The world of artificial intelligence (AI) is currently undergoing a huge upheaval. On one hand, a picture of a golden future is seen due to new technologies and billions of dollars of investment, while on the other, giants like Amazon founder Jeff Bezos are likening it to a big ‘bubble’. Against this backdrop, the multi-billion dollar deal signed by chipmaker AMD with OpenAI has caught the attention of the entire technology world. Is this deal a big opportunity for AMD or part of a bubble created by the growing AI craze, this question is currently being asked everywhere from Wall Street in the US to Silicon Valley.
AMD and OpenAI's historic partnership
According to an announcement made by AMD on Monday, the company will supply OpenAI with GPUs with a capacity of more than 6 gigawatts for several generations. This will start with its cutting-edge MI450 chips in the second half of 2026. The deal is not limited to just supplying chips, but in return, OpenAI will buy 160 million shares in AMD, or about 10% of the company. The process will be completed in stages, as AMD completes its chips.
According to AMD’s Chief Financial Officer (CFO) Gene Hu, “This partnership with OpenAI will generate billions of dollars in revenue for us and accelerate OpenAI’s AI infrastructure. This agreement is strategically important for both companies and will create significant value for shareholders.” The deal is expected to significantly increase AMD’s non-GAAP earnings-per-share, which has investors excited.
Intense competition in the AI space
AMD’s deal comes at a time when its main rival Nvidia announced a $100 billion investment in OpenAI just a few weeks ago. OpenAI is currently the world’s most valuable startup, with a valuation of $500 billion. This company has signed a $300 billion deal to buy cloud equipment from not only Nvidia, but also Oracle. This gives an idea of the huge amount of capital being poured into the development of AI.
AMD’s share lagged behind Nvidia’s in this competition last year. Where Nvidia’s share rose by 52%, AMD’s share rose by only 1%. However, the picture has changed in the last six months. AMD’s share has increased by 75%, while Nvidia’s share has increased by 84%. These figures make it clear that AMD is now giving Nvidia a strong competition in the AI chip market.
AI bubble concerns: Jeff Bezos and David Solomon's opinion
This huge investment in AI has started discussions on Wall Street about a possible ‘AI bubble’. Amazon founder Jeff Bezos explained at the Italian Tech Week that, “There is so much excitement about AI these days that every idea, good or bad, is getting funded. In this excitement, it is becoming difficult for investors to distinguish between good and bad ideas.”
Still, Bezos believes that despite this bubble, AI is a real and powerful technology that will have a far-reaching impact on every industry and company around the world. According to him, “the biggest impact of AI will be that it will increase the quality and productivity of companies.” Notably, Bezos’ company Amazon itself is one of the largest investors in AI. The company is building data centers for AI services and even making its own chips.
Goldman Sachs CEO David Solomon also expressed similar concerns. According to him, “When a new technology grows rapidly, the market often runs ahead of its potential. Some companies win, and some fail.” They say that the market is currently experiencing a huge bull market, which may be somewhat unrealistic.
What does this mean for investors?
On the one hand, shares of companies like Nvidia have registered an incredible growth of 1,350% in the last five years, and the company’s market value has reached $ 4.6 trillion. On the other hand, Bezos gave the example of an unnamed AI company that has a valuation of $ 20 billion despite not having any product. This clearly shows the risk of investing in the current situation.
The agreement between AMD and OpenAI is an important step in the AI revolution. It shows that AI is no longer just an experimental technology, but has become a multi-billion dollar industry. However, investors need to be careful. While the excitement of AI and its huge opportunities are real, the market is volatile in the early stages of any new technology. Therefore, when investing in this golden opportunity of AI, it is extremely important to consider the risk of a potential bubble. Only time will tell whether this enthusiasm gives rise to a new industrial revolution or goes down in history as another financial bubble.