AMD and OpenAI Sign $100 Billion AI Chip Deal — Breaking Nvidia’s Monopoly

AMD and OpenAI: A Deal That Could Redefine the AI Chip Market

― A New Turning Point in the Global Semiconductor Battle, October 2025

AMD has signed a multiyear contract with OpenAI worth around $100 billion in GPU supplies over four years. Following the announcement, AMD’s stock price surged 30% in pre-market trading, while Nvidia slipped 1%. This development marks a dramatic shift in the balance of power in the global AI semiconductor race.

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Part 1. AMD’s Comeback and Market Reassessment ― A New Variable in the AI Era

In 2025, Advanced Micro Devices (AMD) has re-emerged as a central player in the semiconductor industry.

For years, AMD stood in the shadows of two giants: Intel in CPUs and Nvidia in GPUs and AI accelerators. Until 2023 and early 2024, when the AI boom truly took off, investors were overwhelmingly focused on Nvidia.

Nvidia commanded over 80% of the AI training GPU market, establishing a near-monopoly position. After ChatGPT’s explosive success, Nvidia’s GPUs were called the “oil of the AI age,” indispensable for cloud companies, data centers, and Big Tech. By contrast, AMD’s EPYC CPUs and limited GPU lineup had lower visibility and market share. As a result, many investors labeled AMD as a “hopeful but distant runner-up” far behind Nvidia.

But in 2025, things began to shift.

AMD’s stock rose 36% year-to-date, reflecting renewed confidence. Two key factors drove this:

First, the rollout of new GPU architectures and AI-focused chips.

At the end of 2024, AMD launched the Instinct MI350 series, optimized for AI computation with significant gains in efficiency and performance. This caught the attention of cloud providers and research institutions. The upcoming MI400 chip (2025), rumored to be deployed in hyperscale AI platforms like Helios, fueled expectations that AMD could evolve from a latecomer into a credible alternative supplier.

Second, AMD’s solid foundation in the CPU server market.

Through its EPYC processors, AMD had steadily gained share in server CPUs, benefiting from Intel’s delays in production and technology transitions. This established trust in AMD’s data center products and created a natural pathway to expand into AI accelerators. Investors began to see AMD not as just “a company making GPUs” but as a trusted provider of critical data infrastructure.

Still, there were risks. Nvidia announced a $100 billion AI infrastructure partnership with Intel, aiming to dominate the ecosystem beyond GPUs, while Broadcom secured large-scale custom AI chip orders. Such custom processors, optimized for specific workloads, can deliver better efficiency and cost advantages compared to general-purpose GPUs—posing a competitive threat to AMD.

Wall Street analysts, therefore, held mixed views. Many agreed AMD’s long-term growth potential was strong, since the AI market demand was too large for Nvidia alone. AMD’s CPU success and improved GPU roadmap made the “sustainable second supplier” thesis convincing. But in the short run, valuation pressure and competitive investments remained a hurdle. The consensus price target was $187–200, implying upside but also caution if real revenues failed to materialize.

Thus, as of early 2025, AMD was still seen as a “challenger” under Nvidia’s dominance—but one with renewed potential to become a viable alternative in the AI arms race.

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Part 2. The Landmark Deal with OpenAI ― A Game Changer

On October 6, 2025, the market was jolted by unexpected news:

AMD had signed a multiyear AI chip supply agreement with OpenAI.

Total contract value: ~$100 billion in new revenue across four years

Annual revenue impact: tens of billions of dollars

Product: AMD MI450 GPUs, to be shipped starting in late 2026

Equity option: OpenAI secured rights to acquire up to 10% of AMD’s shares

Special condition: Options activate only after first MI450 shipments; final tranches vest if AMD stock reaches $600 per share

At the time of the announcement, AMD’s stock traded around $164 (LSEG data). The mention of a $600 target embedded in the agreement signaled management’s ambition to triple the company’s market value. This was more than a commercial supply deal—it was the beginning of a strategic alliance.

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Why the Deal Matters

The implications go far beyond revenue.

