OpenAI has announced a multi-billion dollar deal with chip giant AMD to build large scale AI data centres – one of the most direct challenges to Nvidia’s dominance in the AI market to date.
Under the partnership, OpenAI will buy six gigawatts of AMD’s next generation processors, starting with the MI450 chip launching in 2026.
The chips will be acquired either directly or through OpenAI’s cloud partners, including Microsoft and Oracle.
AMD chief executive Lisa Su said the partnership could generate “tens of billions of dollars in AI revenue annually” for the company over time, describing it as a major milestone in AMD’s expansion into the fast-growing AI infrastructure market.
While neither company disclosed the full cost, AMD said it typically takes tens of billions of dollars to bring each gigawatt of computing capacity online.
OpenAI will also receive warrants for up to 160 million AMD shares, representing around 10 per cent of the company.
AMD’s shares rose 33 per cent on Monday, reaching $219.10 (£162.68) in early trading following the announcement.
A shift in the AI chip race
The deal comes just two weeks after OpenAI unveiled an even larger partnership with Nvidia, committing to deploy 10 gigawatts of Nvidia-powered data centres and receiving up to $100bn in investment from the chip giant.
AMD’s agreement covers a smaller capacity but includes an equity component, aligning the two companies strategically as OpenAI seeks to diversify its chip supply.
Analysts called the move a breakthrough moment for AMD. Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “AMD has scored a breakthrough with OpenAI, showing its next-generation chips are a viable option for AI’s biggest names. Having OpenAI as a first big customer could open the door for others, and Lisa Su sees the multi-year revenue opportunity topping $100bn”.
OpenAI’s chief executive Sam Altman said the partnership marks “a major step in building the compute capacity needed to realise AI’s full potential”.
The ChatGPT owner has been racing to secure computing power as demand for its AI models soars.
It has committed to purchasing $300bn in computing capacity from Oracle over the next five years, is working with SoftBank and others to develop 7GW of new data centres, and is developing its own custom chips with Broadcom.
While AMD’s latest win gives it new momentum against Nvidia, analysts said Nvidia’s strength across the full data centre still gives it a crucial competitive edge.