Advanced Micro Devices (AMD) has signed a multibillion-dollar deal with OpenAI to supply artificial intelligence (AI) chips.
As part of the deal, AMD is also offering OpenAI an option to buy about 10% of the chipmaker's stock.
AMD shares jumped more than 34% on Monday, their biggest gain in nine years, adding about $80 billion to the company's market value.
The deal highlights the high demand for computing power by OpenAI and the AI industry to develop technology that can rival human intelligence.
Under the deal, OpenAI will use hundreds of AMD AI chips or graphics processing units (GPUs) with a combined capacity of six gigawatts over several years, starting in the second half of 2026.
The amount of energy used is estimated to be equivalent to the needs of 5 million households in the United States (US), or about three times the power generated by the Hoover Dam.
AMD executives expect the deal to generate tens of billions of dollars a year and generate more than $100 billion in new revenue over four years from OpenAI and other customers.
OpenAI CEO Sam Altman also said the deal with AMD would help his company develop an AI infrastructure that can meet its long-term operational needs.
AMD is expected to record revenue of $32.78 billion this year, while analysts expect Nvidia to earn around $206.26 billion in revenue for the current fiscal year, according to LSEG data.
