On Monday, chipmaker Advanced Micro Devices (AMD 23.61%) announced a huge artificial intelligence (AI) strategic partnership with OpenAI, the AI model developer best known for its ChatGPT chatbot. Not only did this news send shares of AMD up a whopping 23.7%, but it also gave a boost to many other AI stocks and the market in general.

AMD’s news came exactly two weeks after its rival Nvidia (NVDA -1.10%), whose graphics processing units (GPUs) dominate the AI chip market, announced a massive deal with OpenAI.

Advanced Micro Devices-OpenAI strategic partnership

The AMD-OpenAI strategic partnership involves AMD supplying 6 gigawatts of its Instinct series GPUs to power OpenAI’s next-generation AI infrastructure. The first 1 gigawatt deployment of AMD Instinct MI450 GPUs is set to begin in the second half of 2026. That’s the same time frame involved in the Nvidia-OpenAI deal.

Moreover — and this is big for AMD — “AMD has issued OpenAI a warrant for up to 160 million shares of AMD common stock, structured to vest as specific milestones are achieved,” according to the press release. AMD has a total of about 1.62 billion shares outstanding, so 160 million shares is about 10% of total shares.

For context, before the deal was announced, AMD had a market cap of about $267 billion. Ten percent of that is $26.7 billion.

Putting 6 gigawatts in context

Six gigawatts equates to a ton of computing power. Here are a couple of stats to put 6 gigawatts of power in context:

• New York City’s average power demand is about 6.5 gigawatts, and its peak power demand in the summer is roughly 10 to 11 gigawatts.
• Six large-scale nuclear reactors have a power output of about 6 gigawatts.

Recap of the Nvidia-OpenAI AI deal

On Sept. 27, Nvidia announced its massive deal with OpenAI. The highlights of this strategic partnership:

• The companies plan to deploy at least 10 gigawatts of Nvidia systems for OpenAI’s next-generation AI infrastructure.
• The announcement stated that the systems will be used to “train and run [OpenAI’s] next generation of models on the path to deploying superintelligence.” [Emphasis mine.]
• The first phase is targeted to come online in the second half of 2026 using the Nvidia Vera Rubin platform.
• Nvidia plans to invest up to $100 billion in OpenAI as the new Nvidia systems are deployed.

What are the broader implications for the AI space?

This seems like a win-win deal for both AMD and OpenAI. OpenAI secures a large supply of AI-enabling GPUs over multiple years. This is no small thing, as GPUs are in great demand, so supply has been tight. That’s especially true of Nvidia’s GPUs, but no doubt, also true to some extent for AMD.

On AMD’s part, it secures a huge multiyear customer for its GPUs, and it is poised to get a hefty inflow of cash as OpenAI buys up to 10% of AMD’s shares. The partnership “is expected to deliver tens of billions of dollars in revenue for AMD,” CFO Jean Hu said in the release. Moreover, it’s “expected to be highly accretive to AMD’s non-GAAP [generally accepted accounting principles] earnings per share, ” she added.

Taken together with the recent Nvidia-OpenAI humongous AI deal and other big deals in the space, there are positive implications for the broader AI market.

The main implication, in my opinion, is that these massive AI chip and infrastructure deals should accelerate the race to move beyond generative AI to achieve artificial general intelligence (AGI) and then artificial superintelligence (ASI), as I wrote about after the Nvidia-OpenAI deal was announced. Nvidia and AMD should be two of the big beneficiaries of this race, as companies rush to buy even more of their AI-enabling GPUs.

Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.

Over the last two years, semiconductor powerhouse Nvidia (NVDA 1.74%) has emerged as the biggest force fueling the artificial intelligence (AI) revolution. The company’s industry-leading graphics processing units (GPU) and CUDA software platform have helped Nvidia build a substantial lead over its competition in the chip market.

While Advanced Micro Devices has carved out an impressive pocket for itself in the AI data center landscape, recent reporting suggests that the company is still far behind Nvidia.

Let’s explore the dynamics behind Nvidia’s lead over AMD, and assess if the king of the chip realm just made its checkmate move against its top rival.

Nvidia continues to dominate the competition

During the early phases of the AI megatrend, Nvidia benefited from having a first-mover advantage over other semiconductor companies when it comes to GPUs specifically. While being a first mover can help companies experience outsized growth relative to the competition or form strategic partnerships with leaders in adjacent industries, there’s no guarantee that these businesses can sustain their leads.

In the case of Nvidia, however, trends suggest that company’s lead over AMD may only be getting bigger.

Beth Kindig, who serves as a technology research analyst and CEO of I/O Fund, recently shared a data point from SemiAnalysis that pointed out that Nvidia’s market share in AI accelerators increased by roughly two points during the first quarter — now hovering around 88%. By contrast, AMD’s share shrunk by about one point, now comprising roughly 4% of the market.

Why these trends could spell trouble for AMD

The chart illustrates AMD’s revenue and operating income by reportable segment during the first quarter. One of the more notable takeaways is that AMD’s data center operation is its fastest-growing business, all while remaining highly profitable.

However, a more subtle idea is that sales from the data center business shrunk by 5% quarter over quarter. To be fair, there could be a number of reasons for this.

First, the semiconductor industry is cyclical — which makes quarterly trends tougher to predict and gauge when it comes to the overall health of the business. In addition, AMD’s latest accelerator architectures are expected to ship later this year. This timeline could be playing a role in the slight deceleration of the data center business compared to the fourth quarter.

While these ideas may make some sense in theory, I find them hard to believe, given Nvidia actually gained ground in the AI accelerator market during the first quarter.

Since AI developers raced to buy Nvidia’s newest Blackwell chips, factors such as cyclicality or new competitive chipsets from AMD didn’t seem to be enough to persuade customers from waiting on AMD’s products over those of Nvidia.

In the long run, these dynamics could spell trouble for AMD. Despite the company’s ability to win impressive data center customers such as Oracle, Meta Platforms, and Microsoft, AMD’s innovative efforts do not appear to be enough to outmaneuver Nvidia at this time.

Is this a checkmate move by Nvidia?

As of this writing (June 25), shares of AMD have risen by 18% so far in 2025. Per the chart, these gains are slightly ahead of Nvidia stock’s increase.

NVDA data by YCharts

I think it’s hard to justify AMD’s gains over Nvidia, given the company’s lack of market share and apparent decelerating growth (at least for now).

While I suspect AMD’s growth profile could turn around following the release of new chipsets during the second half of the year, I also think it will be challenging for the company to gain any meaningful momentum back from Nvidia — as Nvidia also has new architectures releasing later this year, too.

To me, Nvidia may have put AMD in a checkmate position for the time being. I think these figures reported could imply that Nvidia will remain the leader in AI data center chips and could be on its way to a new, prolonged, and sustained wave of growth.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.