Benzinga·2025-10-13 09:28Core Viewpoint - Advanced Micro Devices Inc. (AMD) is making a significant strategic move by partnering with OpenAI, which could potentially reshape the competitive landscape in the AI chip market currently dominated by Nvidia Corp. [1] Group 1: AMD's Strategic Move - AMD CEO Lisa Su's decision to grant OpenAI warrants for up to 160 million AMD shares, representing nearly 10% of the company, in exchange for a substantial GPU purchase commitment highlights the high stakes involved [2] - The deal entails OpenAI purchasing up to six gigawatts of AMD's next-generation Instinct MI450X GPUs over the next five years, with analysts estimating potential revenue exceeding $100 billion [2][3] - This partnership is seen as a critical opportunity for AMD to regain competitiveness after its previous generation MI350 was deemed uncompetitive against Nvidia's offerings [3] Group 2: Market Dynamics - Nvidia has significantly outpaced AMD, with projected revenues of approximately $210 billion for Nvidia compared to AMD's $33 billion this year, illustrating Nvidia's dominance in the AI data center revenue space [4] - The shift in the AI race is increasingly focused on control over energy and critical chip ingredients, with companies that manage these supply chain elements gaining power [6] Group 3: Analyst Reactions - Analysts from Bank of America and Goldman Sachs have responded positively to the OpenAI partnership, projecting over $100 billion in potential revenue and raising AMD's stock price targets to $250 and $210, respectively [7][8] - The partnership is viewed as a strong positive for AMD's long-term GPU business, with the potential to unlock up to $135 billion in new sales and challenge Nvidia's market dominance [8]