AMD(US:AMD)2025-10-09 02:00Summary of AMD and OpenAI Deal Insights Company and Industry Involved - Company: Advanced Micro Devices (AMD) - Industry: Semiconductor and AI Infrastructure Core Insights and Arguments - AMD has announced a deal with OpenAI involving a total of 6GW of capacity, positioning AMD as a significant player in the merchant GPU market, particularly as a "core strategic compute partner of OpenAI" [2] - The deal includes the issuance of AMD warrants for 160 million shares (approximately 10% of AMD's outstanding shares) to OpenAI, allowing OpenAI to purchase AMD shares at $600 as they meet specific milestones [2] - J.P. Morgan estimates that the total spend for every GW is around $50-60 billion, with approximately 50% allocated to chips, suggesting potential incremental revenue of $150 billion from the deal [3] - Initial investor feedback indicates a projected EPS (Earnings Per Share) range of $10-12, reflecting a significant re-rating of AMD's valuation to 30x [4] Additional Important Points - The comparison between AMD's 6GW deal and NVIDIA's 10GW+ deal is deemed unfair, as AMD's capacity is through cloud partners [4] - The deal is considered much larger than a previously discussed $10 billion margin dilutive deal by AVGO related to AI ASICs [4] - The deal is expected to benefit TSMC and ASML, indicating positive implications for the semiconductor supply chain [4] - The initial capacity of 1GW is set to begin in the second half of 2026 [2]