AMD and OpenAI have entered into an agreement that involves billions of dollars in chip purchases.
However, the payment structure is unusual. Instead of using its own cash, OpenAI will rely on AMD’s stock to fund the deal.
The partnership has two core elements. First, OpenAI will help AMD improve its Instinct GPUs.
These chips compete directly with Nvidia’s market-leading products. Second, OpenAI will buy and deploy 6 gigawatts of AMD compute capacity over several years.
This is a major revenue opportunity for AMD. For OpenAI, it secures essential hardware at a critical time as demand for advanced AI chips continues to grow rapidly.
The Warrant Structure
To make this possible, AMD granted OpenAI up to 160 million stock warrants. These warrants vest in stages based on specific milestones. One major milestone is the price of AMD’s stock.
Before the announcement, AMD traded at roughly $165 per share. By market close on Monday, it had climbed to $214. The final tranche will vest only if AMD’s stock reaches $600 per share.
If OpenAI meets all conditions and holds the stock, its stake could reach about $100 billion in value.
This scenario would require AMD’s market capitalization to rise to approximately $1 trillion.
Financing
UBS analyst Timothy Arcuri expects a more practical path. In his research note, he suggests that OpenAI will likely sell portions of its AMD stock as the deal progresses.
These sales would then fund the chip purchases. Effectively, AMD is financing its customer’s order using its own equity.
Although this carries risks, it ensures OpenAI has access to the hardware it needs to scale its infrastructure.
Strategic Value
Beyond immediate financial gains from the partnership with OpenAI, AMD receives a powerful endorsement.
If its GPUs can meet OpenAI’s demanding workloads, they can likely support other major customers as well.
AMD has already begun discussions with additional partners. Many are large cloud service providers that currently buy AMD CPUs but depend on Nvidia for GPUs.
OpenAI’s endorsement may encourage these companies to diversify their suppliers.
Investors
This deal structure has a by-effect. If AMD’s stock continues to rise, retail and institutional investors may indirectly fund OpenAI’s chip purchases.
Their enthusiasm could drive the stock price higher, unlocking more warrants for OpenAI.
This approach differs from Nvidia’s strategy. Nvidia recently invested $100 billion in OpenAI, and that investment secured Nvidia a stake in the AI company.
In AMD’s case, the equity flows in the opposite direction.
A Gamble
AMD faced a significant decision. Nvidia controls most of the AI chip market; to compete, AMD needed a high-profile partner.
The stock-based structure gave OpenAI a low-cost path to large-scale compute power while expanding AMD’s market share.
UBS estimates that this deal could give AMD as much as 30% market share in upcoming data center buildouts.
Arcuri described the deal as “arguably less attractive” than Nvidia’s investment. Still, he sees it as a major validation of AMD’s technology roadmap.
This deal positions AMD at the center of one of the largest AI infrastructure projects in history.
The company is betting that this visibility will attract more customers and accelerate the adoption of its GPUs.
