Lisa Su Isn't Worried About AI Hype Fears, Says Big Bet With OpenAI Could Pay Off 'Tens Of Billions Of Dollars' — AMD Stock Spikes 1.5% After Hours
News Summary
On Monday, AMD CEO Lisa Su dismissed concerns about the current surge in AI investment being overblown, stating that the AI boom is just beginning and emphasizing the immense power of this technology. Her comments followed AMD's announcement of a landmark multi-year deal with ChatGPT-maker OpenAI to provide up to six gigawatts of Instinct GPU power for OpenAI's next-generation AI infrastructure. This agreement, set to begin in 2026 with AMD's new MI450 chips, could generate "tens of billions of dollars" in revenue. OpenAI CEO Sam Altman confirmed the partnership on X, highlighting the world's need for much more compute and noting that the deal complements OpenAI's ongoing work with Nvidia. OpenAI co-founder Greg Brockman also echoed sentiments that AI demand is underestimated, citing existing compute bottlenecks for new features. Following this news, AMD shares extended their momentum, rising 1.53% in after-hours trading after a nearly 24% surge during the regular session.
Background
Currently, the world is experiencing a massive investment wave driven by artificial intelligence technology, leading to surging demand for high-performance computing chips. Nvidia, with its first-mover advantage and technological prowess in AI GPUs, has long dominated the market. AMD, as a major competitor, has been actively investing in research and development to challenge Nvidia's supremacy in the AI chip market, introducing its Instinct series of GPUs. Leading AI model developers like OpenAI require immense computational resources to train and run increasingly complex AI models, making compute power a critical constraint for their development and the rollout of new features. This context fuels the ongoing debate about whether AI investment is overblown or sustainable, often referred to as "AI hype."
In-Depth AI Insights
Beyond the stated revenue, what strategic implications does this OpenAI deal hold for AMD's long-term competitive positioning against Nvidia? - This deal grants AMD significant customer validation in the AI infrastructure space, boosting the credibility and market visibility of its Instinct GPU series. - It marks a crucial step for AMD in diversifying its portfolio beyond traditional CPU and gaming GPU markets, pushing into the high-growth AI data center segment. - Direct collaboration with OpenAI will provide AMD with an invaluable feedback loop to optimize its future AI chip designs, enabling it to better meet the specific needs of top-tier AI developers, thereby accelerating its technological iteration and market adaptability. - This partnership reinforces AMD's resolve to challenge Nvidia's dominance in AI chips and could encourage more AI enterprises to consider AMD's solutions, potentially eroding Nvidia's near-monopoly. How might OpenAI's dual sourcing strategy (AMD and Nvidia) influence the broader AI chip market dynamics and pricing power? - By partnering with two major suppliers, OpenAI significantly reduces its reliance on a single vendor, enhancing supply chain resilience and bargaining power, especially in the context of current global chip supply constraints. - This strategy will intensify competition between AMD and Nvidia, potentially leading to more aggressive innovation and pricing strategies, which could translate into better performance-to-price ratios for buyers of AI compute power. - It incentivizes both chip giants to invest more in customized solutions and performance optimization to vie for OpenAI's share and the broader market, thereby accelerating the overall advancement of AI hardware technology. Given the context of "AI hype fears" and statements about underestimated demand, what are the underlying risks and opportunities for investors betting on sustained AI infrastructure growth? - Opportunities: The continued exponential growth in AI model complexity and application scenarios will persistently drive demand for vast computational resources, providing long-term growth momentum for AI infrastructure providers. The emergence of new AI applications and business models will further expand the market size. - Risks: There is a potential risk of market oversupply if AI demand growth underperforms expectations, or if new, more efficient AI architectures (such as ASICs or photonic computing) emerge and disrupt the existing GPU market, potentially leading to an oversupply of current AI chips. - Valuation Risks: Current valuations for many AI-related companies may already fully reflect or even exceed future high growth expectations. Any slowdown in growth or increased competition could lead to a valuation correction.