Advanced Micro Devices In (NASDAQ: AMD) is pushing further to the upside this morning after announcing a multi-year agreement to supply artificial intelligence (AI) chips to OpenAI.
The deal marks a pivotal moment in the global race for AI infrastructure dominance – and includes deployment of up to 6 gigawatts of AMD Instinct GPUs, beginning with a 1 GW rollout in 2026.
AMD has granted OpenAI a warrant for up to 160 million shares as well, potentially giving it a 10% stake in the chipmaker.
Lisa Su – the company’s chief executive called the agreement a “clear validation” of its roadmap.
According to her, the OpenAI transaction could result in over $100 billion in cumulative sales over the next several years.
The announcement has triggered a sharp rally in Astera Labs Inc (NASDAQ: ALAB) – but could prove a bane for Broadcom Inc (NASDAQ: AVGO) over time.
Why OpenAI-AMD deal may be a bane for Broadcom stock
For Broadcom stock, the deal AMD has announced with OpenAI is a strategic setback.
Experts had previously speculated that AVGO will emerge as the second-largest AI chip supplier behind Nvidia – especially after reports surfaced of a $10 billion order from OpenAI for custom ASICs.
However, AMD’s deal is significantly larger in scope and scale, suggesting a shift in OpenAI’s priorities toward more flexible, programmable GPU architectures.
CEO Lisa Su has emphasized that GPUs offer adaptability for evolving AI algorithms – unlike ASICs, which are tailored to specific workloads.
This flexibility is increasingly critical as artificial intelligence models grow more complex.
AVGO’s reliance on ASICs may now limit its appeal in a market that prizes scalability and versatility.
Why OpenAI-AMD deal may be a boon for Astera Labs stock
While Broadcom faces headwinds, Astera Labs stock is riding the AMD-OpenAI wave to new heights.
The Silicon Valley-based firm, which provides networking infrastructure for AI and cloud systems, is a key supplier to AMD’s upcoming Helios platform.
Citigroup analyst Atif Malik sees ALAB shares as a major beneficiary of the deal, noting its leadership in AI networking ecosystems like UALink.
This high-bandwidth, low-latency interconnect technology is designed to optimize AI training and inference across large-scale deployments.
Citi has set a Street-high $275 price target on Astera Labs shares – implying nearly 25% upside from current levels.
With rack-scale systems gaining traction, ALAB could earn $1,000 per accelerator, making it a critical enabler in AMD’s artificial intelligence ambitions.
A reshuffling of AI’s supply chain hierarchy
The AMD-OpenAI partnership signals a broader realignment in the AI hardware ecosystem.
While Nvidia remains the dominant force, AMD’s breakthrough deal positions it as a formidable challenger. Broadcom, once seen as a rising contender, now faces questions about its long-term relevance in general-purpose AI compute.
Meanwhile, Astera Labs is quietly cementing its role as a foundational player in next-gen infrastructure.
As OpenAI diversifies its supplier base, the ripple effects are being felt across the semiconductor landscape – reshaping expectations, valuations, and strategic alliances for years to come.
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