SANTA CLARA: Advanced Micro Devices Inc. will supply artificial intelligence chips to OpenAI in a multi-year agreement that the chipmaker said Monday is expected to generate tens of billions of dollars in annual revenue.
The deal, which includes an option for OpenAI to buy a significant stake in AMD, sent the company’s shares surging more than 35% in premarket trading, putting them on track to open at their highest level since March 2024.
The agreement underscores the voracious appetite for computing power within the AI industry as companies race to develop technology that meets or exceeds human intelligence. It also marks a major vote of confidence in AMD’s ability to compete with Nvidia Corp., the current market leader in AI chips.
“We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry,” AMD executive vice president Forrest Norrod said in an interview.
The deal covers the deployment of hundreds of thousands of AMD’s AI graphics processing units, or GPUs, over several years beginning in the second half of 2026. AMD said OpenAI would begin building a data center facility based on its forthcoming MI450 series chips next year, with revenue recognition starting at that time.
AMD executives expect the deal to bring in tens of billions in annual revenue. They also projected a ripple effect, anticipating more than $100 billion in new revenue over four years from OpenAI and other customers attracted by the partnership.
“Other people are going to come along with it because this is really the pioneer, a pioneer in the industry that has a lot of influence over the broader ecosystem,” said Mat Hein, AMD’s chief strategy officer.
In a statement, OpenAI CEO Sam Altman said the deal with AMD will help the company build the AI infrastructure necessary to meet its ambitious goals.
It was not immediately clear how OpenAI would fund the massive commitment. Media reports indicate the startup generated about $4.3 billion in revenue in the first half of 2025 while spending $2.5 billion in cash as it invests heavily in talent and new AI tools.
As part of the arrangement, AMD issued a warrant allowing OpenAI to buy up to 160 million shares for 1 cent each over the course of the chip deal. The warrant vests in stages based on agreed-upon milestones, starting with the initial shipment of MI450 chips in late 2026. Subsequent milestones are tied to AMD’s stock price reaching specific targets, escalating to $600 per share.
Based on 1.62 billion shares outstanding, the warrant could allow OpenAI to acquire nearly 10% of AMD. The chipmaker closed Friday with a valuation of $267.23 billion, while OpenAI is valued at $500 billion.
Analysts, on average, estimate AMD will generate revenue of $32.78 billion this year, according to LSEG data.