This agreement also grants OpenAI the option to acquire up to a 10% stake in AMD.
Published On 6 Oct 2025
American semiconductor giant AMD has entered into a long-term partnership to supply AI processors to OpenAI, a move expected to generate tens of billions in yearly revenue. Additionally, this deal provides OpenAI with the opportunity to purchase nearly 10% ownership in AMD.
Following the announcement, AMD’s stock price soared over 34% on Monday, marking its most substantial single-day increase in over nine years and boosting the company’s market capitalization by approximately $80 billion.
This collaboration highlights the escalating demand for advanced computing resources within the AI sector, as organizations compete to develop artificial intelligence systems that rival or surpass human cognitive abilities.
Forrest Norrod, AMD’s executive vice president, described the agreement as a game-changer not only for AMD but also for the broader semiconductor industry, emphasizing its transformative potential.
Partnership Reinforces AMD’s Technological Credibility
The contract closely aligns OpenAI, a pivotal player in the AI revolution, with AMD-one of Nvidia’s fiercest competitors. Nvidia, meanwhile, has also recently committed significant investments to OpenAI.
Industry experts view this as a strong endorsement of AMD’s AI hardware and software capabilities, though it is unlikely to disrupt Nvidia’s dominant market position, given Nvidia’s continued ability to meet the high demand for AI chips.
AMD anticipates that this deal will contribute tens of billions in annual revenue. Factoring in the broader impact, the company projects over $100 billion in new revenue over the next four years from OpenAI and other clients.
To put this in perspective, AMD’s expected revenue for the current year stands at $32.78 billion, while Nvidia’s forecasted revenue is significantly higher at $206.26 billion.
Leah Bennett, chief investment strategist at Concurrent Asset Management, noted, “AMD has lagged behind Nvidia for a long time, so this deal serves as a strong validation of their technology.”
Meanwhile, Nvidia’s shares experienced a slight decline of over 1% following the news.
OpenAI CEO Sam Altman expressed that the partnership with AMD will enable the company to scale its AI infrastructure sufficiently to support its ambitious goals.
Details on how OpenAI plans to finance this substantial agreement have not been disclosed.
Currently valued at $500 billion, OpenAI reported revenues of approximately $4.3 billion in the first half of 2025, while incurring cash expenditures of $2.5 billion, according to recent reports.
In a related development, Nvidia announced in September a deal to provide OpenAI with at least 10 gigawatts of computing power.
Unlike the AMD agreement, where OpenAI gains an equity stake, Nvidia’s arrangement involves a $100 billion investment into OpenAI, positioning OpenAI solely as a client rather than a shareholder.
Dan Coatsworth, head of markets at A J Bell, explained that holding a stake in AMD could afford OpenAI influence over the chipmaker’s strategic decisions, a dynamic absent in its relationship with Nvidia.
OpenAI has collaborated with AMD for several years, contributing to the design of previous generations of AI processors.
Last month, OpenAI and its principal investor Microsoft revealed a non-binding agreement to transition OpenAI into a for-profit company.
A source familiar with the matter confirmed that the AMD deal does not alter OpenAI’s existing compute strategies, including its ongoing partnership with Microsoft.
