AMD Secures AI Chip Supply Deal with OpenAI,Stock Jumps Over 34%
SAN FRANCISCO,Feb 29 – Advanced micro Devices (AMD) shares surged more than 34% in extended trading Thursday after the company announced a multi-billion dollar deal to supply artificial intelligence (AI) chips to OpenAI,the creator of chatgpt. The agreement positions AMD as a key hardware partner for the leading AI developer and signals growing demand for chips beyond Nvidia in the rapidly expanding AI market.
The partnership addresses a critical bottleneck in the AI boom: the availability of specialized hardware. OpenAI, like many AI companies, relies on powerful processors to train and run its large language models. While Nvidia currently dominates this space, diversifying the supply chain is crucial for fostering competition and ensuring the continued growth of AI technologies. This deal is expected to significantly boost AMD’s revenue and market share in the AI sector, challenging Nvidia’s current stronghold.
AMD will provide its Instinct MI300 series of data center GPUs to power OpenAI’s workloads. The agreement includes a commitment from OpenAI to utilize AMD’s chips for years to come, providing AMD with a stable revenue stream and a platform to showcase its AI capabilities.
“This is a important win for AMD, validating their investment in the Instinct line and establishing them as a serious contender in the AI chip market,” said Stacy Rasgon, a semiconductor analyst at Bernstein. “The deal demonstrates that OpenAI is willing to work with multiple vendors, which is a positive sign for the industry as a whole.”
The financial terms of the deal were not disclosed, but AMD indicated it expects to begin recognizing revenue from the partnership in the second quarter of 2024. The company anticipates the deal will contribute meaningfully to its data center revenue growth in the coming years.
AMD’s stock closed at $167.89 on Thursday and was trading at $225.80 in after-hours trading as of 6:30 PM EST.
