AMD Stock Surges 27% on $27B OpenAI Partnership
AMD's stock soared over 27% after the company announced a significant partnership with OpenAI. The deal, worth around $27 billion at current market value, could potentially reach almost $100 billion based on the stated price target.
The collaboration, spearheaded by AMD CEO Dr. Lisa Su and OpenAI CEO Sam Altman, involves a firm 6 GW deal for AMD's AI business. While it falls short of Nvidia's 10 GW deal, it's still a substantial success for AMD. OpenAI will heavily rely on AMD for future data centers, supplying Helios Racks and Instinct MI450 chips.
The agreement includes the construction of gigawatt-scale data centers, with the first phase set to deliver 1 gigawatt of computing capacity. The contract is designed to run for at least 6 gigawatts and span several generations of AMD Instinct. OpenAI could potentially acquire up to 10% of AMD through fixed performance targets over the next few years, by purchasing up to 160 million new shares.
The partnership with OpenAI demonstrates that AMD is a strong contender in the AI market, offering viable alternatives to Nvidia. With a current market value of around $270 billion, a 10% stake in AMD would be worth $27 billion, potentially reaching almost $100 billion based on the stated price target. The deal is set to significantly boost AMD's stock, which has already jumped over 27% following the announcement.
