OpenAI and chipmaker AMD sign chip supply partnership for AI infrastructure

Key Points

• AMD will supply its latest high-performance graphics chips to OpenAI as part of a partnership to build AI infrastructure.
• The agreement includes the provision of 6 gigawatts of computing power, with the first gigawatt becoming operational in the second half of 2026.
• OpenAI has received a warrant to purchase up to 160 million shares of AMD's common stock, representing about 10% of the company, contingent on computing power milestones.
• This partnership aims to enhance OpenAI's capabilities and is seen as a critical move for AMD in the competitive AI chip market, which is currently dominated by Nvidia.

Semiconductor maker AMD will supply its chips to artificial intelligence company OpenAI as part of an agreement to team up on building AI infrastructure, the companies said Monday.

OpenAI will also get the option to buy as much as a 10% stake in AMD, according to a joint statement announcing the deal. It's the latest deal for the ChatGPT maker as it races to beef up its AI computing resources.

Under the terms of the deal, OpenAI will buy the latest version of the company's high performance graphics chips, the Instinct MI450, which is expected to debut next year.

The agreement calls for supplying 6 gigawatts of computing power for OpenAI’s “next generation” AI infrastructure, with the first batch of chips worth 1 gigawatt to be deployed in the second half of 2026.

AMD also issued OpenAI with a warrant allowing the AI company to buy up to 160 million shares of AMD’s common stock. That amounts to about 10% of the chipmaker based on AMD's 1.6 billion outstanding shares. The warrant will vest based on two milestones tied to the amount of computing power deployed, as well as unspecified “share-price targets."

Shares of AMD spiked nearly 24% on Monday. Shares of Nvidia, which have repeatedly set new record-highs this year, fell by 1%.

“This partnership is a major step in building the compute capacity needed to realize AI’s full potential,” OpenAI CEO Sam Altman said in a news release. “AMD’s leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster.”

The deal is a boost for Santa Clara, Calif.-based AMD, which has been left behind by rival Nvidia. But it also hints at OpenAI's desire to diversify its supply chain away from Nvidia's dominance. The AI boom has fueled demand for Nvidia's graphics processing chips, sending its shares soaring and making it the world's most valuable company.

Last month, OpenAI and Nvidia announced a $100 billion partnership that will add at least 10 gigawatts of data center computing power. OpenAI and its partners have already installed hundreds of Nvidia’s GB200, a tall computing rack that contains dozens of specialized AI chips within it, at the flagship Stargate data center campus under construction in Abilene, Texas.

Barclays analysts said in a note to investors Monday that OpenAI's AMD deal is less about taking share away from Nvidia than it is a sign of how much computing is needed to meet AI demand.

“We realize there will be delays with these deals, and that the infrastructure required largely doesn’t exist today, but we would again highlight this as a proof point that the ecosystem is desperate for more compute,” wrote Barclays analyst Tom O’Malley.