AMD Is Soaring on an OpenAI Deal. Is AMD Stock a Better Buy Than Nvidia Here?

OpenAI has obtained warrants for up to a 10% stake in Advanced Micro Devices (AMD) following an artificial intelligence infrastructure agreement it finalized with the chip manufacturer earlier this week.

This partnership aims to broaden OpenAI’s chip supply beyond Nvidia (NVDA), with the AI firm announcing plans to utilize around 6 GW of AMD graphics processing units (GPUs).

• Everyone’s a Genius In A Bull Market – Until The Structure Shifts

• This Crypto and AI Stock Just Got a Massive New Street-High Price Target That Implies Shares Could Double in the Next Year

• If You Love Dividends, Here Are 3 High-Yield Stocks to Buy Now

• Our exclusive Barchart Brief newsletter is your FREE midday guide to what’s moving stocks, sectors, and investor sentiment – delivered right when you need the info most. Subscribe today!

Following recent trends, AMD shares have surged approximately 170% from their year-to-date lows back in early April.

The price rally for AMD shares can be attributed largely to the endorsement of its MI-300X accelerators tailored for AI workloads through the OpenAI deal.

The collaboration is expected to generate billions in revenue over the upcoming years, further establishing AMD as a significant competitor to Nvidia’s offerings.

During a segment on CNBC’s “Squawk on the Street”, former hedge fund manager Jim Cramer highlighted the company’s innovation in chip design and efficiency following the announcement with OpenAI.

This agreement reflects the growing industry confidence in AMD’s capacity to scale AI infrastructure and attract high-profile partners while contending with established competitors in the hyperscale and enterprise markets.

Despite AMD’s remarkable stock performance in recent months, it remains a cost-effective option compared to Nvidia.

At present, Advanced Micro Devices holds a price-sales (P/S) ratio slightly under 11x, in contrast to Nvidia, which is above 35x.

Moreover, AMD offers potential exposure to several key growth sectors, including AI, gaming, data centers, and embedded systems, without the concentration risk associated with Nvidia’s hyperscaler-heavy revenue model.

Ultimately, AMD’s expanding collaborations, comprehensive product strategy, and improving profit margins position it as a diversified and high-potential investment in next-generation computational infrastructure.

Additionally, it’s worth mentioning that Wall Street currently rates AMD shares with a rating of “Moderate Buy” as well.