#AMD

AMD CEO Lisa Su defended Big Tech’s AI investments as calculated moves, not gambles, leading to a 10% surge in AMD shares. She cited increased capital expenditures from hyperscalers due to AI reaching an “inflection point.” While acknowledging concerns of an AI bubble, fueled by short-seller Michael Burry’s stance and Softbank’s Nvidia stake sale, Su remained confident in AMD’s growth, projecting 35% annual revenue growth driven by “insatiable” AI chip demand and aiming for a double-digit market share in data center AI chips.

AMD projects 35% annual revenue growth over the next 3-5 years, driven by an 80% annual expansion in its AI data center business, potentially reaching tens of billions in sales by 2027. The company aims for a double-digit share in the data center AI chip market, challenging Nvidia’s dominance. AMD is partnering with OpenAI to supply Instinct AI chips. The total addressable market for AI data centers is estimated to reach $1 trillion by 2030. Despite the AI focus, AMD’s legacy businesses are also experiencing growth.

AMD’s Q3 results exceeded expectations with $9.25B revenue and $1.20 adjusted EPS. Revenue grew 36% YoY, driven by strong performance across key segments. Q4 revenue is projected at $9.6B, up 25% YoY, with a 54.5% gross margin. The company’s guidance excludes Instinct MI308 chip revenue to China. Strategic partnerships with OpenAI and Oracle, and Amazon’s sale of AMD shares highlight key developments. The company’s success in AI and other key areas intensifies its rivalry with Nvidia.

AMD shares surged after reports that IBM successfully used AMD’s FPGAs to run a quantum error correction algorithm. IBM confirmed the development, considering it a milestone in their aim to build a large-scale quantum computer by 2029. The breakthrough simplifies quantum computing by using conventional chips, potentially reducing costs. The news also boosted IBM’s stock and other quantum computing companies like D-Wave, Rigetti, and IonQ. This highlights the advancements in heterogeneous computing for quantum applications.

Oracle Cloud Infrastructure will deploy 50,000 AMD GPUs by late 2026, intensifying competition in cloud AI. AMD shares rose slightly on the news, while Oracle and Nvidia dipped. This reflects a trend of cloud providers diversifying GPU options beyond Nvidia, especially for AI inferencing. The partnership utilizes AMD’s Instinct MI450 chips for scalable AI computation. OpenAI is expanding its AMD infrastructure with a multi-year deal, potentially acquiring AMD shares. They also signed a $300 billion cloud agreement with Oracle, showing broader investment in diverse computing resources.

AMD’s stock surged following OpenAI’s announcement of increased procurement of AMD’s AI hardware, signaling a challenge to Nvidia’s dominance. OpenAI may acquire up to a 10% stake in AMD based on performance milestones. AMD’s market cap is $380 billion, marking its best weekly gain since 2016. AMD CEO Lisa Su emphasized the scalable nature of its AI chips. Nvidia CEO Jensen Huang described OpenAI’s potential equity stake in AMD as “surprising”, acknowledging increased competition.

AMD is challenging Nvidia’s AI chip dominance with a potentially multi-billion dollar GPU deal with OpenAI. This partnership aims to diversify OpenAI’s supplier base and mitigate antitrust concerns surrounding Nvidia’s 90% market share. AMD’s stock surged following the announcement, reflecting investor confidence. The deal is expected to generate significant revenue for AMD and positions the company as a stronger competitor in the AI hardware market, attracting regulatory attention amid concerns about market concentration and potential tariffs.

Nvidia CEO Jensen Huang expressed surprise at AMD’s strategy to grant OpenAI warrants representing a 10% stake in exchange for a multi-year purchase commitment of 6 gigawatts of AMD’s computing power. Huang highlighted the unconventional nature of the deal, contrasting it with Nvidia’s plan to invest $100 billion directly into OpenAI. He emphasized Nvidia’s ability to sell directly to OpenAI and noted OpenAI will need to raise capital to fund the Nvidia deal.

OpenAI and AMD have reportedly finalized a deal where OpenAI will take a 10% stake in AMD, driving AMD’s stock up. OpenAI plans to deploy 6 gigawatts of AMD’s GPUs, starting with 1 gigawatt in 2026. AMD will issue OpenAI a warrant for 160 million shares, vesting upon achievement of deployment and performance milestones. This partnership aims to alleviate supply chain concerns and diversify OpenAI’s hardware sources. This deal, alongside existing agreements with Nvidia, signifies OpenAI’s massive $1 trillion investment in AI infrastructure. Analysts highlight the interconnectedness and potential vulnerabilities within this AI supply chain.

Intel and AMD are reportedly in early talks regarding AMD potentially using Intel’s foundry services. This news boosted Intel’s shares by 7%. Securing AMD as a client would be a major win for Intel, validating its foundry strategy and attracting further investment. It would also signify significant trust from AMD, a direct competitor in the processor market. Diversifying to Intel could improve AMD’s supply chain. Intel’s foundry ambitions are supported by government and Nvidia investments as signals of confidence in Intel’s turnaround, boosting its shares nearly 77% year-to-date. Both companies declined to comment.