OpenAI, AMD Cut a Huge Deal

Semiconductor maker AMD will supply its chips to artificial intelligence company OpenAI as part of an agreement to team up on building out artificial intelligence 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, reports the AP. 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 a warrant allowing the AI company to buy up to 160 million shares of AMD common stock, which amounts to about 10% of the company 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 25% before the opening bell Monday. Shares of Nvidia, which have repeatedly set new record-highs this year, fell slightly.

"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 AMD, based in Santa Clara, California, 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.