{"id":231911,"date":"2025-10-07T10:00:00","date_gmt":"2025-10-07T14:00:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=231911"},"modified":"2025-10-08T03:52:49","modified_gmt":"2025-10-08T07:52:49","slug":"amds-openai-deal-could-spark-a-new-ai-arms-race-with-nvidia","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/stocks\/amds-openai-deal-could-spark-a-new-ai-arms-race-with-nvidia\/","title":{"rendered":"AMD&#8217;s OpenAI Deal Could Spark A New AI Arms Race With Nvidia"},"content":{"rendered":"\n<p><strong>Advanced Micro Devices Inc<\/strong>.\u2019s (NASDAQ:<a href=\"https:\/\/www.benzinga.com\/quote\/AMD\" target=\"_blank\" rel=\"noreferrer noopener\">AMD<\/a>) multi-year deal with OpenAI could unlock $135 billion in revenue and mount a serious challenge to&nbsp;<strong>Nvidia Corp<\/strong>.\u2019s (NASDAQ:<a href=\"https:\/\/www.benzinga.com\/quote\/NVDA\" target=\"_blank\" rel=\"noreferrer noopener\">NVDA<\/a>) long-standing&nbsp;<a href=\"https:\/\/www.benzinga.com\/topic\/ai\" target=\"_blank\" rel=\"noreferrer noopener\">dominance, according to Goldman Sachs<\/a>.<\/p>\n\n\n\n<p>In a note shared Tuesday, the bank\u2019s analyst&nbsp;<strong>James Schneider<\/strong>&nbsp;called the announcement &#8220;a strong positive&#8221; for the AMD\u2019s long-term GPU business and significantly raised its earnings estimates and price target.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-big-is-openai-s-opportunity-for-amd\">How Big Is OpenAI\u2019s Opportunity For AMD?<\/h2>\n\n\n\n<p>The&nbsp;<a href=\"https:\/\/www.benzinga.com\/markets\/tech\/25\/10\/48039154\/chatgpt-parent-openai-amd-partner-in-landmark-ai-deal\" target=\"_blank\" rel=\"noreferrer noopener\">AMD-OpenAI deal<\/a>&nbsp;involves deploying a staggering 6 gigawatts (GW) of AMD GPUs\u2014graphics processing units\u2014to power OpenAI&#8217;s expanding data center infrastructure over the next several years.<\/p>\n\n\n\n<p>In return, OpenAI could receive up to 160 million AMD shares\u2014valued at around $75 billion, or roughly 10% of the company\u2014through performance-based warrants that vest in stages as GPU deployments progress, with the final tranche triggered by the sixth gigawatt and a $600 AMD share price.<\/p>\n\n\n\n<p>According to Goldman Sachs, the OpenAI deal represents a $135 billion revenue opportunity for AMD based on projected average selling prices for GPU deployments.<\/p>\n\n\n\n<p>The bank now expects AMD&#8217;s earnings per share (EPS), excluding stock-based compensation, to rise by 21% in 2026 and 62% in 2027.<\/p>\n\n\n\n<p>Goldman&#8217;s new assumptions forecast staggered GPU deployments starting with 0.25GW in 2026 and scaling to 2GW by 2030.<\/p>\n\n\n\n<p>Based on this timeline and estimated GPU pricing of $22.5 billion per GW, AMD could see massive top-line growth while also capturing a meaningful share of the AI accelerator market currently dominated by Nvidia.<\/p>\n\n\n\n<p>The deal also gives AMD access to OpenAI&#8217;s training stack\u2014previously a near-exclusive Nvidia stronghold\u2014signaling a potential shift in AI chip architecture preferences among leading developers.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">AMD Partners With OpenAI: Is Nvidia Losing Ground?<\/h2>\n\n\n\n<p>Nvidia remains the clear leader in AI chips, particularly for training large language models. But the AMD-OpenAI tie-up represents a &#8220;modest incremental negative&#8221; for Nvidia. According to Goldman Sachs, it reduces the firm&#8217;s lock on OpenAI&#8217;s training workloads.<\/p>\n\n\n\n<p>Still, the bank isn&#8217;t signaling a massive transfer of market share just yet.<\/p>\n\n\n\n<p>Nvidia remains a key player, but it now faces an emboldened rival backed by one of the world&#8217;s most prominent AI developers.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Are The Risks For AMD?<\/h2>\n\n\n\n<p>Despite the upside, Goldman is not turning outright bullish.<\/p>\n\n\n\n<p>The bank citing &#8220;significant customer concentration,&#8221; with OpenAI potentially accounting for more than 40% of AMD&#8217;s revenue by 2027.<\/p>\n\n\n\n<p>There are also questions about OpenAI&#8217;s ability to secure sufficient funding to support this multi-year GPU deployment plan.<\/p>\n\n\n\n<p>If OpenAI fails to meet its financing goals, AMD\u2019s projected revenue gains could be delayed or reduced.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Upside Is Limited\u2014For Now<\/h2>\n\n\n\n<p>Following AMD\u2019s 23% rally on Monday, this suggests that much of the optimism is already priced in.<\/p>\n\n\n\n<p>The risk-reward profile, however, could improve quickly if AMD executes well and OpenAI secures continued funding. In such a scenario, Goldman said it could become &#8220;more constructive&#8221; on AMD shares in future quarters.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted October 7, 2025 &#8211; <a href=\"https:\/\/www.benzinga.com\/analyst-stock-ratings\/analyst-color\/25\/10\/48074088\/amd-openai-deal-ai-chip-race-nvidia-partnership\">AMD&#8217;s OpenAI Deal Could Spark A New AI Arms Race With Nvidia<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Advanced Micro Devices Inc.\u2019s multi-year deal with OpenAI could unlock $135 billion in revenue and mount a serious challenge to\u00a0Nvidia Corp.\u2019s long-standing\u00a0dominance, according to Goldman Sachs.<\/p>\n","protected":false},"author":1128,"featured_media":228756,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6,8,9,22,26,3],"tags":[],"contributors-categories":[13584],"class_list":{"0":"post-231911","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-north-america","8":"category-region","9":"category-securities","10":"category-stocks","11":"category-text-articles","12":"category-traders-insight","13":"contributors-categories-benzinga"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.7) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>AMD&#8217;s OpenAI Deal Could Spark A New AI Arms Race With Nvidia<\/title>\n<meta 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