For what has felt like an eternity in the fast-moving world of technology, Nvidia has been the undisputed king of artificial intelligence. The company’s stock has soared, its valuation has skyrocketed, and its name has become synonymous with the AI revolution.
But on Monday, the monolithic giant felt a tremor as a formidable rival, Advanced Micro Devices (AMD), announced a groundbreaking partnership with OpenAI, sending shockwaves through Wall Street and signalling that the race for AI dominance is far from over.
The Technology Fuelling the Boom
Nvidia’s shares have surged by over 48 per cent in the last year, a direct result of its commanding position in the hottest business segment on the planet: artificial intelligence. The company’s core business lies in a particularly crucial area of AI. It is the leading manufacturer of graphic processing units (GPUs), the chips that have become the engine of modern AI development.
Originally designed for rendering graphics in devices like smartphones and computers, GPUs excel as AI accelerators. Their power lies in parallel processing, a method where thousands of cores perform calculations simultaneously across vast amounts of data.
This architecture is perfectly suited for the complex matrix multiplication and large-scale computations required by AI models. A traditional Central Processing Unit (CPU), by contrast, processes data sequentially, moving from one task to the next. While effective for general computing, this linear approach is far less efficient for the demanding workloads of AI.
A New Alliance Is Forged
The market’s confidence in Nvidia’s unassailable position was shaken on Monday morning. Its shares declined by as much as 2.3 per cent, or $4.39, to $183.33 after AMD announced its colossal multibillion-dollar deal with OpenAI, the trailblazing research lab behind ChatGPT. The news signalled a potential shift in the landscape, threatening to eat into Nvidia’s dominant market share.
In stark contrast, AMD’s shares soared by an incredible 27.6 per cent, or $45.45, to $210.12. The catalyst for this surge was the revelation that OpenAI plans to deploy a staggering 6 gigawatts of AMD’s Instinct GPUs, a hardware arsenal powerful enough to train the next generation of sophisticated AI models. This strategic, multi-year partnership is seen as a deliberate move by OpenAI to diversify its hardware supply chain and reduce its heavy reliance on a single provider. For AMD, it represents a monumental opportunity to cement its status as a top-tier competitor in the lucrative AI accelerator market.
The Stakes Could Not Be Higher
As part of the landmark transaction, OpenAI will receive a warrant giving it the right to purchase as much as 160 million AMD shares for a mere 1 cent apiece. If fully exercised, OpenAI would acquire a 10 per cent stake in AMD for only $1.6 million. To put this in perspective, AMD currently boasts a market valuation of $342.7 billion, making this an exceptionally favourable deal for the AI pioneer. For comparison, Nvidia remains the most valuable publicly traded US stock, with a colossal valuation of $4.5 trillion.
While everybody is talking about what $AMD can be, most people forget the elephant in the room.
Nvidia is still valued low compared to AMD, and their stand in the GPU market is absolutely incontestable.
They are already expanding into CPUs, trying to contest AMD’s… pic.twitter.com/zFgoZ7FN6F
— The Analyst (@MMatters22596) October 6, 2025
While Nvidia’s shares did rebound slightly from their initial dip, closing the day down only 0.81 per cent, or $1.51, at $186.10, as the primary source PhoneArena reported, the threat is clear. The AI chip arena is becoming fiercely competitive. It is not just AMD challenging the throne; other technology titans, including Google and Amazon, have also been actively designing their own bespoke AI chips, signalling that the hardware foundation of the future is still very much being built.
The AI hardware race is intensifying, with market fortunes shifting in an instant. For cutting-edge insights and up-to-the-minute coverage of the tech and financial sectors, tune in to the IB Times UK and never miss a beat.