AI moves by the hour.
Given the pace at which the industry’s moving, it feels that one announcement could rewrite the entire leaderboard.
This week, it was Advanced Micro Devices’ (AMD) turn, as OpenAI became both partner and investor in a monumental deal built on scale and alignment.
Here are the terms of the deal that turned heads across Wall Street Oct. 6:
- Equity: OpenAI receives warrants for up to 160 million AMD shares at $0.01, backed by technical and commercial milestones with stock-price targets reportedly near $600.
- Scale and timing: Six gigawatts of compute have been committed, with the first gigawatt expected to be available in 2026.
- Revenue math: AMD expects “tens of billions” in sales from OpenAI-related deployments, with estimates exceeding $100 billion over the next four years.
- Non-exclusive: Sam Altman said the pact adds to, instead of replacing, Nvidia orders.
- Strategic intent: OpenAI is looking for maximum compute while diversifying suppliers.
CEO Lisa Su hailed the pact as “a big day for AMD and for the AI industry.”
The power-packed combo of capital, capacity, and timing has shifted sentiment rapidly for AMD.
All of that sets the stage for veteran tech analyst Dan Ives to weigh in on the implications for AMD, Nvidia, and the wider AI cycle.
His comments were curt, and his three-word verdict summed it all up perfectly.
Image source: Cheng/AFP via Getty Images
Dan Ives calls AMD-OpenAI deal a “huge vote of confidence”
Wedbush’s Dan Ives hails AMD’s deal with OpenAI as a “major validation moment” for the company.
The veteran tech analyst believes the deal positions the AI chipmaker firmly at the center of the global AI chip spending cycle. AMD stock surged 23.7% to close at $203.71 on Oct. 6 after the announcement.
On X (formerly Twitter), Ives expanded on his view, writing:
With a 10% stake in AMD, this quickly brings Lisa Su and AMD right into the core of the AI chip spending cycle and is a huge vote of confidence from OpenAI and Altman. Any lingering fears around AMD should now be thrown out the window. Major validation moment for AMD.
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Also, in an appearance on CNBC’s “Closing Bell,” Ives added that the deal puts Lisa Su/AMD “right into the AI revolution.”
He thinks AMD’s AI share can jump from 10% to 15% to 20%, adding that for every $1 OpenAI invests in AMD, it could potentially realize $12 to $15 in value.
Moreover, he maintains that Nvidia remains the “godfather,” capturing 90% of AI spending, with demand outstripping supply by 10 to 12 times.
According to Ives, the deal underscores that the AI arms race is early, “a 1996 moment, not 1999,” with Wall Street underestimating capex by 30% to 35%.
Quick Takeaways
- Dan Ives hailed OpenAI’s 10% stake in AMD as a “major validation moment” and “huge vote of confidence” in CEO Lisa Su.
- Ives feels that the move puts it “right into the AI revolution,” lifting its AI share to 15% to 20%.
- On CNBC’s “Closing Bell,” Ives said each $1 OpenAI invests could deliver $12 to $15 in value for AMD.
- He said Nvidia remains the “godfather” with 90% of AI spend, but the race is in its early innings.
Lisa Su calls OpenAI partnership “a big day for AMD and AI”
On CNBC‘s “Squawk on the Street” with Jim Cramer, AMD CEO Lisa Su said that the new partnership with OpenAI was “a big day for AMD, for our relationship with OpenAI, and for the AI industry.”
She talked about the power-packed five-year agreement with 6 gigawatts of deployments while emphasizing the warrant structure that “ties performance to each other.”
Related: Palantir just walked away from a billion-dollar fight
Su was clear about the economics, saying, “Every gigawatt of compute is significant double-digit billions of revenue to us.” She also added that the deal was day-one accretive to AMD’s top-and-bottom line, turbocharging its AI footprint.
On the product roadmap side, Su said AMD is shipping the MI350 already with “great adoption” and that she is “even more excited about MI450,” with OpenAI’s engineering feedback being a massive advantage.
Greg Brockman, OpenAI’s co-founder and president, joined the interview and explained that the tie-up adds capacity rather than replacing Nvidia.
“We need as much computing power as we can possibly get,” he said. Nvidia remains critical for training and inference, but AMD “is really delivering in the next generation of chips.”
Su said the warrants were in place because “it is actually hard to build these huge gigawatt deployments.” The structure ensures a long and fruitful partnership where OpenAI gets to benefit from the success of AMD.
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