Background on Advanced Micro Devices (AMD)
Advanced Micro Devices, Inc. (AMD) is a leading manufacturer of semiconductors based in Santa Clara, California. Known for producing high-performance processors and graphics chips, AMD has been a significant player in the technology industry for decades. The company’s products are integral to various sectors, including gaming, data centers, and artificial intelligence (AI).
The Agreement with OpenAI
On the mentioned day, AMD’s stocks surged on Wall Street following an announcement of a multi-year agreement with OpenAI, a prominent AI research organization. The deal is expected to generate billions of dollars in annual revenue for AMD by supplying AI chips to OpenAI.
Key Details of the Agreement
- AMD will supply AI processing chips to OpenAI, with deployment of millions of AMD’s graphics processing units (GPUs) over several years starting from the second half of 2026.
- OpenAI plans to build a 1-gigawatt facility using AMD’s upcoming MI450 chip series starting from the next year.
- The agreement includes an option for OpenAI to acquire up to 10% of AMD’s stock, which fueled investor optimism about potential inflows of tens of billions of dollars for AMD.
Impact and Reactions
The news of the partnership between AMD and OpenAI positively affected the semiconductor sector, with AMD’s stocks rising by 23.71% to $203.71 each, marking its highest single-day increase since April 9.
AMD’s market capitalization increased by $63,355 million in a single day, reaching $330,589 million. This surge reflects investor confidence in the potential revenue streams from this collaboration.
Expert Opinions
GBM Research analysts attributed the strong movement in AMD’s stock to the strategic alliance with OpenAI, which will see AMD supply high-performance chips for AI infrastructure development. They noted that the agreement contemplates up to six gigaflops of computational capacity and grants OpenAI an option to acquire up to 10% of AMD’s stock, driving investor optimism about substantial revenue inflows for the semiconductor manufacturer.
Actinver experts explained that market optimism was driven by significant corporate news in the technology sector following the OpenAI-AMD collaboration agreement for developing graphics processors aimed at AI. The agreement aims to diversify AI infrastructure beyond NVIDIA, strengthen OpenAI’s computational capacity, and accelerate its global expansion.
Ripple Effect on Semiconductor Sector
AMD’s rise propelled the semiconductor sector in Wall Street. The Philadelphia Semiconductor Index added 2.89% to reach 6,774.1 units, its highest level since it started trading in the stock market.
Stock prices of other semiconductor companies also rose, with Taiwan Semiconductor Manufacturing advancing 3.49% to $302.40, followed by Applied Materials with a 2.93% increase to $223.91. Lam Research, a designer of semiconductor manufacturing equipment, saw a 2.28% rise to $149.13, while Micron Technology increased by 1.67% to $190.96.
However, NVIDIA’s stocks, which produce chips used for AI development and compete directly with AMD, fell 1.12% on the NASDAQ to $185.54. Broadcom also declined by 0.84%.
Key Questions and Answers
- What is the agreement between AMD and OpenAI about? The agreement involves AMD supplying AI processing chips to OpenAI, with the deployment of millions of AMD GPUs over several years starting from mid-2026. OpenAI plans to build a 1-gigawatt facility using AMD’s upcoming MI450 chip series.
- What does the agreement include regarding stock acquisition? The agreement includes an option for OpenAI to acquire up to 10% of AMD’s stock, which has boosted investor optimism about potential revenue inflows for AMD.
- How did the semiconductor sector react to this news? The news positively affected the semiconductor sector, with AMD’s stocks rising significantly and other major semiconductor companies’ stocks also experiencing gains.
