Major challenge to Nvidia: OpenAI’s massive new computing push will run on AMD chips
By David Goldman, CNN
(CNN) — In a significant challenge to Nvidia’s dominance, OpenAI announced Monday it would buy 6 gigawatts of computing power from data centers that will run exclusively on AMD chips.
Nvidia (NVDA) has become the go-to AI chipmaker in recent years, propelling it to a $4.6 trillion market capitalization that has made it the world’s most valuable public company. OpenAI, famous for its ChatGPT AI chatbot, is the artificial-intelligence frontrunner that just made waves when it launched the breakthrough video generator Sora 2.
Just two weeks ago, the companies announced a $100 billion partnership, in which Nvidia agreed to start delivering chips in 2026. OpenAI CEO Sam Altman said in a post on X that the company plans to increase its Nvidia purchasing and that the AMD partnership is “incremental” to its “work with Nvidia.”
But AMD is no slouch, and demand for AI computing power is so high that OpenAI needed to hedge its bets.
The deal will provide OpenAI with 1 gigawatt of power by this time next year and it will add another 5 gigawatts on future generations of AMD’s high-end Instinct processors. OpenAI will work with AMD (AMD) to build the technology, and it will invest significantly in AMD to fuel its chip-building capabilities.
Shares of AMD jumped 36% in premarket trading on the news. Shares of Nvidia fell 2%.
“With a 10% stake in AMD this quickly brings Lisa Su and AMD right into the core of the AI chip spending cycle and is a huge vote of confidence from OpenAI and Altman,” Wedbush Securities analyst Dan Ives wrote in an industry note Monday morning.
The companies said the partnership would deliver tens of billions of dollars of revenue for AMD, but they didn’t disclose the exact amount of the deal. AMD issued OpenAI a warrant of 160 million shares of its stock, worth more than $26.3 billion at Friday’s closing price. Those shares would vest over time as the partnership achieves specific milestones, including share-price targets and overcoming technological hurdles for what Lisa Su, AMD’s CEO, called “the world’s most ambitious AI buildout.”
“This partnership is a major step in building the compute capacity needed to realize AI’s full potential,” Altman said in a statement. “AMD’s leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster.”
Su called the partnership a “win-win.”
The amount of money getting thrown around the AI industry is staggering. In addition to the AMD and Nvidia deals, OpenAI agreed last month to pay Oracle $300 billion over five years for 4.5 gigawatts of data center space. And OpenAI is believed to have inked a $10 billion chip design deal with Broadcom to train its AI models, a move that could potentially reduce its reliance on partners like Nvidia and AMD.
That’s why the AMD announcement may have been significant, but not exactly surprising — OpenAI has been diversifying its supply of chips for a while, notes Ben Barringer, global technology analyst at Quilter Cheviot.
“AMD is another big player in this space, so this deal is a logical move from OpenAI and is great news for AMD,” said Barringer.
It’s no surprise that the eight most valuable companies on the market are all heavily invested in AI — and all are worth more than $1.4 trillion. Following Nvidia are Microsoft (MSFT), Apple (AAPL), Google (GOOG), Amazon (AMZN) and Meta (META), each of which announced new consumer-focused AI products in recent months. Broadcom, with a $1.6 trillion valuation, is No. 7 on the list. And Elon Musk’s Tesla, which has bet its future on AI-powered robotaxis and could soon make a large investment in Musk’s xAI company, is No. 8 on the list.
Although those companies have driven enormous market gains over the past several years, many Wall Street analysts fear that the AI market has become a bubble — powered by unsustainable gains that are driven more by FOMO than fundamentals.
The-CNN-Wire
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This story has been updated with additional content.
