Fox Business alert: a seismic shift in the A.I. arms race. AMD and OpenAI have reached a deal to deploy 6 gigawatts of power for OpenAI's next-generation A.I. infrastructure, all of it generated by hundreds upon hundreds of thousands of AMD's graphics processing units. So just to put this into perspective, folks, 6 gigawatts of power roughly 4.5 million homes in the U.S. But this isn't just 'we'll give you money and you give us chips' deal. It involves AMD granting OpenAI an enormous number of stock warrants, the first tranche of which only goes to OpenAI after the initial 1 gigawatt is deployed. The deal has got investors vibrating with excitement. Just look at AMD stock — it is exploding to an all-time high at today's open and has gained 25% right now to $205.97. That gain has added $74 billion to AMD's market cap in a single session. AMD's valuation now sitting at more than $330 billion. Let's get more on this very initial and interesting deal and unpack it. It's massive and somewhat unusual — AMD Chair and CEO Lisa Su and OpenAI co-founder and President Greg Brockman.
Greg, I know that — is Greg there?
Okay, so he's standing by. We'll get him in just a minute. Lisa, let me begin with you. This is a five-year deal. Give us a sense of when it kind of started to really take shape. I know you guys have been in talks and had relationships in the past, but when did it start to really take shape?
So first of all, Liz, it's great to be here. Thank you for the opportunity. You know, today is a big day for AMD. We are very proud of this agreement that we have now signed with OpenAI. And really, I think you said it at the top, right? We're in a place where A.I. compute is kind of the foundation — you know, everyone is looking to put more compute on board. And so partnering with OpenAI makes total — it's like the exact right opportunity right now. And to your question of how did it come about? Look, we've been working with OpenAI over the last few years and we've had a very good relationship. They've given us a lot of feedback. Sam Altman was at our A.I. event in June. But what we said is the world needs more A.I. compute as soon as possible, and we want to go big. And so we've been working for many months now on really a large-scale deal. And what this is is 6 gigawatts, so it's massive compute. For each gigawatt, it's, you know, significant double-digit billions of revenue for AMD, and it's also an opportunity to accelerate A.I. compute for OpenAI. So it's a win-win all around.
Well, you could argue and say, 'Well, OpenAI, finally you guys are choosing our chips in such a huge number.' That, to me, is very interesting because it says what? What does it validate about your technology when it comes to the entire market?
Well, it's fair to say, Liz, to build the type of technology that we're talking about, to talk about gigawatts of compute, it's really hard. You need all parts of the ecosystem to work together. You know, we do the silicon, we do scale solutions, OpenAI has the models, they have the services that go about, our cloud service providers. And so what this really says is the tech has to be there. That's foundational for this. We very, very much appreciate all of the work, and I know Greg has been a huge supporter of really ensuring that we get the technology right and get the roadmaps right. So we have great capability today with our MI-350 chips, but next generation, we have something called the MI-450, which is a significant step-up. And we're really excited to call OpenAI a lead partner in this. And it is all about ensuring that things work at massive scale and that we can get that acceleration and roadmap out as soon as possible.
I have some big AMD stock fans, and one of them wanted me to ask you this specifically: are there potential secondary deals of similar significant size that are now up for grabs that you feel this is going to help you land, because OpenAI has given you such a thumbs up?
Well, I will definitely say, Liz, look. We love this partnership. This is a long-term partnership, multi-year, multi-generation. We are absolutely going to put our best capabilities on it, but we have a lot of other partners in the marketplace. That's the beauty of the overall A.I. ecosystem. We all are in this together to build A.I. compute as fast as possible, so I'm very excited. I must say that from our partner standpoint, we have a very rich set of partners — Microsoft, Oracle, Meta, many others. And it is a significant day in terms of just ensuring that the A.I. compute capability is really built out. And yes, I do feel that with this opportunity with OpenAI, it also opens up many other opportunities in terms of existing customers and new customers who will be very excited about using our next-generation chips.
Lisa, can you deliver? You already have so many customers and now this is hundreds of thousands of chips, just for one gigawatt. Can you hit the deadlines here and manufacture this much?
Well, Liz, absolutely. I mean, as we go through the full build-out to 6 gigawatts, you can imagine it'll be millions of chips, and we have a world-class supply chain. We've been working through every aspect of this. This is what we do for a living — is really build the entire foundation of compute. So our GPU roadmap, very strong. We're also very excited about our CPUs and all that goes into a data center. So we are very much able to satisfy all that our deal with OpenAI covers, as well as our broad set of other customers.
Okay, so let me just ask about this particular deal, because what it does is it grants an enormous number — 160 million — stock warrants to OpenAI. This is 'performance-based' but it's not your performance. They've got to perform, meaning the first tranche doesn't kick in until that first gigawatt of compute power is purchased. So they need to deploy that. But these are at a penny, one penny a piece. I find this really interesting. So what are you getting? Is this just a way of discounting the price of the chip, or is there some broader strategic relationship contemplated that has something separate to do from the chip purchases? I mean, they could end up having a 10% stake in Advanced Micro Devices, and what does that actually mean?
Yeah, so Liz, I think that this is a great question. Let me just take a step back and just give you a flavor of where we are in the A.I. compute landscape right now. This is about sort of massive, accelerating build-outs, and you'd need a lot of capabilities. The entire ecosystem has to come together. So this is about how do we get more A.I. compute online, faster. When we thought about this deal, what we thought about is how can we ensure that both companies, AMD and OpenAI, are committed to working together over multiple years. And that's what this deal is all about. So think about it as a win, win, win, right? From an AMD standpoint, it is accretive from day one. The first revenue we ship is good for AMD shareholders. We get significant double-digit billions revenue for every gigawatt that OpenAI deploys. On top of that, we work really closely together on the software and the hardware and the networking ecosystem, which is very helpful for all of our ecosystem. And then as we ramp deployment, OpenAI gets the benefit of some of the value creation. So it's like win, win, win.
