AMD Stock Soars After OpenAI Deal, Up 43% This Week

Shares of Advanced Micro Devices (AMD) surged 11% on Wednesday, fueled by the momentum initiated earlier in the week after OpenAI publicly announced its intent to significantly ramp up procurement of AMD’s AI-focused hardware and related equipment. This move signals a potential shift in the AI landscape, challenging Nvidia’s dominant position.

The scope of the burgeoning partnership between OpenAI and AMD extends beyond simple product acquisition. Sources indicate that OpenAI may acquire a stake in AMD, potentially reaching 10% ownership, contingent on specific performance and partnership milestones. This substantial investment underscores OpenAI’s confidence in AMD’s technological roadmap and its long-term potential within the rapidly expanding AI infrastructure market.

The market’s response has been resounding. AMD’s market capitalization currently stands at $380 billion, reflecting gains of 4% on Tuesday and a remarkable 24% on Monday. The stock is on track for its most substantial weekly increase since April 2016, marking a critical moment in AMD’s competitive trajectory.

This strategic alliance directly challenges Nvidia, which has long maintained a strong relationship with OpenAI. Experts see this move as a proactive maneuver by OpenAI to diversify its supply chain and mitigate risks associated with relying on a single vendor for critical AI computing resources. Further, it could provide AMD with crucial real-world deployment validation and accelerate refinements of its AI chip architecture.

AMD CEO Lisa Su addressed reporters, emphasizing the “win-win” nature of the deal. Su reinforced that AMD’s current AI chip technology is ready for “at-scale deployments,” specifically targeting the massive data centers utilized by organizations such as OpenAI and leading cloud service providers. This highlights AMD’s commitment to providing comprehensive, scalable solutions to meet the escalating demands of AI workloads.

Nvidia CEO Jensen Huang, in response to the AMD-OpenAI collaboration, described the move as “surprising” during a CNBC Squawk Box segment. Huang commented on the implied pre-emptive relinquishment of equity, stating, “I’m surprised that they would give away 10% of the company before they even built it. And so anyhow, it’s clever, I guess.” Observers interpret Huang’s remarks as both a commentary on the perceived risk undertaken by OpenAI and a recognition of the growing competitive pressures Nvidia faces in the AI silicon market.