AMD's Stock Skyrockets 30% Following Big OpenAI Partnership

AMD's stock surged at the opening of trading on Monday following the chipmaker's announcement of a multibillion-dollar deal with OpenAI. The deal involves OpenAI acquiring and deploying 6 gigawatts of AMD's AI chips, starting with a 1-gigawatt deployment in 2026. As part of the agreement, AMD issued OpenAI a warrant for up to 160 million shares, representing an estimated 10% stake in AMD at $0.01 per share, tied to specific share-price milestones.

The deal, which aims to challenge Nvidia's dominance in the AI chip market, is expected to bring in significant revenue for AMD. Following the announcement, AMD's shares rose by over 30% to around $215, marking the largest single-day gain since April 2016. This increase also contributed to a substantial rise in CEO Lisa Su's net worth, which is estimated at $1.4 billion.

In contrast, Nvidia had previously announced plans to invest $100 billion in OpenAI, allowing the company to deploy Nvidia systems for its AI data centers. This deal, however, is still in the preliminary stages, with only a letter of intent signed between Nvidia and OpenAI. The boost for AMD comes amidst collaborations between its rivals Nvidia and Intel on new custom data center and consumer chips, which could potentially impact AMD's market position.

The collaboration between Nvidia and Intel involves Nvidia acquiring around $5 billion worth of Intel's shares, posing a challenge to AMD's competitive edge. Only AMD and Intel are licensed to manufacture x86 chips, the architecture powering most desktops and laptops globally. The partnership between Nvidia and Intel opens up possibilities for integrating Nvidia's GPUs with Intel's x86 CPUs, impacting the dynamics of the semiconductor industry.