing. She described the collaboration as a win-win scenario that will fuel the world’s most ambitious AI infrastructure expansion and propel the entire AI ecosystem forward.
(Source: The Verge)
