OpenAI has agreed a multibillion-dollar partnership with Advanced Micro Devices (AMD) to secure massive computing power for its next generation of artificial intelligence models — a direct challenge to Nvidia’s dominant position in the global AI chip market.
Under the five-year deal, OpenAI will purchase up to 6 gigawatts of AMD’s most advanced AI processors, a level of computing capacity equivalent to the peak electricity demand of London. The partnership is designed to provide OpenAI with the infrastructure it needs to scale its technology as competition in the AI sector intensifies.
Shares in AMD surged 27 per cent to $209.39 in New York trading after the deal was announced, adding tens of billions of dollars to the chipmaker’s market value.
As part of the arrangement, OpenAI has the right to acquire a 10 per cent stake in AMD, worth around $34 billion at current market prices. The company can buy up to 160 million AMD shares for one cent each, with the first tranche due to vest after the shipment of AMD’s upcoming MI450 chips in the second half of 2026.
AMD chief executive Lisa Su said the deal “tightly aligns OpenAI and AMD”, adding that it will “drive significant revenue and earnings growth for AMD while allowing OpenAI to accelerate their AI build-out and share directly in the upside of our mutual success”.
OpenAI chief executive Sam Altman described the partnership as “a major step in building the compute capacity needed to realise AI’s full potential”.
The agreement reflects OpenAI’s escalating drive to secure advanced semiconductor capacity as demand for generative AI technology soars. The San Francisco-based company, which has yet to turn a profit, generated an estimated $4.3 billion in revenue in the first half of 2025 but burned through $2.5 billion in cash, according to The Information.
Just weeks earlier, OpenAI announced a “strategic partnership” with Nvidia, under which the world’s most valuable company is expected to invest up to $100 billion and supply at least 10 gigawatts of processors. That deal has not yet been finalised.
The AMD partnership suggests OpenAI is seeking to diversify its chip suppliers and reduce its reliance on Nvidia hardware, which dominates the AI accelerator market.
While AMD’s stock jumped on the news, Nvidia shares dipped 0.8 per cent to $186.08 amid signs of intensifying competition. Analysts said the OpenAI deal gives AMD a significant foothold in the fast-expanding AI infrastructure market.
However, some market observers have warned that such multibillion-dollar chip deals may be fuelling a speculative bubble reminiscent of the dotcom era, when vast sums were poured into fibre-optic networks on the promise of future growth.
Critics say the recent wave of reciprocal investments — where companies fund start-ups that in turn purchase their products — could mask underlying demand risks in the AI sector.
OpenAI’s latest deal follows a series of supply chain moves, including partnerships with Samsung and SK Hynix for advanced memory chips, as well as efforts to design its own custom processors.
For AMD, the partnership is expected to generate tens of billions of dollars in new revenue and bolster its standing as a credible alternative to Nvidia in the race to power the next wave of AI applications.
