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AMD and OpenAI have forged a strategic partnership for AI data center development, with OpenAI committing to purchase 6 gigawatts of AMD chips, commencing with the MI450 next year. This agreement is projected to generate tens of billions of dollars in new revenue for AMD over five years and includes AMD issuing warrants for up to 160 million shares to OpenAI, vesting based on chip deployment and performance milestones, thereby aligning incentives. The collaboration addresses the escalating demand for AI computing power, securing critical infrastructure for OpenAI while significantly boosting AMD's position in the AI chip market.

Analysis

The collaboration will see the companies develop artificial intelligence data centers running on AMD processors, according to a Monday (Oct. 6) press release. “This partnership is a major step in building the compute capacity needed to realize AI’s full potential,” OpenAI co-founder and CEO Sam Altman said in the release. “AMD’s leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster.” With this deal, OpenAI pledged to purchase 6 gigawatts worth of AMD’s chips, beginning with the MI450 chip next year, the release said. It will buy the chips either directly or through OpenAI’s cloud computing partners, The Wall Street Journal (WSJ) reported Monday. As part of the agreement, AMD issued OpenAI a warrant for up to 160 million shares of AMD common stock, designed to vest as specific milestones are reached, according to the release. The first tranche vests with the initial 1-gigawatt MI450 chip deployment, with more tranches vesting as purchases scale up to 6 gigawatts. Advertisement: Scroll to Continue “Vesting is further tied to AMD achieving certain share-price targets and to OpenAI achieving the technical and commercial milestones required to enable AMD deployments at scale,” the release said. The deal comes on the heels of chipmaker Nvidia’s $100 billion pledge to OpenAI, a deal that, when realized, would be the largest private company investment on record. AMD CEO Lisa Su said the deal will result in tens of billions of dollars in new revenue for the chip company over the next half-decade, per the WSJ report. She was interviewed jointly with Altman, who said demand for inference computing has jumped in tandem with the rise of AI tools like large language models. “It’s hard to overstate how difficult it’s become” to get sufficient computing power, Altman said, according to the report. “We want it super fast, but it takes some time.” Inference is when a trained model is applied to new inputs in real time, a “constant, real-time activity” that never stops, PYMNTS reported Sept. 22. Keeping ChatGPT online alone reportedly costs OpenAI tens of millions of dollars each month. Altman and Su said their collaboration gives both companies incentives to commit to the boom in AI infrastructure, WSJ reported. “It’s a win for both of our companies, and I’m glad that OpenAI’s incentives are tied to AMD’s success and vice-versa,” Su said, per the report. For all PYMNTS AI coverage, subscribe to the daily AI Newsletter. Advanced Micro Devices (AMD) has secured a significant, multi-year strategic partnership with OpenAI, positioning itself as a key hardware supplier for the development of artificial intelligence data centers. OpenAI has committed to purchasing 6 gigawatts of AMD's AI chips, starting with the MI450 model next year, a deal AMD's CEO projects will generate tens of billions of dollars in new revenue over the next five years. The structure of the agreement is designed to tightly align the interests of both parties, as AMD has issued warrants for up to 160 million of its shares to OpenAI, with vesting contingent upon specific deployment milestones, AMD share-price targets, and OpenAI's technical success. This collaboration directly addresses the severe supply constraints in AI computing, as articulated by OpenAI's CEO, and provides AMD with a substantial, high-profile customer win that validates its position as a credible large-scale alternative to Nvidia in the AI accelerator market.

Key Decisions for Investors

• Investors should re-evaluate AMD's long-term revenue forecasts, as the multi-billion dollar commitment from OpenAI provides a significant and visible catalyst for top-line growth in the high-margin AI chip segment.
• Monitor AMD's execution and OpenAI's deployment progress, as the vesting of 160 million warrants is tied to specific purchase volumes and technical milestones, making successful implementation a key factor for realizing the deal's full equity and revenue value.
• Recognize this deal as evidence that major AI developers are actively diversifying their hardware supply chains, potentially mitigating concentration risk in Nvidia and fostering a more competitive market for AI accelerators.