AMD Supplies Hundreds of Thousands of AI GPUs to OpenAI in Multi-Billion Dollar Deal

AMD Wins Massive AI Chip Deal from OpenAI with Stock Sweetener In a multi-billion dollar deal that is set to transform the artificial intelligence (AI) chip market, AMD has announced that it will supply hundreds of thousands of its AI graphics processing units (GPUs) to OpenAI over several years. The agreement, which is worth tens of billions of dollars annually, marks a major endorsement of AMD's AI hardware and software capabilities as the company competes with Nvidia for dominance in the AI chip market. Financial Impact The deal is expected to generate more than $100 billion in new revenue for AMD over four years from OpenAI and other customers who follow OpenAI's lead. This represents a significant boost to AMD's top line, which has been growing steadily in recent years. The company's stock price surged on the news, with shares rising by as much as 10% in early trading. Company Background and Context AMD is one of the leading manufacturers of GPUs, which are critical components in AI systems. The company has been investing heavily in its AI hardware and software capabilities in recent years, including the development of its MI450 series chips. OpenAI, on the other hand, is a leading developer of AI technologies, including the popular ChatGPT chatbot. Market Implications and Reactions The deal marks a significant shift in the AI chip market, with AMD gaining a major foothold alongside Nvidia. The agreement also highlights the growing importance of AI in various industries, from healthcare to finance. Analysts expect other companies to follow OpenAI's lead and adopt similar deals with AMD. Stakeholder Perspectives "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," said Forrest Norrod, Executive Vice President at AMD. "This agreement demonstrates our leadership in AI hardware and software capabilities and positions us well for future growth." The deal also has implications for Nvidia, which has been a dominant player in the AI chip market until now. "We welcome competition from AMD and believe that this deal will drive innovation and improve choice for customers," said a spokesperson for Nvidia. Future Outlook and Next Steps The agreement is set to start generating revenue for AMD next year when OpenAI starts building a 1 gigawatt facility based on AMD's forthcoming MI450 series chips. The company expects to book income from the deal starting in 2027, with the potential for significant growth over the coming years. In conclusion, the deal between AMD and OpenAI marks a major milestone in the AI chip market, with significant implications for both companies and the industry as a whole. As the demand for AI continues to grow, we can expect to see more deals like this emerge in the future. Latest Developments AMD's stock price has risen by over 10% since the announcement of the deal. OpenAI is expected to start building its 1 gigawatt facility based on AMD's MI450 series chips next year. The deal marks a significant shift in the AI chip market, with AMD gaining a major foothold alongside Nvidia. Key Numbers $100 billion: new revenue generated by AMD over four years from OpenAI and other customers who follow OpenAI's lead 10%: rise in AMD's stock price since the announcement of the deal 1 gigawatt: capacity of OpenAI's facility based on AMD's MI450 series chips *Financial data compiled from Arstechnica reporting.*