AMD’s recent partnership with OpenAI could revolutionize its standing in the AI chip market. The collaboration involves OpenAI deploying 6 gigawatts of AMD’s Instinct GPUs, beginning with a 1 gigawatt release of the MI450 chip in 2026. This deal, where AMD grants OpenAI warrants for up to 160 million shares, positions AMD for significant annual revenue, potentially exceeding tens of billions by 2027.
In contrast to Nvidia’s direct investment in OpenAI, AMD is benefiting from OpenAI’s stake, encouraging collaboration for AMD’s technological growth. This strategy may open opportunities with hyperscalers seeking alternatives to Nvidia’s GPUs. Analysts suggest the partnership can boost AMD’s earnings potential significantly, potentially raising projected earnings per share by 2027 to around $10.
Despite competition from Nvidia and risks related to the rollout timeline, AMD’s long-term outlook appears favorable, making it an attractive option for investors even after recent stock price increases.
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