Wall Street analysts explain how AMD’s own stock will pay for OpenAI’s billions in chip purchases

Last Updated on: October 8, 2025

AMD’s unusual deal to finance OpenAI’s chip purchases could grant the AI model maker up to $100 billion, analyst estimates.

Wall Street analysts describe the mechanism for how AMD’s own stock effectively helps pay for OpenAI’s multi-billion dollar chip purchases as one of the most creative and risky financing deals in tech history.

The core of the arrangement is an unusual use of stock warrants, which are tied to both the chip purchases and AMD’s stock performance.

Here is a breakdown of the key elements and analyst perspectives on the deal:

The Financing Mechanism

Instead of a simple cash-for-chips transaction, the deal is structured to let OpenAI partially fund its massive GPU purchase using the future appreciation of AMD’s own stock.

Stock Warrants for OpenAI: AMD issued a warrant that gives OpenAI the ability to purchase up to 160 million shares of AMD common stock—approximately a 10% stake in the company—for a nominal price, reportedly 1 cent per share.
Vesting Tied to Milestones: The key is that the warrants do not vest (become exercisable) immediately. They are released in tranches based on two types of conditions:
- Deployment Milestones: Tying the vesting to the actual purchase and deployment of AMD’s AI chips, such as the initial shipment of the MI450 series.
- Stock Price Targets: Tying the later tranches to specific, ascending AMD stock price milestones. The final tranche of stock options reportedly requires AMD’s shares to hit a price target as high as $600 per share.
The “Payment” Flow: Analysts explain this creative structure as allowing OpenAI to essentially “pay” for its chips with AMD’s rising stock price.
- OpenAI commits to a large-scale purchase of AMD chips (totaling 6 gigawatts of computing power).
- This massive order is a major validation of AMD’s AI chip roadmap, which Wall Street expects to drive AMD’s stock price significantly higher.
- If AMD’s stock price hits the specified targets, the warrants vest, and the potential value of OpenAI’s new stake in AMD could be as high as $100 billion (if the final price of $600 is met and the full warrant is exercised). This potential profit would help offset the cost of the chip purchases.

Wall Street Analysis and Concerns

Wall Street’s reaction to the deal has been a mix of excitement over its potential and caution over the risks involved, often drawing comparisons to “vendor financing.”

Analyst View	Explanation
“Creative Financing/High-Stakes Gamble”	Analysts view this as an ingenious way for AMD to secure a massive order from a leading AI firm without forcing cash-strapped OpenAI to pay entirely up front. It is a high-stakes gamble for AMD, as the potential value for OpenAI is tied to AMD’s future success.
Market Validation	The deal serves as a major validation of AMD’s AI chip and software ecosystem (ROCm) as a viable alternative to Nvidia, which immediately drove AMD’s stock up significantly (over 30% on the day of the announcement) and added tens of billions to its market capitalization.
Revenue Projections	AMD executives anticipate the deal with OpenAI and the subsequent “ripple effect” of other customers following suit will generate over $100 billion in new revenue over four years. This enormous revenue visibility has led many analysts to significantly raise their price targets for AMD.
Circular Financing/Bubble Concern	Some market watchers have expressed concern about the deal’s “circular nature” and its parallels to vendor financing, a precarious practice seen during the dotcom bubble. The concern is that the deal’s success (and the warrants’ value) depends on a massive amount of chips being sold to a company (OpenAI) whose own ability to profitably use them and secure outside financing is not guaranteed. As one commentator put it, it “created the illusion of [financing]” because the stock only rises if the chips lead to real, profitable AI use.
Strategic Alignment	The warrant structure creates deep strategic alignment, incentivizing OpenAI to actively promote the success of AMD’s chips and co-design future products to ensure their success, which in turn drives up the value of its own stake in AMD.