OpenAI Signs Multi-Billion Dollar Chip Deal with AMD Today

BREAKING: OpenAI has just signed a multi-year partnership with chipmaker Advanced Micro Devices (AMD), cementing its commitment to secure critical computing power for the rapidly evolving landscape of generative artificial intelligence. This groundbreaking deal, announced earlier today, positions OpenAI to develop AI data centers expected to generate tens of billions of dollars in revenue over the next five years.

AMD’s stock surged by 35 percent upon the news, reflecting investors’ enthusiasm surrounding this lucrative agreement. Under the contract, AMD will deliver a staggering six gigawatts worth of chips to OpenAI, significantly bolstering the AI giant’s infrastructure.

OpenAI, already at the forefront of the AI revolution, controls the ambitious Stargate project, which aims to secure US$400 billion of the $500 billion planned investment for expansive data centers in Texas, New Mexico, and an undisclosed location in the U.S. Midwest by 2029. This partnership with AMD follows an earlier contract with Nvidia worth over $100 billion, designed to enhance OpenAI’s generative AI capabilities.

The CEO of OpenAI, Sam Altman, emphasized the importance of this collaboration on X (formerly Twitter), stating, “This is all incremental to our work with NVIDIA. The world needs much more compute… Excited to partner with AMD to use their chips to serve our users!”

OpenAI is solidifying its position in a fiercely competitive market, where it aims to diversify its semiconductor supply and reduce reliance on Nvidia, the dominant player in the field. Analysts are closely monitoring AMD’s ability to compete against not only Nvidia but also major players like Huawei, Amazon, and Google.

In a noteworthy aspect of the deal, AMD will issue OpenAI 160 million warrants, allowing the AI company to acquire roughly 10 percent of AMD’s shares under certain conditions. This partnership reflects a strategic move to enhance OpenAI’s technological capabilities while expanding AMD’s footprint in the AI sector.

Despite OpenAI’s substantial investments, questions remain regarding its financial viability. The company is still years away from profitability due to the exorbitant computing costs required for its operations. However, Wall Street remains optimistic about the future of AI, as OpenAI has become the world’s most valuable private company, surpassing Elon Musk’s SpaceX with a valuation of $500 billion.

As the AI landscape continues to evolve, today’s announcement marks a significant step for OpenAI and AMD in shaping the future of artificial intelligence. Keep an eye on this developing story as it unfolds.