AMD Lands OpenAI GPU Megadeal, Offers Penny Warrant for 10% Stake

AMD struck a multi-year deal to supply OpenAI with hundreds of thousands of MI450 GPUs starting in H2 2026, and issued a warrant letting OpenAI buy up to 10% of AMD for $0.01 per share. AMD forecasts tens of billions in annual revenue and more than $100 billion over four years from the deal’s ripple effects; its shares jumped over 34%. Analysts view the agreement as validation of AMD’s AI offerings but not a threat to Nvidia’s dominance as OpenAI continues to diversify compute sources.

Key Points

AMD will supply OpenAI hundreds of thousands of MI450-based GPUs over several years starting in H2 2026, totaling about six gigawatts of compute; OpenAI will build a one-gigawatt MI450 facility beginning next year.
OpenAI receives a warrant to buy up to 160 million AMD shares at $0.01 each (about a 10% stake), vesting after initial shipments and upon hitting AMD share-price milestones up to $600.
AMD expects tens of billions in annual revenue from the pact and over $100 billion in cumulative new revenue across customers over four years; AMD shares surged more than 34% on the news.
Analysts call it a strong vote of confidence in AMD but expect Nvidia’s dominance to persist; Nvidia is supplying at least 10 gigawatts to OpenAI and investing $100 billion in the startup.
OpenAI is diversifying compute sources (including its own chips with Broadcom) and targets roughly 250 gigawatts by 2033; how it funds the scale-out remains unclear.

Sentiment

Overall, the sentiment of the Hacker News discussion is overwhelmingly skeptical and critical. While acknowledging the immediate market reaction (AMD stock surge), commenters largely view the deal with distrust, interpreting it as a prime example of circular financing, financial engineering, and a clear indicator of an 'AI bubble' rather than a fundamentally sound business development.

In Agreement

The deal represents a significant market validation for AMD's AI hardware and software, potentially enabling them to establish a strong foothold in the large-scale AI market and challenge Nvidia's current dominance.
AMD's stock price jump indicates strong investor belief that the deal will generate substantial future revenue and demonstrates confidence in AMD's ability to compete in the AI space.
Equity stakes tied to performance and purchases can be a legitimate strategy for a non-market leading vendor like AMD to incentivize a market leader like OpenAI to commit to their products, offsetting risk for the client.
This partnership could foster the development of better software libraries and tools for AMD chips, providing a much-needed alternative to Nvidia's CUDA ecosystem and benefiting the wider AI community by reducing vendor lock-in and pricing power.

Opposed

The deal is a prime example of "circular financing" or "financial engineering," where AMD essentially subsidizes OpenAI's GPU purchases by offering deeply discounted equity, which OpenAI could leverage to fund the acquisition, creating an illusion of financing.
The transaction is widely seen as a symptom of an "AI bubble," with many drawing parallels to past speculative market frenzies (e.g., dot-com or telecom bubbles of 1999-2000) where valuations are driven by hype rather than fundamental economic realities.
Concerns are raised about OpenAI's financial sustainability, given its significant cash burn, implying that such massive compute commitments are "desperation plays" to generate hype rather than being based on proven profitability or robust funding.
Existing AMD shareholders face dilution from the issuance of new shares, and the long-term value generated for AMD is questionable if OpenAI fails to monetize its compute effectively or if the AI bubble bursts, potentially leading to AMD stock decline.
Nvidia's software ecosystem (CUDA) still represents a significant moat that AMD's hardware, despite its capabilities, has struggled to overcome, making the success of this deal heavily reliant on difficult and costly software development efforts.