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
-
Don't Miss Out! A Quiz on Medicare Enrollment DeadlinesQuiz Test your basic knowledge of Medicare enrollment periods in our quick quiz.
-
IRS Updates 2026 Tax Deduction for People Age 65 and OlderTax Changes Adjustments to the extra standard deduction can impact the tax bills of millions of older adults. Here are some new amounts to know for 2026.
-
A 'Fast, Fair and Friendly' Fail: Farmers Irks Customers With Its Handling of a Data BreachFarmers Insurance is facing negative attention and lawsuits because of a three-month delay in notifying 1.1 million policyholders about a data breach. Here's what you can do if you're affected.
-
Serving the HNW Market: How Financial Advisers Can Break Through and Deliver Lasting ValueFinancial advisers have a significant opportunity to serve high-net-worth clients by elevating their capabilities, delivering comprehensive planning, building diverse teams and prioritizing family wealth education.
-
Don't Just Sell, Connect: How Financial Advisers Can Ignite Their Sales GrowthAvoid complacency and embrace small, consistent improvements to optimize your sales process and results.
-
Dow Adds 587 Points as Stocks Bounce: Stock Market TodayThe main indexes rebounded sharply Monday after President Trump took a calmer stance toward China.
-
Are You a Small Business Owner Buckling Under Economic Pressure? Here's How You Can CopeSignificant emotional and financial challenges, including tariff worries, are piling up on small business leaders. Here's how leaders can develop more healthy coping strategies and systems of support.
-
To Raise Prices or Not to Raise Prices: Tariff Tips for Small BusinessesSmall businesses are making critical decisions. Should they pass on higher costs due to tariffs, or would that only cost them more in lost customers?
-
Five Retirement Planning Traps You Can't Afford to Fall Into, From a Wealth AdviserTo help ensure you reach your savings goals and enjoy financial security in your golden years, be aware of these common pitfalls. The key is to be proactive, informed and flexible.
-
Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs InMany employer-sponsored plans offer limited investment options, which can stunt growth. But participants considering alternatives might need some sound advice to get the most from their accounts.
