Nvidia's stock price fluctuated after AMD announced a major partnership with OpenAI.
Nvidia rival AMD gets its own deal with OpenAI threatening Nvidia's dominance in the AI accelerator market.
GPUs use parallel processing to perform simultaneous calculations on large datasets using thousands of cores. CPUs process data sequentially, handling tasks one at a time, which is less efficient for the matrix multiplication required for AI.
On Monday, Nvidia's stock fell by $4.39, or 2.3%, to $183.33 after AMD, a competitor, announced a major deal with OpenAI that could reduce Nvidia's market share. AMD's stock price increased by $45.45, or 27.6%, to $210.12 following the announcement that OpenAI intends to use 6 gigawatts of AMD's Instinct GPUs. In addition to the threat to Nvidia's position as the leader in AI accelerators, other tech companies, including Google and Amazon, are also developing AI chips.
Nvidia's shares have been recovering since the market opened. As of 11:30 am ET, the stock is down by $1.51, or 0.81%, to $186.10.
The agreement includes a warrant allowing OpenAI to purchase up to 160 million AMD shares for $0.01 each. If exercised, OpenAI would own 10% of AMD for $1.6 million. AMD's current valuation is $342.7 billion, making this a beneficial deal for OpenAI. Nvidia, in comparison, has a valuation of $4.5 trillion and is the most valuable publicly traded U.S. stock.
In late September, OpenAI agreed to use 10 gigawatts of Nvidia's GPUs to power its datacenters, with Nvidia investing up to $100 billion in OpenAI, the AI research company that created ChatGPT.
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