OpenAI's deals with Broadcom and AMD show how big the AI ​​market can be

OpenAI’s agreements to sell chips from Advanced Micro Devices Inc. and Broadcom Inc. for sale, demonstrates how much room the artificial intelligence industry has to grow beyond top dog Nvidia Corp. In the two weeks since AMD and OpenAI announced their mammoth deal, the chipmaker’s stock has risen more than 42%. AMD also received a large order from Oracle Corp. this week. got, further diluting its shares. Meanwhile, Broadcom unveiled its own deal with OpenAI on Monday, sending its shares up 10% in a single session, their best performance since April. But Nvidia is languishing, down 3.1% since the AMD-OpenAI pact became public and underperforming the tech-heavy Nasdaq 100 index, which is essentially flat. “OpenAI clearly cannot rely solely on Nvidia,” said Eric Clark, portfolio manager of the Rational Dynamic Brands Fund, which has less than $70 million in assets under management, according to data compiled by Bloomberg. “They need to do deals with as many people as they can because they have a voracious appetite for computing power.” Of course, none of this is meant to imply that Nvidia is losing its leadership position in AI infrastructure. The chip behemoth remains the 800-pound gorilla in the field, commanding about 95% of the total market, according to data from Bloomberg Intelligence. But as the industry expands, there is increasing room for more winners. Investors are now looking for those opportunities, giving the stock a taste of the momentum that has driven Nvidia over the past few years. “AMD and Broadcom already had their irons in the fire, but they seem to be getting more and more attention as more money is thrown into this area,” said Kevin Mahn, president and chief investment officer at Hennion & Walsh Asset Management, which has $7 billion in assets under management and owns positions in Nvidia, AMD and Broadcom. “Nvidia remains at the center of the AI ​​ecosystem, everyone is playing catch-up. But that doesn’t mean it’s the only company worth investing in.” In many ways, OpenAI’s releases make the operator of ChatGPT the new kingmaker in technology. “The industry really wants a real alternative to Nvidia, and it looks like AMD has arrived,” said Jason Tauber, co-manager of the Neuberger Berman Disrupters ETF, which has $29 million in assets under management and holds Nvidia, AMD and Broadcom. “The OpenAI agreement was an important confirmation that this is real.” OpenAI is hardly the only company throwing around cash and chasing the AI ​​wave. The tech industry has been awash in billions of dollars in spending to build the infrastructure to power the technology, as many companies worry that if they don’t keep up in the burgeoning arms race, they’ll fall behind their competitors. But while these expenses are a boon for companies like AMD, Broadcom and Nvidia, they also raise concerns about the health of the AI ​​trade that has buoyed the broader market in recent years. As long as demand continues to outstrip supply, which is the driving force behind many of the deals that have been made lately, there should be room for multiple players in the space. The problem is that OpenAI is closely held, so it doesn’t have to answer to investors or file quarterly updates on its financial health. As a result, no one really knows how deep its pockets are or when things will start to tighten as it pays up for the more than $1 trillion in commitments it has made through 2030. “Everyone should remain highly skeptical about whether OpenAI can deliver on the extraordinary commitments it has made,” Michael O’Rourke, chief market strategist, wrote in a Jones note. “Considering all the companies involved, each carries significant exposure to OpenAI, and all will face repercussions if issues arise later.” This is a risk that investors will need to watch. Meanwhile, Nvidia’s rivals like AMD and Broadcom will continue to offer opportunities to diversify away from the biggest player as long as the AI ​​cash keeps flowing. “The sense of competition and other companies winning deals is very welcome,” said Hennion & Walsh’s Mahn. “Investors now have more opportunity to not be concentrated in any single name. They can diversify into other chipmakers.” Tech Chart of the Day Nintendo Co. has asked suppliers to produce as many as 25 million units of the Switch 2 by the end of March 2026, setting the company up for record first-year sales of a console that has already reached high water points for the global gaming sector. Top Tech Stories Earnings Due Friday With help from Subrat Patnaik and David Watkins. ©2025 Bloomberg LP This article was generated from an automated news agency feed with no text modifications.