The market opened higher on Monday following news of a landmark deal between OpenAI and semiconductor giant Advanced Micro Devices (AMD) , lifting the Nasdaq 0.7% intraday.
OpenAI has announced a 6-gigawatt agreement with AMD to power its next-generation AI infrastructure, marking a significant win for AMD in its efforts to challenge rival Nvidia and maintain its dominance in AI computing.
The first 1-gigawatt deployment of AMD’s Instinct MI450 GPUs is slated for the second half of 2026.
This partnership follows OpenAI’s recent $100 billion, 10-gigawatt collaboration with NVIDIA, which was announced in a letter of intent last month.
Industry analysts view these parallel deals as part of OpenAI CEO Sam Altman’s strategy to diversify hardware suppliers and avoid overdependence on a single chipmaker.
Image source: Cheng/AFP via Getty Images
“Basically, Sam Altman seems to be hedging,” said Daniel Newman, CEO of the Futurum Group, in an interview with TheStreet.
He is doing deals with Broadcom. He is doing deals with AMD. He is doing deals with NVIDIA. And so everybody’s in the game right now. And as long as we know that the compute capacity requirements are going to keep growing, all these companies that are playing have a great opportunity to see more upside.
The deal arrives amid a booming AI infrastructure market forecasted to reach $583 billion over the next five years, underlining a growing demand for high-performance computing systems that can support increasingly complex AI workloads.
A win for AMD
This new deal with OpenAI puts AMD in the running. It lifted its stock price to $209, a 52-week high for the global semiconductor company, up 27% just today.
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According to the terms of the deal, AMD also issued OpenAI a warrant for up to 160 million shares of AMD common stock, structured to vest as specific milestones are achieved, exercisable at a strike price of $1c per share.
The vesting schedule of OpenAI also relies on AMD achieving specific share-price targets, details of which have not yet been announced.
AMD’s CFO, Jean Hu, described the partnership as a significant step forward, projecting that it will “deliver tens of billions of dollars in revenue for AMD while accelerating OpenAI’s AI infrastructure buildout.
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“This partnership brings the best of AMD and OpenAI together to create a true win-win,” said Dr Lisa Su, Chair and CEO of AMD. It will enable one of “the world’s most ambitious buildouts,” and advance the entire AI ecosystem.
Altman echoed that sentiment, emphasizing the role of AMD’s technology in expanding OpenAI’s computing capacity.
Analyst Reactions
Wall Street responded enthusiastically to the announcement of the deal.
Roth Capital raised AMD’s price target to $250 from $200, maintaining a Buy rating. Analyst Suju Desilva said the partnership cemented AMD’s position as a credible source of large-scale AI infrastructure.
Barclays’ Tom O’Malley was even more optimistic, raising AMD’s price target to $300 from $200, and keeping an Overweight rating.
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He highlighted the unique nature of the warrant structure, noting that the final tranche could vest if the AMD stock price reached $600. Barclays estimates that the deal could add $4.5 billion in quarterly revenue by 2026, with an earnings-per-share impact of $1.30 per quarter, as reported by TheFly.
The announcement also boosted Sanmina’s stock price, up 29% during trading hours on Monday.
Sanmina is a key AMD partner in data center manufacturing. It has previously acquired AMD’s data center infrastructure manufacturing business from ZT Systems.
Dr. Lisa Su also noted on a follow-up call that AMD expects to deploy the first gigawatt “as soon as possible and is “well-positioned to ensure that we supply everyone who is interested in MI 450,” as reported by TheFly.
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