AMD and OpenAI Forge $Billions AI Chip Deal, Xbox Handheld Canceled

AMD’s agreement to supply artificial intelligence (AI) chips to OpenAI, AI computing leader is a multi-year, multi-billion dollar agreement. This agreement covers the supply of 6 gigawatts of AMD Instinct GPUs, to be fulfilled in the MI450 chip series beginning late 2026, and constitutes the basis for the next generation OpenAI AI infrastructure. This establishes enormous computational power for AI. 

AMD will generate tens of billions of dollars in revenue as a result of this partnership as stated by AMD CEO Lisa Su. This partnership is a revenue booster for AMD as well. OpenAI gets the option to purchase a 10% stake which is one of the first of AMD’s partnerships which aligns OpenAI and AMD economically. 

AMD and OpenAI AI chip partnership is the foundation of AMD's long term growth over the next several years as OpenAI will build AI’s most advanced computing capabilities, breaking the compute capabilities ceiling. This partnership actively competes with Nvidia, Open AI's computing and AMD's partnership AI infrastructure also hosted Nvidia's AI chips as well competing with Nvidia.

Today, we’re announcing a multi-year, multi generation strategic partnership with @OpenAI that puts AMD compute at the center of the global AI infrastructure buildout.

✅ 6GW of AI infrastructure
✅ Initial 1GW deployment of AMD Instinct MI450 series GPU capacity beginning 2H… pic.twitter.com/AVRgSePB0m

— AMD (@AMD) October 6, 2025

Impact on AMD’s Stock and Market Position

Reflecting the confidence of investors, AMD shares jumped over 25% in premarket trading following the announcement. Experts predict the AMD’s growth and expansion into the AI sector, and not just gaming chips, will be accelerated by the potential AI partnership. 

AMD’s position as a core supplier of AI technology is substantially enhanced and the partnership will drive AI technology innovation cementing AMD’s reputation globally as a high-performance chip maker. 

BREAKING: AMD stock, $AMD, soars over +25% on news that OpenAI is taking up to a 10% stake in the company.

OpenAI will deploy up to 6 gigawatts of AMD Instinct GPUs, beginning with a 1-gigawatt rollout in 2026.

This is a MASSIVE deal. pic.twitter.com/2bI1v2ABMT

— The Kobeissi Letter (@KobeissiLetter) October 6, 2025

Why AMD Canceled Xbox Handheld

Microsoft’s Xbox handheld gaming console, and AMD’s demand that the Xbox division commit to a minimum sale of 10 million units of chips, is the basis of reports explaining the cancellation of the highly anticipated handheld gaming console. 

Microsoft’s decision to cancel the handheld console, deemed a high-risk investment, is reinforced by the disparity of the handheld gaming market compared to the Steam Deck, which sold only 5 million units. Microsoft’s cancellation decision is more favorable given the partnership approach to hardware makers, which is the partnership with Asus for the ROG Xbox Ally handheld line. 

This cancellation exemplifies the control that AMD and other powerful chip suppliers have over gaming hardware development.

AMD's Console Chip Milestones: More than 100 Million Chips Delivered

AMD has delivered more than 100 million console generation chips which power flagship devices including the Sony PlayStation 5 and Valve Steam Deck. This considerable market share cements AMD's reputation as a provider of reliable and high-quality gaming hardware.

This achievement demonstrates AMD's ability to satisfy large-scale hardware requirements, which is one of the reasons why AMD has negotiated for AI chips with OpenAI and is in talks for the handheld Xbox.

Plans AMD has on the Table

• Deployment of MI450 GPUs for AI data centers starts late 2026.
• Continued collaboration with OpenAI to co-develop future GPUs.
• Potential increase of market share in AI chips, contesting Nvidia.
• Concentration on scalable AI infrastructure and evolving gaming hardware collaborations.