AMD Scores Major Win with OpenAI Deal, Challenging Nvidia's Dominance
AMD has secured a significant boost with OpenAI's endorsement, which could prompt other major cloud providers to diversify their GPU suppliers. The deal places AMD at the heart of a monumental AI infrastructure project.
The agreement involves billions in chip purchases, with AMD granting OpenAI up to 160 million stock warrants that vest in stages, including when AMD's stock hits $600 per share. If all conditions are met, OpenAI's stake could reach a staggering $100 billion in value.
OpenAI will fund the deal using AMD's stock, potentially leading retail and institutional investors to indirectly support OpenAI's chip purchases if AMD's stock continues to rise. UBS analyst Timothy Arcuri expects OpenAI to sell portions of its AMD stock to fund chip purchases as the deal progresses.
AMD's CEO, Lisa Su, is likely overseeing this strategic partnership. OpenAI will assist AMD in enhancing its Instinct GPUs and acquire 6 gigawatts of AMD compute capacity over several years. This collaboration is AMD's gamble to challenge Nvidia's dominance in the AI chip market and attract more customers.
AMD's deal with OpenAI is a substantial win, positioning the company at the forefront of a massive AI project. If successful, it could reshape the AI chip market and benefit both AMD and OpenAI.
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