OpenAI Eyes 10% Stake in AMD via AI Chip Deal

In a potentially transformative move for the artificial intelligence landscape, OpenAI and Advanced Micro Devices (AMD) have reportedly finalized an agreement that could see Sam Altman’s AI powerhouse acquire a substantial minority stake in the chipmaker. Sources familiar with the matter indicate that OpenAI is poised to take a 10% ownership position in AMD, sending ripples of excitement through the financial markets.

The news triggered a premarket surge in AMD’s stock, with shares soaring over 25% as investors digested the implications of the strategic alliance. This development underscores the intense demand for high-performance computing resources as AI models become increasingly sophisticated and data-intensive.

Under the terms of the deal, OpenAI is slated to deploy a staggering 6 gigawatts of AMD’s Instinct graphics processing units (GPUs) over the coming years, spanning multiple generations of hardware. The initial phase will involve a 1-gigawatt rollout of chips starting in the second half of 2026. This massive deployment highlights OpenAI’s commitment to securing a diverse and robust supply chain for its AI infrastructure.

A key component of the agreement involves AMD issuing OpenAI a warrant for up to 160 million shares of AMD common stock. The vesting of these shares is contingent upon meeting specific milestones related to both the volume of deployed chips and AMD’s stock performance. This structure aligns the incentives of both companies, ensuring a mutually beneficial partnership.

The warrant will vest in tranches, with the first tranche unlocking upon the initial deployment of a full gigawatt of GPUs. Subsequent tranches will become available as OpenAI scales its deployment to 6 gigawatts and achieves critical technical and commercial milestones necessary for large-scale AI infrastructure.

If OpenAI fully exercises the warrant, it could acquire approximately 10% ownership in AMD, based on the current number of outstanding shares. While the ChatGPT maker has acknowledged the multi-billion dollar value of the deal, a specific dollar amount has not been disclosed, leaving analysts to speculate on the full financial scope of the transaction.

“AMD’s leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster,” stated Altman in a press release announcing the collaboration. This strategic alignment positions AMD as a critical partner for OpenAI, solidifying its role as a key player in the AI ecosystem.

This partnership could also alleviate concerns surrounding supply chain constraints within the AI sector. By diversifying its procurement strategies, OpenAI can mitigate potential disruptions and ensure a consistent supply of cutting-edge hardware. Furthermore, the AMD deal could reduce OpenAI’s reliance on any single vendor, enabling greater flexibility and negotiating power in the long run.

It’s worth noting that OpenAI recently unveiled a landmark $100 billion agreement with Nvidia, which combined capital investment with long-term hardware supply, with Nvidia taking an ownership stake in OpenAI, further highlighting the intertwined relationships shaping the AI landscape.

The announcement of the OpenAI-AMD deal had an immediate impact on Nvidia’s stock, with shares falling 1% in premarket trading. This market reaction reflects the growing competition among chipmakers vying for dominance in the burgeoning AI market.

To put this in perspective, the Nvidia deal accounts for a dedicated 10-gigawatt portion of OpenAI’s broader 23-gigawatt infrastructure roadmap. With estimated construction costs of $50 billion per gigawatt, combined with the expenses associated with the AMD partnership, OpenAI has committed an impressive $1 trillion in new buildout spending in just the past two weeks. This unprecedented level of investment signals OpenAI’s ambitious vision for the future of AI and its relentless pursuit of transformative technologies.

In addition to its partnerships with AMD and Nvidia, OpenAI is reportedly engaging in discussions with Broadcom to develop custom chips tailored to its next generation of AI models. This diversification of suppliers demonstrates OpenAI’s commitment to optimizing its AI infrastructure for maximum performance and efficiency.

The evolving relationship between OpenAI and its suppliers illustrates the interconnected nature of the AI economy, where capital, equity, and compute resources are exchanged among a select group of companies. This dynamic creates both opportunities for collaboration and potential risks associated with over-reliance on a limited number of players.

In this intricate ecosystem, Nvidia provides capital to facilitate chip purchases, Oracle assists in building the necessary infrastructure, AMD and Broadcom serve as key suppliers, and OpenAI acts as the primary demand driver. This tightly coupled circular economy raises concerns among analysts about the potential vulnerabilities that may arise if any component of the chain experiences disruption.

For AMD, this partnership represents a pivotal moment, both as a commercial success and as validation of its next-generation Instinct product roadmap. After being overshadowed by Nvidia in the AI accelerator market for years, AMD has now secured a flagship customer at the forefront of the generative AI revolution.

AMD CEO Lisa Su emphasized the mutually beneficial nature of the deal, stating that it creates “a true win-win enabling the world’s most ambitious AI buildout and advancing the entire AI ecosystem.” This partnership not only strengthens AMD’s position in the market but also reinforces OpenAI’s ambitious infrastructure plans.

Through its Stargate project, OpenAI is rapidly evolving into one of the most assertive infrastructure developers in the AI domain. The initial site in Abilene, Texas, is already operational, utilizing Nvidia chips, and expansion efforts are underway to further increase capacity. These developments underscore OpenAI’s ambition to build a robust and scalable AI infrastructure capable of supporting its growing portfolio of AI-powered applications.

Upcoming builds in New Mexico, Ohio, and the Midwest are expected to integrate a mix of suppliers, including AMD, indicating OpenAI’s commitment to a diversified and resilient supply chain.