What Happened?

Shares of computer processor maker AMD (NASDAQ: AMD) jumped 26.8% in the morning session after the company announced a massive, multi-year strategic partnership with OpenAI (the creator of ChatGPT) to supply its Graphics Processing Units (GPUs) for the AI company's next-generation infrastructure. 

The agreement commits OpenAI to deploying up to 6 gigawatts of AMD's Instinct GPUs, starting with the AMD Instinct MI450 Series. The initial rollout of one gigawatt is scheduled for the second half of 2026. This scale signifies a long-term, multi-billion-dollar revenue stream for AMD, with some analysts projecting the deal could generate tens of billions of dollars in total revenue over its lifespan. To align interests, AMD issued OpenAI a warrant for up to 160 million shares of AMD common stock. These shares are structured to vest as specific milestones are achieved, including the initial deployment and subsequent scaling up to the full 6 gigawatts. This equity position signals a deep, long-term commitment and strong belief in AMD's technology and future on the part of one of the world's most influential AI companies. 

For investors, this deal does three things: 1) It validates the performance and readiness of AMD's Instinct GPU line for the most demanding AI workloads; 2) It secures a massive, long-term revenue commitment from a flagship client in the AI sector; and 3) It establishes AMD as an essential player in the global AI supply chain.

Is now the time to buy AMD? Access our full analysis report here.

What Is The Market Telling Us

AMD’s shares are very volatile and have had 22 moves greater than 5% over the last year. But moves this big are rare even for AMD and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 4 days ago when the stock gained 3.6% after the company announced an expanded artificial intelligence (AI) partnership and reports surfaced of a potential manufacturing deal with rival Intel. 

The collaboration with enterprise AI firm Cohere involved deploying Cohere's AI models on AMD's Instinct GPU-powered infrastructure, a move aimed at competing in the enterprise and sovereign AI markets. In separate reports, it was noted that AMD was in early discussions to use Intel's foundry services for some of its chip production, which would mark a shift from its current producer, TSMC. The stock's rise was also supported by broader positive sentiment for the semiconductor sector, as strong demand for data center and AI chips lifted several major tech companies.

AMD is up 75.7% since the beginning of the year, and at $211.92 per share, has set a new 52-week high. Investors who bought $1,000 worth of AMD’s shares 5 years ago would now be looking at an investment worth $2,509.

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