AMD’s Landmark Deal with OpenAI Marks a New Phase in the AI Chip Race

Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the AI Stocks Shaping Wall Street’s Next Big Rally. On October 6, Reuters reported that AMD will supply artificial intelligence chips to OpenAI in a multi-year deal.

The deal has the potential to generate tens of billions of dollars in annual revenue and includes a warrant-structure that gives OpenAI the option to acquire an estimated 10% of AMD; contingent on deployment, milestones and share price targets.

“We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry.”

-AMD executive vice president Forrest Norrod told Reuters on Sunday.

The agreement will allow the deployment of hundreds of thousands of AMD’s AI chips, or graphics processing units (GPUs) over several years beginning in the second half of 2026. This is equivalent to six gigawatts.

According to AMD, OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips starting next year, at which point revenue will begin to be recognized.

OpenAI CEO Sam Altman noted that the AMD deal will help his startup build enough AI infrastructure to meet its needs.

“We are thrilled to partner with OpenAI to deliver AI compute at massive scale,” said Dr. Lisa Su, chair and CEO, AMD. “This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world’s most ambitious AI buildout and advancing the entire AI ecosystem.”

Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.

While we acknowledge the risk and potential of AMD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMD and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 10 Buzzing AI Stocks on Wall Street and 10 AI Stocks Investors Are Watching Closely

Disclosure: None.