Photo by Mohamed Nohassi on Unsplash
 

Advanced Micro Devices Inc (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 (ALAB) – but could prove a bane for Broadcom Inc (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 (NVDA) 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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