AMD Share Price: Stock soars 38% in 1 day - Biggest rally in a decade! Reason behind the massive gain

AMD Share Price : Shares of Advanced Micro Devices Inc ( AMD ) soared as much as 38 per cent on Monday. AMD shares jumped as high as $226.71 in New York trading, marking their biggest intraday gain since April 2016. Nvidia, on the other hand, dropped as much as 2.3 per cent.

AMD Share Price: Reason behind the rally

In a major win for Advanced Micro Devices Inc. (AMD), the chipmaker has landed a blockbuster deal with OpenAI to collaboratively build next-generation artificial intelligence ( AI ) infrastructure. The partnership provides AMD a crucial opportunity to showcase its capabilities and effectively challenge Nvidia Corp.'s dominance in the highly lucrative AI computing industry, reported Bloomberg New.

According to the pact, OpenAI will deploy 6 gigawatts’ worth of AMD graphics processing units over multiple years, which is just over half the size of an agreement the AI startup recently reached with Nvidia. It also sets the stage for OpenAI to acquire a large stake in the chipmaker.

This agreement represents a high-stakes test for AMD. If successful, it could unlock tens of billions of dollars in new revenue and cement AMD's status as a genuine rival in AI technology. However, the deal also carries significant risk: it further links the chipmaker's financial future to an AI market that some analysts fear may be inflated or in a speculative bubble.

“This is certainly the largest deployment we have announced so far,” AMD Chief Executive Officer Lisa Su said during an interview on Bloomberg Television.

“Now we’re embarking on a massive build-out. It’s a big deal for us, for our shareholders and our teams,” Su stated.

As part of the agreement, OpenAI has the potential to acquire up to 160 million shares of AMD at a token price of a penny per share, based on the project hitting a series of predetermined milestones. That’s equivalent to about 10 per cent of the chipmaker’s outstanding stock.

To unlock the full share allotment, AMD's stock price would have to reach $600—a significant jump from its closing price of $164.67 last Friday.

The chipmaker wanted to make sure “OpenAI would be motivated for AMD to be successful,” Su said on a conference call. “And the more OpenAI deploys, the more revenue we get, and they get to share in the upside,” Su said.

This new accord with AMD marks the latest in a series of massive data center deals for OpenAI. The artificial intelligence startup is making an unprecedented bet on the tech industry: that the explosive and power-hungry demand for AI tools will continue its runaway growth unabated, requiring vast new computing capacity.

Earlier in September, Nvidia said it would invest as much as $100 billion in OpenAI to build AI infrastructure and new data centers with a capacity of at least 10 gigawatts of power. That’s equal to the peak electricity demand of New York City.

It’s unclear how exactly OpenAI will finance the enormous costs associated with the chips and data centers needed to build and run more advanced AI systems. Two months ago, OpenAI CEO Sam Altman said he wants to spend “trillions” on infrastructure to secure the computing resources he thinks the company needs for AI services. To bankroll that, Altman said his company is working to devise a “new kind” of financial instrument, without providing details.

The deal arrives amidst growing concern on Wall Street that the rapid, multibillion-dollar proliferation of AI chip and data center deals—funded through venture capital, debt, and unconventional arrangements—could lead the industry down a path similar to the dot-com crash of the late 1990s which ended in a spectacular crash and a wave of bankruptcies.

For AMD, the deal keeps its technology in the mix as OpenAI and other owners of large-scale data centers funnel billions toward expanding AI capacity. The chipmaker remains a distant second to Nvidia in the market for so-called accelerator processors.

AMD’s revenue from this specialized area is projected to reach $6.55 billion this year. Executives believe the OpenAI tie-up will significantly boost these sales in 2026, accelerate them further in 2027, and provide a path to taking the company's total AI revenue above $100 billion in the years to come.

It wasn’t immediately clear exactly what the pace of OpenAI’s chip deployments will look like as part of the AMD deal.

Su, on the call Monday, said that the idea is to deploy products as soon as possible. She pointed to the fact that the stock warrant structure is set up to run over the course of five years, until October 5, 2030.

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