AMD Strikes Billion-Dollar AI Chip Deal with OpenAI

AMD secures a multi-year agreement with OpenAI to provide AI chips, promising tens of billions in annual revenue. This partnership highlights AMD's growing influence in AI technology, offering OpenAI a stake in a major Nvidia competitor. The deal is expected to greatly impact AMD's market performance.

AMD announced on Monday a landmark multi-year agreement to provide artificial intelligence chips to OpenAI, the creator of ChatGPT. The deal is poised to generate tens of billions in annual revenue and grants OpenAI an option to acquire nearly 10% of AMD, a major competitor to Nvidia.

Described as transformative for both AMD and the AI industry, the agreement is a significant endorsement of AMD's AI chips and software capabilities. Heidi Norrod, AMD's executive vice president, emphasized the deal's potential impact on the company and sector dynamics.

Pre-market trading saw AMD shares rise by over 23%, potentially hitting their highest since March 2024. The contract includes deploying hundreds of thousands of AMD GPUs, beginning in late 2026, with expected revenues surpassing $100 billion in the ensuing four years.

(With inputs from agencies.)