Last week, Altimeter Capital CEO Brad Gerstner described Advanced Micro Devices Inc.'s (NASDAQ:AMD) multi-billion-dollar deal with Sam Altman's OpenAI as a "bet-the-farm" moment for CEO Lisa Su — one that could reshape the balance of power in the AI chip race currently dominated by Nvidia Corp. (NASDAQ:NVDA).
Gerstener Calls AMD's Move A High-Risk, High-Reward Gamble
Speaking on The All-In Podcast, Gerstner said Su's decision to grant OpenAI warrants for up to 160 million AMD shares — worth nearly 10% of the company — in exchange for a massive GPU purchase commitment shows how much is at stake.
"This is a bet-the-farm bet by Lisa Su," Gerstner said. "She's given away 10% of the company, if the compute gets deployed."
Under the deal, OpenAI will purchase up to six gigawatts of AMD's next-generation Instinct MI450X GPUs over the next five years — a contract analysts estimate could generate over $100 billion in revenue.
"Either the MI450 gets adopted and they get back into the game, or they're out," Gerstner added, noting that AMD's previous generation, the MI350, "was just not competitive" with Nvidia's offerings.
"She’s a total warrior. I think she believes in the MI450. She went to her board and she said, ‘Listen, we got to take the shot here. We got to bet the farm.' If it works, she’s going to get 150 billion of incremental revenue just from OpenAI," he stated.
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AMD Aims To Regain Ground Lost To Nvidia
Gerstner illustrated how Nvidia has surged far ahead since 2022. "Two and a half years ago, Nvidia and AMD had basically the same revenue, around $25 billion," he said.
This year, Nvidia will do about $210 billion and AMD will do roughly $33 billion, he stated, adding that Nvidia has captured nearly 100% of the incremental AI data center revenue.
He credited Nvidia's dominance to its "ecosystem of software, networking and extreme co-design," saying the "unit of compute is no longer the chip — it's the entire data center."
AMD's partnership with OpenAI, he said, is a bold attempt to validate its new GPU architecture and claw back share in the booming AI accelerator market.
Energy And Supply Chains Become The New Bottlenecks
Co-host Chamath Palihapitiya added that the AI race is shifting toward control over energy and critical chip ingredients.
The companies that control those elements of the supply chain will come into power, he said, referencing OpenAI's deals with South Korean memory giants SK Hynix and Samsung Electronics Co. (OTC:SSNLF).
Analysts See Massive Upside If AMD Executes
Wall Street analysts have also reacted positively to the OpenAI deal. Bank of America's Vivek Arya projected over $100 billion in potential revenue from the deployment, with EBIT margins of up to 35% and raised AMD's price target to $250.
Goldman Sachs' James Schneider called the partnership "a strong positive" for AMD's long-term GPU business and lifted the stock's target to $210, saying it could unlock as much as $135 billion in new sales while finally challenging Nvidia's dominance.
AMD scores strongly in Benzinga's Edge Stock Rankings for Momentum, Growth and Quality, reflecting robust short, medium and long-term trends. Explore a full stock analysis, including comparisons with its peers and competitors.
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