1. Supply Chain Diversification

OpenAI now has Nvidia, AMD, Samsung, and SK Hynix as key suppliers. Depending solely on one vendor is risky, as bottlenecks or pricing power can derail massive AI projects. By building a multi-vendor network, OpenAI reduces supply chain fragility and secures long-term resilience.

2. AMD’s Elevated Status

For years, AMD was labeled a “follower.” With this deal, it has become a true rival to Nvidia. Notably, OpenAI had already contributed design feedback to AMD’s MI300X GPUs, making the MI450 collaboration closer to co-development than simple procurement. OpenAI’s right to acquire 10% of AMD underscores the deepening partnership.

3. Strategic Equity Option

By tying equity ownership to performance milestones and stock targets, OpenAI is no longer just a client. It becomes a strategic stakeholder in AMD’s success, aligning incentives over the long term.

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Market Reactions

The immediate reaction was dramatic:

AMD soared 30% in pre-market trading, adding tens of billions in market cap within hours, while Nvidia dipped 1%. Investors recognized the deal as a signal that “Nvidia’s monopoly is no longer unshakable.”

Although revenue will not materialize until late 2026, the contract provides AMD with a secure multi-year growth pipeline. CEO Sam Altman of OpenAI stated: “Our agreement with AMD ensures that we have the AI infrastructure capacity we need going forward.”

This deal also complements OpenAI’s parallel project with Broadcom on custom chips—indicating that OpenAI’s strategy is not about loyalty to one vendor but about maximizing resilience and innovation.

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Part 3. A New Phase in the AI Semiconductor War

OpenAI’s move signals a broader structural shift in the AI chip ecosystem. Three dynamics stand out:

1. Cracks in Nvidia’s Monopoly

In September, Nvidia announced its own $100 billion commitment to supply OpenAI with next-gen “Vera Rubin” GPUs (10GW). Only weeks later, OpenAI struck a similarly large deal with AMD. The message: OpenAI will not put all its eggs in one basket. Investors are reassessing whether Nvidia can sustain its dominance in the face of such diversification.

2. The Rise of Korean Memory Giants

AI workloads require high-bandwidth memory (HBM). Samsung and SK Hynix dominate this market—especially SK Hynix with its leadership in HBM3E and upcoming HBM4. OpenAI’s partnership with them ensures a critical edge, while simultaneously boosting the standing of Korean firms in the global AI supply chain. For the KOSPI and related stocks, this development carries a significant tailwind.

3. Cloud Giants Under Pressure

Google, Amazon, and Microsoft have already begun developing their own AI accelerators—TPU, Trainium/Inferentia, and Maia, respectively. Yet all still rely heavily on Nvidia. With OpenAI pivoting toward AMD, the cloud majors face renewed urgency to diversify suppliers and reduce dependency on a single vendor.

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Conclusion ― AMD Seizes Its Defining Opportunity

This OpenAI contract represents a watershed moment in AMD’s history.

While analysts previously flagged AMD’s lack of short-term momentum, the deal locks in $100 billion in secured revenue over the next four years, transforming its growth outlook.

Challenges remain:

Revenues won’t be recognized until 2026 and beyond.

AMD must still prove the real-world performance of the MI450 against Nvidia’s offerings.

OpenAI continues to pursue its own chip efforts with Broadcom.

Nevertheless, AMD is no longer just “Nvidia’s pursuer.” It is now positioned as a co-leader in the global AI semiconductor race. For investors, AMD has shifted from a speculative alternative to a central pillar in the AI infrastructure story.

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📌 Key Takeaways

AMD stock up +36% YTD before the deal; long-term optimism builds

Contract with OpenAI: $100B over four years, equity option up to 10%

Immediate market reaction: AMD +30%, Nvidia –1%

Strategic impact: Nvidia’s monopoly challenged, Samsung & SK Hynix benefit

Bigger picture: AI supply chain moves toward multi-vendor balance

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📌 Sources (Reference)

LSEG, October 6, 2025: AMD stock price and valuation data

Reuters, Bloomberg coverage of AMD–OpenAI contract (2025.10.06)

Official statements from AMD and OpenAI

AMD Instinct MI series product announcements