In a significant shake-up in the AI chip landscape, shares of Nvidia, the leading company in hardware for artificial intelligence, were down around 1% on Tuesday morning after Advanced Micro Devices (AMD) and OpenAI announced a strategic multiyear partnership. The deal, which was announced on Monday, is one of the biggest A.I. infrastructure agreements around that doesn’t involve Nvidia and may be evidence of an increasing threat to that company’s dominance over processing chips for artificial intelligence.
The Deal Details
AMD announced a deal with OpenAI to provide as much as 6 gigawatts of its AMD Instinct GPUs for the company’s next generation large language models and AI training systems. The first deployment is to begin in the second half of 2026 using AMD MI450 series GPUs, with large scale rollouts expected across multiple generations. This wide-ranging partnership also involves licensing to OpenAI packages from AMD software components and standards, with a warrant for AMD to purchase up to 160 million shares of the chipmaker’s stock — or about 10 percent of its equity — at an agreed-upon price based on deployment scale and stock price execution.
Market Reaction
Shares of AMD skyrocketed by more than 30% on the news, as investors appeared taking the silver lining to this announcement — that it’s likely going to be a critical AI hardware supplier for one of the dominating companies in the industry. By contrast, shares in Nvidia fell by about 1 percent on Monday as investors assessed the potential impact of more competition.
For years, Nvidia has been the reigning champion of providing chips for artificial intelligence, which means they’ve powered most of the AI technology in use today around the world. But OpenAI’s effort to diversify its chip supply chain also dovetails with an industry wide push in recent months away from reliance on Nvidia, particularly considering Nvidia’s reported supply shortages of its most advanced GPUs.
Industry Impact and Analyst Views
The AMD-OpenAI deal is widely considered a key moment that threatens to disrupt the competitive balance of power in the AI chip industry. Analysts point out that AMD’s multi-generational roadmap and partnership with OpenAI leave it well placed to benefit from the growing AI infrastructure market.
Although certain skeptics sound notes of caution about the complexity and risks associated with rolling out AMD’s MI450 chips at a national scale, many industry observers maintain that AMD’s ROCm software stack combined with its competitive hardware has significantly bolstered its credibility. OpenAI CEO Sam Altman also clarified that this agreement is in addition to their continued relationship with Nvidia, stating its intention of sourcing more of its chips from Nvidia over time, and emphasizing a diversified AI compute supplier strategy.
AMD CEO Lisa Su called the acquisition “a truly historic moment as we welcome CXL and IP to the AMD family,” one that cements AMD as a leader in AI global infrastructure buildout, generating tens of billions of potential revenue over the next half decade.
What This Means for Nvidia
Despite the decline in its stock price, Nvidia’s position remains solid, powered by a leading-edge induction to AI chip technology and years of having maintained a mature software ecosystem. But the new AMD agreement raises the stakes as OpenAI starts to separate workloads even further across different chipsets — namely, delineating between AI model training (where Nvidia is on top) and AI inference ( where companies like AMD and others are making headway).
Some investors remain wary of Nvidia’s high valuation and the increasing competitive threat from AMD, Intel and up-and-coming AI chip makers. There is also increasing angst over Nvidia’s lack of market penetration in China, an important AI growth market that can put a damper on future earnings.
Conclusion
The AMD-OpenAI deal is a landmark moment in AI hardware. It signals the rise of AMD as a more formidable competitor in the AI chip space and underscores OpenAI’s ambition to scale AI infrastructure with diversified partnerships. Nvidia’s 1% stock dip reflects investor recalibration as the AI compute race intensifies, but the overall market for AI chips is expected to expand rapidly, likely benefiting multiple players.
Investors and industry observers will be closely watching the execution of AMD’s deliveries and OpenAI’s multi-generation deployment milestones in the years ahead, as this could redefine the future landscape of AI computing.