AMD secures a 6 gigawatt GPU contract with OpenAI, potentially selling 160 million shares to the company. Wall Street reacts positively, with AMD shares soaring to $226, up over 25% in a day. On the flip side, Nvidia’s shares fall 1% after OpenAI announces a $100 billion partnership with the company.

OpenAI’s partnership with both AMD and Nvidia reflects a strategic hedge against GPU shortages. OpenAI needs 16 gigawatts of compute capacity for its AI infrastructure ambitions. The company is burning through capital rapidly, projecting losses despite expected revenue of $12.7 billion in 2025.

AMD’s MI450 series promises competitive specs compared to Nvidia’s chips, but AMD’s ROCm software platform falls short of Nvidia’s CUDA. AMD sweetens the deal with warrants and promises of joint development to compete. The broader chip wars intensify with competitors like Google, Amazon, and OpenAI exploring custom chip development.

For AMD, landing OpenAI’s deal validates its AI ambitions, but until ROCm matches CUDA’s reliability, AMD may struggle to gain broader market share. OpenAI’s engineering resources could help close the gap, but most customers won’t have that luxury. Meanwhile, Nvidia maintains its 80% market share and premium pricing.

Read more at Yahoo Finance: AMD Stock Skyrockets on OpenAI Bet to Loosen Nvidia’s Grip on the AI Chip Market