AMD and OpenAI announced a multi-year, multi-generational deal on Monday. The stocks of AMD saw a surge of more than 25 percent after the announcement was made. Although there has been no information of the costs, the deal is expected to be worth billions and artificial intelligence pioneer OpenAI is expected to get a 10 percent stake in the traditional chip maker AMD.

The October 6 announcement says that a 6-gigawatt agreement has been signed for AMD Instinct GPUs to power OpenAI’s next-generation AI infrastructure. The first 1 gigawatt AMD Instinct MI450 GPUs are scheduled to be deployed in the second half of next year. 

The two companies will increase their strategic interests with OpenAI acquiring a stake in AMD. The chip-making company has issued a warrant for up to 160 million shares of common stock to the artificial intelligence startup, provided specific milestones are achieved.

CWEB analysts say that this agreement will benefit both OpenAI and AMD. OpenAI has recently been valued at $500 billion, is considered by many experts as one of the most successful companies with future high growth potential, and this deal has boosted AMD stock.

By locking in GPUs from AMD, OpenAI is also benefiting, as it can lock in several gigawatt-hours of power for future needs. There are a huge number of Fortune 500 companies that are also accelerating their AI models and need GPUs. So, signing a multi-year, multi-generational agreement with AMD is important for OpenAI.

OpenAI is also acquiring a stake in AMD, and this is expected to strengthen the agreement between the artificial intelligence maker and the chip maker, as the success of AMD will increase the value of the stake that OpenAI will have in the company. AMD will also grow exponentially and improve its chips as it has locked down the deployment of GPUs in a multi-year deal.