Advanced Micro Devices just became the AI player to watch.
AMD surged 23.71% today after announcing a blockbuster deal with OpenAI that could lead to the ChatGPT creator owning 10% of the semiconductor company.
The not-so-micro deal: AMD will supply OpenAI with 6 gigawatts of computing power from AMD’s chips, with the first gigawatt being deployed in the first half of 2026. In return, AMD has handed OpenAI a warrant for up to 160 million shares of its common stock (or 10% of the company’s outstanding shares) at the price of a penny per share.
But OpenAI only wins that major moneybag if specific performance milestones are met—for example, the final tranche of shares vest if AMD’s share price rises above $600, a far cry from today’s closing price of $203.71.
For OpenAI, bringing on AMD as a new ally diversifies its AI infrastructure supply chain away from Nvidia. The company has plans to roll out 23 gigawatts in AI data center power over the next few years, which is why it just signed a $100 billion agreement with Nvidia last month for 10 gigawatts.
And for AMD, this win isn’t just about more revenue or big share price gains—being plucked from the pack by OpenAI is a signal to investors that the top dog in the AI game sees AMD as a long-term winner.
“Any lingering fears around AMD should now be thrown out the window as this gives them a major platform to monetize the AI Revolution,” explained Wedbush analyst Dan Ives in a note this morning. That’s bad news for Nvidia, which sank 1.12% today.
Chip mania can’t stop, won’t stop
Big Tech is pouring more cash into AI than the human mind can fully comprehend, and even AI bulls are starting to fear a bubble is forming. At a conference in Turin last week, both Amazon founder Jeff Bezos and Goldman Sachs CEO David Solomon warned that AI equities are overdue for a serious pullback—but maintained they’re still bulls on the AI market long-term.
To AI evangelists, however, froth is the least of their concerns: “While the bears will fret about valuations and have been skeptical of the historical tech rally, we stress that if you focus solely on valuation looking out a year with P/E.....you would have missed every transformational growth tech stock the last 20 years,” wrote Ives.—LB
Making sense of market moves
Stay up to date on the latest market news with daily analysis of the investing landscape, served up Brew-style.