OpenAI delivers Midas touch to AMD as AI economy booms
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
There's a new Midas in the stock market, and its name is OpenAI.
Why it matters: The company is becoming a powerful kingmaker in the AI economy as investors heap rewards onto anyone who partners with the ChatGPT creator.
Driving the news: Advanced Micro Devices shares soared 24% Monday after the chip designer announced a deal to deliver the data processing power for 6 gigawatts in computing capacity for OpenAI.
- OpenAI will also take up to a 10% share of the American semiconductor firm.
- AMD's stock jumped to a level seen just twice in a single session over the past 40 years, Bespoke Investment Group noted.
- Also, "with today's gain, shares of AMD will also be trading at 'extremely extreme' overbought levels," Bespoke reported. "Over the last 45 years, there have only been a handful of other days when the stock traded" at these volumes.
The big picture: OpenAI's blessing signaled to the market that AMD is keeping pace in the AI revolution.
- It shows "AMD now joining the AI party as this 1996 Moment for the tech world accelerates," Wedbush Securities analyst and tech bull Dan Ives wrote Monday. "Any lingering fears around AMD should now be thrown out the window as this gives them a major platform to monetize the AI Revolution."
Catch up quick: The AMD spike came after OpenAI last week gave a jolt to shares of Shopify and Etsy after announcing an "instant checkout" feature.
- "Such market-moving sway, usually reserved for behemoths like Apple Inc. or Nvidia, is the latest sign of OpenAI's rising influence on a wide variety of stocks," Bloomberg reported. It's "made OpenAI's announcements and events ... critical for traders."
Yes, but: The Midas effect also works in reverse.
- When OpenAI recently posted a blog "detailing new features the company is using internally," it "sent a fresh wave of jitters through software stocks like Atlassian Corp.," Bloomberg reported.
The bottom line: OpenAI announcements have become must-see TV.
