Nvidia CEO Jensen Huang expressed surprise at AMD's decision to offer OpenAI up to 10% ownership in exchange for a massive chip purchase commitment. The comments came as AMD stock surged 35% this week following the multibillion-dollar partnership announcement that directly challenges Nvidia's AI chip dominance.
The AI chip wars just got a lot more interesting. Nvidia CEO Jensen Huang didn't hold back his thoughts on AMD's bold move to offer OpenAI a potential 10% stake in the company as part of their massive chip partnership announced Monday.
"It's imaginative, it's unique and surprising, considering they were so excited about their next-generation product," Huang told CNBC's Squawk Box on Wednesday. "I'm surprised that they would give away 10% of the company before they even built it. And so anyhow, it's clever, I guess."
The deal that's got everyone talking commits OpenAI to purchasing 6 gigawatts worth of chips over multiple years, including AMD's forthcoming MI450 series. In return, OpenAI receives warrants for up to 160 million AMD shares - roughly 10% of the company if fully exercised - with vesting tied to deployment milestones and AMD's stock performance.
Markets have responded with enthusiasm. AMD shares rocketed 35% this week and gained another 5% Wednesday following Huang's comments. Even Nvidia stock climbed nearly 3% as investors digested the competitive implications.
This represents the most direct challenge yet to Nvidia's stranglehold on AI computing infrastructure. While Nvidia controls an estimated 80% of the AI chip market, AMD has been scrambling to catch up alongside cloud providers developing their own silicon. The equity component makes this partnership particularly aggressive - essentially betting AMD's future on capturing a meaningful slice of OpenAI's exponential growth.
The timing creates an fascinating dynamic. Nvidia announced plans to invest up to $100 billion in OpenAI over the next decade just last month, with OpenAI committing to deploy Nvidia systems requiring 10 gigawatts of power - equivalent to 4-5 million GPUs according to Huang. Now OpenAI is hedging its bets with AMD while still being Nvidia's largest customer.
Huang emphasized the "very different" nature of Nvidia's investment, which allows direct sales to the ChatGPT creator rather than equity dilution. But when asked how OpenAI will fund their Nvidia commitment, Huang was candid: "They don't have the money yet."
"They're going to have to raise that money through, first of all, their revenues, which is growing exponentially, equity or debt," he explained, adding that Nvidia received "the opportunity to invest alongside other investors when the time comes."
The funding challenge underscores concerns about the "circular nature" of AI infrastructure deals, where chip companies invest in startups that primarily use those same chips. Huang seems unbothered by this dynamic, noting his "only regret is that we didn't invest more" in previous OpenAI rounds.
Meanwhile, the investment spree continues. Huang confirmed Nvidia's $2 billion commitment to Elon Musk's xAI funding round, which Bloomberg reports could reach $20 billion total. "Almost everything that Elon is part of, you really want to be part of as well," Huang said, adding he's "super excited" about the opportunity.
Nvidia has also backed AI data center operator CoreWeave, which Huang called one of several "terrific investments" building out "the AI infrastructure for the world." The strategy appears clear - invest in the customers driving demand for your products while maintaining technological leadership.
But AMD's equity gambit changes the game. By essentially making OpenAI a strategic partner rather than just a customer, AMD could secure long-term demand while giving OpenAI more control over its hardware destiny. If OpenAI's valuation continues soaring - recent reports suggest north of $150 billion - that 10% stake could prove transformative for AMD's market position.
AMD's equity-for-chips deal with OpenAI represents a watershed moment in the AI infrastructure wars. While Huang's public surprise suggests Nvidia didn't see this coming, the move forces both companies to rethink their customer relationship strategies. For OpenAI, diversifying hardware suppliers reduces dependency on Nvidia while potentially creating a more collaborative partnership model. The real test comes when AMD's MI450 chips hit the market - will performance match the financial engineering? Either way, the AI chip duopoly just became a lot more competitive.
