Advanced Micro Devices (AMD 4.53%) stock is coming off an impressive year in 2025 when its shares soared 77% and flew past rival Nvidia, which gained 39%. It's not often that AMD outshines its much larger rival, but with the chipmaker generating some strong growth and launching next-gen chips that have investors hopeful can take market share from Nvidia, the stock took off.
This year, however, as investors have been growing concerned about high levels of spending on all things related to artificial intelligence (AI), AMD's stock has declined by 8%, while Nvidia has fallen by just 2%. You can point to its oversized gains last year as a possible reason for the steeper decline, but there could also be another reason investors are a bit more concerned with AMD: its close relationship with OpenAI.
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Why AMD's partnership with OpenAI could be a concern
In October of last year, AMD announced that it was entering into a multi-year deal with OpenAI, the company behind ChatGPT. The deal involves OpenAI deploying up to 6 gigawatts of chips from AMD. OpenAI will also receive warrants, which, if exercised, could enable it to have a 10% stake in AMD.
While the deal could unlock plenty of growth opportunities for AMD, investors may be worried about the dependency on OpenAI, which may not be profitable even by 2030, calling into question its financial stability over the long term. This adds risk for AMD, and that could weigh on the tech stock. Oracle has come under fire for its close ties with OpenAI and a $300 billion cloud deal it reached last year. Between that and its concerningly high debt load, investors have been bearish on Oracle, and in the past six months, it has declined by around 34%. There could be similar challenges for AMD's stock as the year goes on.
NASDAQ: AMD
Key Data Points
AMD could face a make-or-break year in 2026
This year may be a pivotal one for AMD to prove whether its chips can indeed take significant market share from Nvidia. Last year was a strong one for AMD, with its revenue rising by 34% to $34.6 billion. But a year earlier, its growth rate was around just 14%.
Whether AMD can continue growing at a high rate and live up to expectations could determine whether the stock's decline intensifies this year, or it's able to get back into the green. But with a spotlight on OpenAI and tech-heavy spending, it might not be easy. I'd hold off on buying AMD stock right now, because at 75 times its earnings, it isn't cheap, and it still has a lot to prove.
