Hold Your Horses: AMD's OpenAI Payday Starts in a Year (and Really Ramps Up in 2027)

Core Insights - AMD has formed a significant partnership with OpenAI, but immediate revenue generation is not expected until late 2026, with substantial growth anticipated in 2027 [2][8] - The partnership could potentially add over $100 billion to AMD's sales in the coming years, driven by AI-related data center revenue from the deployment of Instinct MI450 and Helios systems [5][8] - The deal includes a complex stock warrant structure that allows OpenAI to acquire up to 160 million AMD shares based on performance metrics, which could significantly impact AMD's stock valuation [6][7] Revenue Timeline - Revenue from the OpenAI partnership will not commence until the second half of 2026, with a significant ramp-up expected in 2027 [3][8] - Each gigawatt-scale tranche of AMD's installations could lead to double-digit billions in annual revenue once fully operational [3][5] Strategic Implications - The partnership positions AMD as a competitive player in the AI space, potentially attracting other major companies like Meta and Google due to the efficiency of its Instinct chips [8] - The structure of the deal provides performance incentives for OpenAI, aligning interests between the two companies and creating a pathway to bypass Nvidia's market dominance [7]