Any questions about the durability of the AI revolution can be set aside for today after Advanced Micro Devices (AMD) and ChatGPT operator OpenAI announced a deal to collaborate on the construction of AI data centers to be run on AMD chips.
AMD stock soared as much as 37.6% Monday, and semiconductor stocks, as represented by the iShares Semiconductor ETF (SOXX), were up nearly 4%. Nvidia (NVDA) was down more than 1%, its dominant position in the ongoing AI infrastructure buildout somewhat undermined.
AMD CEO Dr. Lisa Su said in a statement that the agreement will support "the world's most ambitious AI buildout." OpenAI CEO Sam Altman said the partnership with AMD "is a major step in building the compute capacity needed to realize AI's full potential."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
According to terms of a strategic partnership announced by both parties, OpenAI will buy 6 gigawatts' worth of AMD chips, beginning with AMD's next-generation MI450 processor set for deployment in the second half of 2026.
The companies did not provide an estimated total value for the agreement, though Dr. Su said in an interview with The Wall Street Journal that the deal will generate tens of billions of dollars in new revenue for AMD over the next five years.
Advanced Micro Devices has also granted OpenAI a warrant for as many as 160 million AMD shares, approximately 10% of its outstanding stock, at a price of 1 cent per share. Vesting is tied to a rising AMD share price.
As Dr. Su explained, "OpenAI actually has to do a lot of work to make sure our deployments are successful. We wanted to make sure they were motivated in the sense that OpenAI would be motivated for AMD to be successful."
AMD CFO Jean Hu said the agreement "is expected to be highly accretive to AMD's non-GAAP earnings-per-share." AMD stock had already risen more than 36% for the year to date through the closing bell on Friday, October 3.
"We are in a phase of the build-out where the entire industry's got to come together and everybody's going to do super well," Altman said. "You'll see this on chips. You'll see this on data centers. You'll see this lower down the supply chain."
"The AI narrative continues to gain momentum," said Louis Navellier of Navellier & Associates. "This gives some competition for NVIDIA, which currently dominates AI chips, and accelerates the timeline for data center buildouts. "
Related Content
-
Dow Dives 797 Points as Government Opens: Stock Market TodayThe process of pricing and re-pricing realities old and new never stops, and next week promises to be at least as exciting as this week.
-
3 Ways High-Income Earners Can Maximize Their Charitable Donations in 2025Tax Deductions New charitable giving tax rules will soon lower your deduction for donations to charity — here’s what you should do now.
-
Dow Dives 797 Points as Government Opens: Stock Market Today
The process of pricing and re-pricing realities old and new never stops, and next week promises to be at least as exciting as this week.
-
5 Core Stocks Every Investor Should Own In 2026 and BeyondCore stocks are solid, long-term investments that provide stable returns and steady growth within your portfolio. Here are five we like.
-
How to Calm Your Retirement Nerves When It's Time to Shift from Savings Mode to Spending ModeTransitioning from saving to spending in retirement can be tricky, but devising a strategic plan can help ensure a smooth and worry-free retirement.
-
Why Wills and Trusts Aren't Enough in the Great Wealth Transfer, From an Attorney Who KnowsFamilies need to prepare heirs through communication and financial know-how, or all that money could end up causing confusion, conflict and costly mistakes.
-
Private Markets for Main Street: What Financial Advisers' Clients Need to KnowWith product innovation 'democratizing' private market access for everyday investors, advisers must step up their game to educate clients on the pros and cons.
-
Dow Climbs 327 Points, Crosses 48,000: Stock Market TodayMarkets are pricing the end of the longest government shutdown in history – and another solid set of quarterly earnings.
-
The Best Homebuilder ETFs to BuyThe best homebuilder ETFs give investors efficient exposure to growth-oriented real estate assets.
-
Seven Practical Steps to Kick Off Your 2026 Financial PlanningIt's time to stop chasing net worth and start chasing real worth. Here's how to craft a plan that supports your well-being today and in the future.
