Advanced Micro Devices shares rose sharply after announcing a major deal with OpenAI to supply AI infrastructure, strengthening AMD’s position in the rapidly expanding AI hardware market.
BNN Bloomberg spoke with Romeo Alvarez, director and research analyst at William O’Neil + Co., about why the partnership is a major endorsement for AMD, how it could shift the balance of power among chipmakers, and what challenges remain around financing and implementation.
Key Takeaways
- AMD’s agreement with OpenAI will see up to six gigawatts of AI chips deployed, starting in 2026.
- OpenAI could take up to a 10 per cent stake in AMD through performance-based warrants.
- The partnership boosts AMD’s visibility and credibility in a market long dominated by Nvidia.
- Analysts say the deal may force rivals and hyperscalers to diversify chip supply chains.
- Questions remain about how OpenAI will finance its large-scale AI infrastructure expansion..
Read the full transcript below:
MERELLA: Big news in the tech world today. Chipmaker Advanced Micro Devices has announced a deal with OpenAI to roll out AI infrastructure. That deal could see OpenAI take a 10 per cent stake in the company. For perspective, let’s go to Romeo Alvarez. He’s a director and research analyst at William O’Neil + Co. Thanks for joining us today.
ROMEO: Thank you for having me. My pleasure.
MERELLA: You see this as transformational for AMD. How so?
ROMEO: Well, for the past several years—since the AI trend really took off on the semiconductor side—Nvidia has been the king of AI chips. They’ve been the main supplier to every hyperscaler trying to develop a large language model or any leading AI offering. And for the first time, AMD has signed a high-profile deal with one of these top-tier developers of AI technology. I think that’s a massive endorsement for the company.
MERELLA: OpenAI already buys from Nvidia. Why is it good for them to buy from AMD? Is diversification necessary here?
ROMEO: Correct. I don’t think any company wants to rely on a single vendor. The objective is to diversify across suppliers, even if the technologies aren’t identical. We’re not talking about a commodity-type offering, but AMD’s technology is competitive enough for OpenAI to partner with them. OpenAI is also working with Broadcom for custom chips, so they’re clearly exploring multiple alternatives. I don’t believe just one company benefits here. The pie is so big that multiple players can benefit from the same trend.
MERELLA: Is it clear how OpenAI is going to pay for this?
ROMEO: That’s the big question. And it doesn’t just apply to the AMD contract—it also applies to the Oracle partnership. We’re all wondering the same thing. It will likely come from debt, given that OpenAI is still not profitable. So yes, it’s a valid question how they plan to finance this.
MERELLA: What’s your take on the structure of the deal, where OpenAI can buy a stake in AMD? I think it’s around a penny per share?
ROMEO: Correct. Looking purely at the structure, I think it’s beneficial for both AMD shareholders and OpenAI. There are incentives for both parties to make this partnership work. AMD benefits because the more chips it sells, the more revenue and profit it generates. For OpenAI, there’s incentive as well, since it could eventually gain up to a 10 per cent ownership in AMD.
MERELLA: What’s your outlook for AMD at this point? Does this deal change your view?
ROMEO: Definitely. We’ve been on the sidelines at William O’Neil on AMD. We always viewed AMD as the Pepsi-Cola to Nvidia’s Coca-Cola, if I can use that analogy. But this is a significant endorsement. We still don’t have AMD on our buy list—we do have Nvidia and Broadcom—but this is something we’ll have to re-evaluate following this announcement.
MERELLA: More broadly, we’re seeing a ramp-up in AI infrastructure as more complex uses emerge. When you look at deployment right now, where is AI most widely being used?
ROMEO: The clearest example we can all relate to is ChatGPT—answering everyday questions. But going forward, it’ll extend to health care and research and development. It’s already being used for coding and software automation. Google is a leader in that space, and Microsoft is integrating co-pilots into its Office products. Apple is developing AI tools for video and photo editing. I think it’s going to be everywhere, and we’re still in the early stages of this AI trend.
MERELLA: Got it. Romeo Alvarez, we’ll have to leave it there. Thanks for joining us.
ROMEO: Thank you.
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This BNN Bloomberg summary and transcript of the Oct. 6, 2025 interview with Romeo Alvarez are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
