A new report about OpenAI’s hardware strategy just powered significant gains for AMD stock.
Advanced Micro Devices (AMD 3.96%) stock surged in Tuesday’s trading. The company’s share price closed out the day’s trading up 4% and had been up as much as 4.7% earlier in the session.
Reuters published a report today detailing elements of OpenAI’s strategy when it comes to the use of hardware for artificial intelligence (AI). While most of the report was concentrated on the company’s efforts to design a new AI chip with the help of Broadcom and Taiwan Semiconductor Manufacturing, the report also noted that the AI leader had been purchasing processors from AMD.
Investors are keeping a close eye on OpenAI
OpenAI has been at the forefront of the generative AI revolution and is responsible for software including ChatGPT, Dall-E, and Sora. The company has been a big purchaser of Nvidia‘s graphics processing units (GPUs), and it’s also used computing power generated from these GPUs through its partnership with Microsoft. But while Nvidia maintains a dominant position in the market for advanced GPUs for AI applications, OpenAI is looking to diversify and mitigate its reliance on third-party hardware.
OpenAI is in the process of developing its own in-house AI chips, and it’s getting some help from Broadcom and TSMC with its first design. Today’s report on the OpenAI’s chip strategy also noted that the company had been purchasing processors from Advanced Micro Devices. The AI software leader is expanding rapidly and has huge long-term ambitions, and it’s ramping-infrastructure spending could wind up being a significant tailwind for AMD.
Is AMD on the verge of big AI wins?
Thus far, AI has not been the big sales and earnings driver for AMD that some investors had been banking on. Training for advanced AI models has primarily been utilizing ultrahigh-end GPUs, and Nvidia has significant advantages in the space. Meanwhile, the central processing units (CPUs) that AMD uses can be used for AI inference, but growth for demand on that front has been far less explosive. High-end GPUs are also commanding much stronger margins.
As AI infrastructure continues to evolve and expand, Advanced Micro Devices and other processing players outside of Nvidia could see stronger-growth tailwinds. OpenAI’s moves to purchase more hardware from AMD could already be an early indication of moves in that direction. Additionally, some analysts and industry watchers anticipate that demand for AI inference will increase as more applications are built, deployed, and scaled, and that could bolster demand for CPUs and less-powerful GPUs. AMD certainly has some substantial AI-related sales opportunities on the horizon, but investors should understand that there’s still a high degree of speculation involved in charting how competitive positioning in the hardware space will play out.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
