AMD Soars on OpenAI Deal. Is It Too Late to Buy the Stock?

Advanced Micro Devices' (NASDAQ: AMD) stock soared earlier this week after the company announced a new partnership with OpenAI that could greatly improve its fortunes in the artificial intelligence (AI) chip market. As part of the deal, OpenAI will deploy 6 gigawatts of AMD's Instinct graphics processing units (GPUs) across multiple generations of hardware, beginning with a 1 gigawatt rollout of its MI450 chip in the second half of 2026. Meanwhile, AMD granted OpenAI warrants for up to 160 million shares that vest as specific rollout and share price milestones are hit, with the final tranche tied to AMD's stock reaching $600 a share. AMD said the deal will be immediately accretive and gives it a clear line of sight to tens of billions of dollars in annual AI data center revenue beginning in 2027.What makes this arrangement so striking is how different it looks from the Nvidia deal OpenAI signed just a couple of weeks earlier. Nvidia invested directly into OpenAI, which would allow it to help fund the company's purchase of its chips, while here the capital flow is reversed. Instead of AMD investing in OpenAI, the AI model company will take a stake in AMD, which gives it every reason to help AMD's chips succeed. This is important because it shows a concerted effort by one of the company's biggest builders of AI infrastructure to diversify away from a single chip supplier. It is also believed that OpenAI has designed a custom chip with Broadcom that will start to be delivered next year. Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool