AMD shares soar 27% on OpenAI chip deal that could give Altman's firm a 10% stake

Core Insights - AMD has secured a deal to supply OpenAI with hundreds of thousands of AI chips, potentially granting OpenAI a 10% stake in AMD [1][5] - AMD's stock surged by 27%, adding nearly $80 billion to its market capitalization following the announcement [1][3] - The agreement includes a significant deployment of six gigawatts of power, sufficient to supply 5 million US households, starting in the second half of 2026 [1][3] Financial Implications - The deal is projected to generate tens of billions of dollars in revenue for AMD while enhancing OpenAI's AI infrastructure capabilities [3][4] - OpenAI's CEO highlighted the partnership as a crucial step in building the necessary compute capacity for AI development [3][4] Strategic Developments - OpenAI plans to establish a one-gigawatt facility utilizing upcoming AMD Instinct MI450 chips, with the project commencing next year [4][6] - AMD has issued OpenAI a warrant for up to 160 million shares of common stock, contingent on achieving specific milestones [4][5] Competitive Landscape - This partnership is one of the largest GPU deployment agreements to date and aims to diversify OpenAI's supplier base, reducing its dependence on Nvidia [6][11] - Nvidia's shares fell by 1.1% following the announcement, indicating potential market shifts due to AMD's new role [6][11] Broader Industry Trends - OpenAI is also negotiating with Broadcom for custom chips for its next-generation GPUs, reflecting a trend towards a more complex supply chain in the AI sector [7][9] - The collaboration aligns with a larger initiative, reminiscent of the $500 billion Stargate project aimed at rapidly developing AI infrastructure in the US [9][10]