SAN FRANCISCO – Advanced Micro Devices (AMD) landed a blockbuster deal with ChatGPT maker OpenAI to build artificial intelligence (AI) infrastructure, giving the chipmaker a chance to show it can mount a challenge to Nvidia in the AI computing industry.
AMD shares soared 24 per cent to US$203.71 after the agreement was announced on Oct 6, adding US$63.4 billion to the company’s market valuation. It is now worth US$330.6 billion (S$427 billion), more than Coca-Cola, General Electric or Chevron.
The news also sent the Nasdaq and the S&P 500 to record closing highs on Oct 6, even as the US government shutdown extended through its sixth day.
OpenAI will deploy 6 gigawatts’ worth of AMD graphics processing units over multiple years, according to the pact, which is just over half the size of a recent deal OpenAI reached with Nvidia. It also sets the stage for the AI start-up to acquire a large stake in AMD.
The deal represents a high-stakes test for AMD – one that could deliver tens of billions of dollars in new revenue and burnish its status as a serious contender in AI technology. There are also risks: It further ties AMD’s prosperity to an AI market that some worry is in a bubble.
“This is certainly the largest deployment we have announced so far,” AMD chief executive officer Lisa Su told Bloomberg Television. “Now we’re embarking on a massive build-out. It’s a big deal for us, for our shareholders and our teams.”
As part of the accord, OpenAI will have the ability to buy as many as 160 million shares of AMD at one US cent apiece, depending on the project hitting certain milestones. This is about 10 per cent of the chipmaker’s outstanding stock.
The targets require AMD’s share price to continue to increase in value. At the final level of the agreement, the stock would have to reach a price of US$600.
The chipmaker wanted to make sure “OpenAI would be motivated for AMD to be successful”, Ms Su said on a conference call. “And the more OpenAI deploys, the more revenue we get, and they get to share in the upside.”
The agreement is the latest huge data centre deal for OpenAI as it builds out more computing capacity – an unprecedented bet by the technology industry that runaway demand for power-hungry AI tools will continue unabated.
In September, Nvidia said it would invest up to US$100 billion in OpenAI to build AI infrastructure and new data centres with a capacity of at least 10 gigawatts of power. That is equal to the peak electricity demand of New York City.
It is unclear how exactly OpenAI will finance the enormous costs associated with the chips and data centres needed to build and run more advanced AI systems. Two months ago, OpenAI CEO Sam Altman said he wants to spend “trillions” on infrastructure to secure the computing resources he thinks the company needs for AI services. To bankroll that, his company is working to devise a “new kind” of financial instrument, he said, without providing details.
On Bloomberg Television, OpenAI president Greg Brockman was asked how his company would fund its massive projects. He said the start-up is pursuing a number of different options, including debt and equity. There is a widespread underestimation of the amount of computing required for AI, he said. Without more infrastructure, OpenAI is constrained in the new features and products it can launch.
“We look at equity and debt and all kinds of ways to pay for it,” he said in the interview. “The revenue will eventually be there.”
Meanwhile, there is concern that the AI industry could suffer a fate similar to the dot.com craze of the late 1990s, which ended in a spectacular crash and a wave of bankruptcies. The fears have only grown as multibillion-dollar AI chip and data centre deals proliferate globally. The financing is coming from venture capital, debt and, lately, some more unconventional arrangements that have raised eyebrows on Wall Street.
For AMD, the deal keeps its technology in the mix as OpenAI and other owners of large-scale data centres funnel billions towards expanding AI capacity. The chipmaker remains a distant second to Nvidia in the market for so-called accelerator processors.
AMD’s revenue from this area is projected to reach US$6.55 billion in 2025. It expects the tie-up with OpenAI to add to these sales in 2026 and accelerate in 2027. The deal also is going to provide a springboard to greater adoption of its technology that could take its revenue from the area to above US$100 billion, executives said, without specifying a timeframe.
It was not immediately clear exactly what the pace of OpenAI’s chip deployments will look like as part of the AMD deal. Ms Su said on the call on Oct 6 that the idea is to deploy products as soon as possible. She pointed to the fact that the stock warrant structure is set up to run over the course of five years, until Oct 5, 2030.
The AMD commitment may help OpenAI decrease the reliance on Nvidia’s technology. OpenAI and data centre operators spend a huge portion of their infrastructure budgets on products from Nvidia.
Nvidia’s data centre division alone has more revenue than any other chipmaker has in total. In its latest financial year, the unit more than doubled to US$115 billion in sales and is on course to show similar growth in the current period.
Bernstein analyst Stacy Rasgon said it was not previously clear if AMD customers were just placing orders to gain negotiating leverage with Nvidia and others. The OpenAI deal might be large enough to show that is changing, he said. “But we will watch to see if it does spark more legitimate interest from other sizeable customers.”
AMD, like other companies tied to the AI infrastructure build-out, is now dependent on OpenAI’s huge plans coming to fruition, Mr Rasgon said. For a long time, Mr Altman has had the power to either crash the economy or “take us to the promised land”, the analysts said. “Right now we don’t know which is in the cards.”
AMD spent much of its life as a challenger to Intel in the market for personal computer and server processors. It has won away some customers from Intel under Ms Su, and AMD’s push into AI chips has further enamoured the company with investors. Even before the rally on Oct 6, the shares had gained 36 per cent in 2025.
Chief financial officer Jean Hu said the OpenAI agreement would boost AMD’s earnings per share, with “tens of billions of dollars in revenue for AMD”.
Under the agreement, OpenAI’s AMD stock warrants will vest when the first gigawatt of computing is deployed – a roll-out that will start in the second half of next year. Those computers will be based on AMD Instinct MI450 chips. Additional portions will vest as further hardware is put in place.
Nvidia, the world’s largest publicly traded company, pioneered the market for graphics processors, a type of chip that has become the basis of processors used to train and run AI software. The company has made the industry more reliant on its technology with additional software, computing and networking equipment – all designed to make it easy to quickly deploy large amounts of data centre infrastructure.
AMD is rapidly adding capabilities as it aims to match Nvidia’s breadth of offerings and help it play a broader role.
“This is a huge pie,” Ms Su said on Bloomberg TV. “As much as we love to work with OpenAI, we are working with a lot of other customers as well.” BLOOMBERG