On October 6, 2023, OpenAI and Advanced Micro Devices (AMD) announced a significant multi-year partnership, boosting AMD’s stock by nearly 24% to a fresh 52-week high. This strategic alliance will see AMD supply up to six gigawatts of its Instinct GPUs, starting next year, which could yield tens of billions in annual revenue and approach $100 billion over four years. The deal includes warrants allowing OpenAI to acquire up to 160 million shares of AMD, ensuring a vested interest in AMD’s technology and promoting long-term demand. The collaboration positions AMD to compete with Nvidia in the AI sphere, diversifying its customer base and enhancing credibility. However, risks persist, including AMD’s high price-to-earnings ratio of 117, indicating potential overvaluation. Additionally, challenges in deploying the necessary infrastructure could affect revenue timelines. Overall, this partnership offers substantial growth potential for AMD in the evolving AI market.
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