Advanced Micro Devices (AMD) has entered a significant partnership with the AI giant OpenAI, resulting in a notable surge in AMD stock. This collaboration involves OpenAI utilizing 6 gigawatts of AMD graphics processing units (GPUs) over several years. Initially, OpenAI will deploy 1 gigawatt of AMD’s latest Instinct MI450 Series GPUs starting in the latter half of 2026.
Details of the AMD and OpenAI Partnership
The strategic agreement includes the potential for OpenAI to purchase up to 160 million shares of AMD stock as certain milestones are met. For these milestones to be attained, AMD’s stock price must rise and OpenAI must accomplish various technical and commercial benchmarks essential for large-scale GPU deployments.
- Initial GPU Deployment: 1 gigawatt of AMD Instinct MI450 Series GPUs.
- Timeframe: Second half of 2026.
- Potential Share Purchase: Up to 160 million shares.
- Ownership Stake: Approximately 10% in AMD if fully realized.
Projected Impact on AMD Stock
Immediately following the announcement, AMD’s stock jumped by over 27%, reaching 209.63. Earlier in the trading session, it peaked at 226.71, representing a remarkable 37.7% increase. This upward trend signals the breakthrough from a seven-week trading consolidation phase, with a critical buy point set at 186.65.
Financial Expectations and Market Response
AMD anticipates that this partnership could generate tens of billions in annual revenue over time. OpenAI plans to invest heavily in its AI infrastructure, spending hundreds of billions in total. Recent partnerships with tech behemoths including Nvidia, Oracle, Samsung, and SK Hynix further illustrate OpenAI’s aggressive expansion strategy.
Analyst Perspectives
Analysts are optimistic about the implications of this deal. Barclays analyst Tom O’Malley notes that the total revenue stemming from the partnership could exceed $100 billion over five years. He affirmed his positive outlook on AMD, increasing his price target from 200 to 300.
Wedbush Securities supports this sentiment, stating that the movement in AMD’s stock is justified based on the news of the partnership. The agreement is seen as indicative of an accelerating competition for AI capabilities among major tech firms.
Conclusion
The AMD and OpenAI collaboration marks a pivotal moment for AMD. As the demand for AI infrastructure grows, this partnership positions AMD favorably within an increasingly competitive landscape.
