Advanced Micro Devices (AMD) has agreed to a multi-billion-dollar partnership to supply its artificial intelligence chips to OpenAI.
The multi-year deal, announced on Monday, October 6, is expected to bring in tens of billions of dollars in annual revenue and provide the tech giant the option to buy up to roughly 10% of the chipmaker.
Furthermore, the agreement will see OpenAI deploy 6 gigawatts of AMD GPUs, with the first 1 gigawatt deployment set to begin in the second half of 2026.
"This partnership is a major step in building the compute capacity needed to realise AI's full potential," said Sam Altman, cofounder and CEO of OpenAI.
The move provides a significant boost to AMD against its most formidable rival, Nvidia, which is the dominant player in the AI chip market.
Discussing the deal with Reuters, AMD executive vice president Forrest Norrod noted, "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry."
Shares of AMD jumped more than 23% in premarket trading, putting them on track to open at their highest level since March 2024, if gains hold.
The deal with AMD will help OpenAI build enough AI infrastructure to meet its needs, OpenAI CEO Sam Altman said in a statement.
Analysts, on average, estimate AMD will generate revenue of $32.78 billion this year, according to LSEG data.
As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chips deal.
