AMD's Stock Surge to Fund OpenAI's Multibillion-Dollar AI Chip Orders, Analysts Say

Following the announcement of an expanded partnership between AMD and OpenAI on Monday, attention quickly turned to the unconventional payment method OpenAI will use for its AMD purchases: AMD's own stock.

To summarize: OpenAI has agreed to assist AMD in refining its line of Instinct GPUs, which compete with Nvidia, and to purchase and deploy 6 gigawatts of computing capacity from AMD over several years. AMD stated this agreement is worth billions in revenue.

However, OpenAI is not funding this with its own revenue. Instead, AMD has provided OpenAI with a substantial number of stock warrants—up to 160 million AMD shares—that will vest in stages as specific milestones are met. These milestones include predetermined increases in the stock price, with the final tranche requiring AMD shares to reach $600 each, according to AMD's disclosure. The stock was trading around $165 before the news and jumped to $214 by Monday's market close following the announcement.

If the stock price meets the targets, OpenAI fulfills all its required contributions, and holds all the AMD shares without selling any, OpenAI could generate enough from the AMD stock to cover the cost of numerous GPUs. The stock could be valued at approximately $100 billion.

"We would note that the final sixth tranche requires a market cap of nearly $1 trillion to vest—meaning, if OpenAI holds the stock until the deal concludes, its stake could be worth around $100 billion," UBS analyst Timothy Arcuri wrote in a research note on Tuesday.

Arcuri suggests a more plausible scenario is that OpenAI will sell its AMD stock over time to pay its bill to AMD. Essentially, this arrangement allows AMD to finance its customer's purchases.

Nevertheless, Arcuri contends that the validation of AMD's AI GPUs handling OpenAI's workloads—and by extension, any other AI tasks—is sufficiently valuable for AMD to pursue this financing strategy. "AMD highlighted ongoing discussions with other customers beyond OpenAI and expects this agreement to accelerate adoption momentum," he writes. Specifically, OpenAI's endorsement provides AMD an opportunity to sell its GPUs to the many cloud service providers it already supplies with CPUs.

Join 10,000+ tech and VC leaders for growth and networking at Disrupt 2025

Netflix, Box, a16z, ElevenLabs, Wayve, Hugging Face, Elad Gil, Vinod Khosla—just a few of the 250+ industry leaders heading 200+ sessions designed to provide insights that drive startup growth and enhance your competitive advantage. Don't miss the 20th anniversary of TechCrunch and the opportunity to learn from top tech voices. Secure your ticket before the event begins to save up to $444.

Join 10,000+ tech and VC leaders for growth and networking at Disrupt 2025

Netflix, Box, a16z, ElevenLabs, Wayve, Hugging Face, Elad Gil, Vinod Khosla—just a few of the 250+ industry leaders heading 200+ sessions designed to provide insights that drive startup growth and enhance your competitive advantage. Don't miss this chance to learn from top tech voices. Secure your ticket before the event begins to save up to $444.

Thus, in the long term, retail and institutional investors will effectively fund OpenAI's massive multi-year purchase of AMD GPUs if they drive the stock price higher.

In many respects, Nvidia is also financing OpenAI's purchases of its products through its own $100 billion investment announced last month. The key difference is that Nvidia's multiple investments in OpenAI have given it a stake in the rapidly growing AI provider, rather than the reverse.

What alternative did AMD have? By structuring a deal that minimizes OpenAI's upfront costs, AMD gains a significant foothold—UBS estimates as much as 30% market share—in one of the largest next-generation data center build-outs ever seen.

While Arcuri acknowledges that AMD's deal is "arguably less attractive" than Nvidia's, "we view this as a major validation of its [AMD's] roadmap that could attract other customers."