AMD shares surged 27% overnight after announcing a major chip supply agreement with OpenAI that could result in the ChatGPT maker acquiring up to 10% of the semiconductor company.

The deal added nearly A$120 billion to AMD’s market capitalisation as investors welcomed the company’s emergence as a key computing partner for OpenAI.

The multi-year deployment agreement covers six gigawatts of computing capacity, enough to power 5 million US households, beginning in the second half of 2026.

AMD expects the deal to generate tens of billions of dollars in revenue while accelerating OpenAI’s AI infrastructure expansion.

“This partnership is a major step in building the compute capacity needed to realise AI’s full potential,” OpenAI CEO Sam Altman said in a statement.

“AMD’s leadership in high-performance chips will enable us to accelerate progress and bring the benefits of advanced AI to everyone faster.”

OpenAI plans to construct a one-gigawatt facility using AMD’s upcoming Instinct MI450 chips starting next year.

As part of the agreement, AMD has issued OpenAI a warrant for up to 160 million shares of common stock, structured to vest as specific milestones are achieved, including the initial one-gigawatt deployment.

If fully exercised, the warrant would give OpenAI approximately 10% ownership of AMD.

“We are thrilled to partner with OpenAI to deliver AI compute at massive scale,” AMD CEO Lisa Su said.

“This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world’s most ambitious AI buildout.”

The AMD deal represents one of the largest GPU deployment agreements to date and arrives just two weeks after OpenAI announced a $150 billion chips agreement with Nvidia.

The diversification strategy aims to reduce OpenAI’s reliance on a single supplier, challenging Nvidia’s industry dominance.

Nvidia shares dipped 1.1% on Monday.

OpenAI is also in discussions with Broadcom to develop custom chips for its next-generation GPUs.

The agreements reflect a complex AI supply chain emerging across the sector, with Nvidia providing capital for chip purchases, Oracle building massive data centres, and AMD and Broadcom supplying GPUs.

The structure mirrors the $750 billion Stargate project announced by President Trump in January, involving OpenAI, Oracle, and SoftBank to rapidly build AI infrastructure in the US.

OpenAI’s first data centre in Abilene, Texas, is already operational using Nvidia chips, with construction continuing to expand capacity.

Planned facilities in New Mexico, Ohio, and the Midwest are expected to use multiple suppliers, including AMD.