OpenAI’s investment in AMD positions the company as a competitive player in the AI chip market, potentially generating tens of billions in revenue. AMD’s stock surged following the news, as OpenAI plans to deploy 6 gigawatts of AMD’s Instinct GPUs, starting with a 1 gigawatt rollout in late 2026. This partnership differentiates AMD from Nvidia, which recently invested in OpenAI, allowing AMD to secure OpenAI as a key customer. The collaboration enhances AMD’s software ecosystem and may attract other large data center clients seeking alternatives to Nvidia’s costly chips.
Despite potential risks, including the delayed rollout of GPUs and share dilution due to warrants, AMD’s prospects look promising. Morgan Stanley estimates each gigawatt could boost AMD’s earnings significantly by 2027. With a forward P/E ratio of 36 and an appealing PEG ratio of 0.4, long-term investors may find it worthwhile to consider AMD stock. However, The Motley Fool identifies ten alternative stocks worth exploring.
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