CNBC’s Mad Money host, Jim Cramer, shared his thoughts on the multibillion-dollar partnership between OpenAI (PC:OPAIQ) and Advanced Micro Devices (AMD). He issued a warning to major tech companies competing in the artificial intelligence (AI) space to watch out for OpenAI as it may be creating an edge after the latest deal. The announcement sent AMD shares rocketing over 23% yesterday, as the agreement positions AMD’s chips as strong contenders to Nvidia’s (NVDA) industry-leading GPUs (graphics processing units).
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The latest deal boosts the ChatGPT creator’s competitiveness, potentially putting hyperscalers like Alphabet (GOOGL), Amazon (AMZN), and Microsoft (MSFT) at risk if OpenAI secures the computing power it needs. Cramer pointed out that OpenAI is purchasing large volumes of chips, suggesting it could challenge multiple areas of Big Tech’s business.
OpenAI Strengthens Its Chip Supply
OpenAI has entered into an agreement with AMD to deploy up to 6 gigawatts of GPUs over several years. Importantly, the deal includes a warrant that, if exercised, would grant OpenAI roughly a 10% ownership stake in AMD based on its current shares outstanding.
Cramer noted that OpenAI has previously partnered with Nvidia, and this latest arrangement shows the ChatGPT maker considers AMD’s AI chips to be on par with Nvidia’s. He emphasized that OpenAI urgently needs vast computing power to meet surging demand for its AI models.
In addition to AMD and Nvidia, OpenAI has signed other multibillion-dollar infrastructure agreements with Oracle (ORCL), CoreWeave (CRWV) and Broadcom (AVGO).
AI Is Legitimate, Says Cramer
Cramer expressed solid confidence in the authenticity of the AI boom, while many on Wall Street have become increasingly skeptical. The Big Tech has been spending billions on developing AI infrastructure and data center projects. While several experts believe that the AI hype is overblown, Cramer sees the AI surge as a genuine and transformative trend and believes that the major players will ultimately benefit from their massive investments.
Cramer also stated that Big Tech companies don’t want to fall behind in the AI race, and each has its own vertical where AI is important. For example, Meta (META) focuses on social media and ads, Microsoft on business services, Google on search, Amazon on retail, and Tesla (TSLA) on robotics and self-driving cars. He also mentioned that these companies aren’t worried about spending a lot because they have plenty of money to support their AI efforts.
However, following the OpenAI–AMD deal, Cramer believes that these hyperscalers have reason to be concerned and they have to keep spending on computing power, as OpenAI could quickly become a formidable competitor in their domains.
Which Is the Best AI Stock to Buy Now, According to Analysts?
We used the TipRanks Stock Comparison Tool for Best Artificial Intelligence Stocks to determine which companies are currently preferred by analysts.
Wall Street has assigned a “Strong Buy” consensus rating to GOOGL, Alibaba (BABA), NVDA, AMZN, and META stocks, with META offering the highest upside potential among them.
