OpenAI and AMD on Monday revealed they entered into an agreement for AMD to supply the generative AI vendor with six gigawatts of compute power to fuel inference for OpenAI’s models.
AMD said it will deploy the first gigawatt of its Instinct MI450 GPUs in the second half of 2026.
With the new agreement, OpenAI will work with AMD as a compute partner and receive warrants for up to 160 million shares of AMD common stock. Depending on both sides meeting performance goals, OpenAI will gain a progressive equity stake in the 56-year-old chipmaker over the next five years.
The partnership is reportedly worth billions of dollars, although neither OpenAI nor AMD disclosed the specific amount.
The deal was well-received on Wall Street, with AMD’s stock surging over 34%.
It is one of many deals OpenAI has made with AI hardware providers recently. Last month, OpenAI and Nvidia revealed a $100 billion contract under which Nvidia will provision 10 gigawatts of compute to support OpenAI’s AI infrastructure training. Also last month, OpenAI signed a $300 billion deal with Oracle to obtain compute power through 2030.
Diversification for OpenAI
This deal with AMD shows that OpenAI is not relying solely on one infrastructure provider.
“OpenAI understands that they need more than one source of chips,” said Jack Gold, analyst at J. Gold Associates. He added that it is likely that OpenAI will make even more deals with other hardware providers to further diversify.
“That’s a good thing because you get a better product that way,” Gold said.
Meanwhile, the deal is a big win for AMD because it solidifies its market position as a credible alternative to Nvidia and appears to give AMD a reliable and lucrative source of revenue into the future.
“It firmly establishes AMD as a competitor to Nvidia,” said Gaurav Gupta, an analyst at Gartner. He added that while AMD has performed well with its new AI product line, the vendor is still distinctly behind Nvidia, which holds more than 70% of the global market for GPUs used to power generative AI models. “This announcement likely cements AMD as a truly legit AI player in the eyes of the investment community and maybe potential customers.”
Competition
The competition that the deal appears to spur could also lead to more favorable pricing terms for other AI vendors looking for infrastructure services from either AMD or Nvidia.
“If you’ve got competition, you can keep people from charging you through the roof,” Gold said.
It might also create more chip scarcity for large language providers such as OpenAI rival Anthropic, feel like they’re missing out, Gupta said.
“It could create a rush for other companies as they see these big deals and might fear being left out in the queue for compute capacity,” he said. “In the near term, it could hog supply.”
While the agreement appears to be advantageous for both vendors, challenges abound, particularly as OpenAI continues to invest significant amounts of money even as it has not found dependable revenue streams in the enterprise AI market and has been losing billions of dollars annually.
“If OpenAI continues down this path … if there’s a bubble, and something bursts everywhere, pain will go equally across everybody,” Gold said.