Hold Your Horses: AMD's OpenAI Payday Starts in a Year (and Really Ramps Up in 2027)

Chip designer Advanced Micro Devices (NASDAQ: AMD) just inked a headline-grabbing artificial intelligence (AI) partnership with ChatGPT maker OpenAI -- but investors shouldn't expect big sales right out of the gate.

The OpenAI contract is indeed a big deal. However, the revenue clock doesn't start until the second half of 2026, with the real ramp-up to follow in 2027. Each gigawatt-scale tranche of AMD's Instinct MI450 and Helios rack installations could translate into double-digit billions of annual AI-related data center revenue once ramped. You just have to give AMD some time to get its number-crunching ducks in a row.

AMD's AI superhighway won't open until late 2026

AMD is finally getting the green light to build a 6-gigawatt AI superhighway with OpenAI. But it takes time to deliver on a project this big.

The on-ramp opens in late 2026, when the first AMD MI450/Helios systems go live. Traffic really starts moving in 2027, when each new lane -- Instinct chips and Helios racks -- can add many billions of annual revenue once it's humming along at full scale. AMD's management expects the partnership to add more than $100 billion to the company's sales over "the next few years," including direct OpenAI shipments and a smattering of additional deals inspired by this week's announcement.

The speed limit and mile markers are baked into a complex set of stock warrants: OpenAI unlocks vesting based on actual chip deployments and AMD share-price targets.

If all targets are met, OpenAI could acquire up to 160 million AMD shares in five years. That's about 10% of the 1.6 billion shares AMD has in circulation today. The final tranche takes effect when AMD's stock reaches $600 per share. That's about triple the stock's closing price on Oct. 6.

Whether OpenAI goes public or not, this structure gives the private company market-based performance incentives. It's a great road for AMD and a genuine route around Nvidia's pricey tollbooths -- but it's a long drive with scheduled maintenance, not an instant teleport.

AMD and OpenAI can still see other people

Crucially, this contract is nonexclusive. AMD can sell MI450/Helios to anyone, and OpenAI will keep buying AI accelerators from Nvidia (NASDAQ: NVDA) (and possibly others) because the world needs every ounce of AI compute it can get nowadays.

You're watching the industry shift into a multivendor phase -- less obviously dominated by Nvidia, more about second-sourcing and managing the total cost of ownership. The AI accelerator industry suddenly looks more competitive. AMD's Instinct chips may not win many head-to-head performance comparisons against Nvidia's Blackwell family, but the math often changes when you include power consumption in those calculations.

Image source: Getty Images.

The domino effect: Who's next in line to buy AMD chips?

Will OpenAI rivals like Anthropic, X, Meta Platforms, or Alphabet's Google follow with big AMD orders? That's hard to tell, and some of it may already be happening behind closed doors. It's fair to say that OpenAI tends to set the tone in the AI market, and others tend to follow suit when the ChatGPT maker takes a big step.

Wall Street was quick to embrace the news either way. AMD stock hit a fresh all-time high on the announcement, arguably for good reason: This deal is real validation and a clearer line of sight to big AI dollars for the chip-supplier underdog.

You just need to give the top line some time to expand, since the OpenAI sales won't start flowing until the second half of 2026. But you know what they say about patience being a virtue, especially on Wall Street. Big, juicy AI revenue streams are coming AMD's way, just not right away.

Anders Bylund has positions in Alphabet and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.