Advanced Micro Devices (NASDAQ:AMD) has transformed into an artificial intelligence (AI) powerhouse in a short time. Just a few years ago, AMD was seen as lagging in the artificial intelligence chip market.
Nvidia (NASDAQ:NVDA) dominated with its early investments in GPUs tailored for AI workloads, capturing the lion’s share of data center spending. AMD, focused more on CPUs and gaming graphics, entered the AI race later with its Instinct series accelerators. But recent innovations have propelled it forward.
The MI300X chip, launched in late 2023, delivered competitive performance for AI training at a lower cost than Nvidia’s equivalents. This caught the eye of hyperscalers seeking alternatives to reduce dependency on one supplier. AMD’s roadmap, including the upcoming MI450 set for 2026, promises even greater efficiency in inference tasks — running trained models at scale.
Today, AMD holds about 10% to 15% of the AI GPU market, up from near zero in 2022. Partnerships with Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), and now Oracle (NASDAQ:ORCL) underscore its momentum.
Still, it trails Nvidia’s trajectory, where the latter commands over 80% market share and a valuation exceeding $4.4 trillion. Nvidia’s CUDA software ecosystem remains a sticky advantage, locking in developers. AMD counters with open-source ROCm, gaining traction but not yet at parity.
Despite these gaps, AMD’s stock has surged 93% in 2025, reflecting investor bets on its catch-up potential. Oracle, though, just gave investors 50,000 reasons to buy AMD stock.
Oracle’s Top Exec Bets Big on AMD’s AI Prowess
Yesterday, Karan Batta, senior vice president of Oracle Cloud Infrastructure, shared bullish views on AMD during a CNBC interview at Oracle’s AI World conference in Las Vegas. “We feel like customers are going to take up AMD very, very well — especially in the inferencing space. I think AMD has done a really fantastic job, just like Nvidia, and I think both of them have their place.”
This endorsement came alongside a major announcement: Oracle Cloud will deploy 50,000 AMD Instinct MI450 AI chips starting in the second half of 2026. The MI450, AMD’s next-generation accelerator, is optimized for large-scale AI clusters, supporting both training and inference with up to 40% better energy efficiency than prior models.
This deployment will power Oracle’s new AI supercluster service, the first publicly available one from a hyperscaler using AMD hardware at this scale. Batta highlighted inference as a key strength, where AMD’s chips excel in cost-effective, high-volume model deployment — critical as AI shifts from training to real-world applications like chatbots and analytics.
Why This Deal Could Supercharge AMD’s Bottom Line
This Oracle commitment is a game-changer for AMD, validating its AI strategy amid fierce competition. First, it diversifies AMD’s customer base beyond initial wins like OpenAI‘s recent multi-year supply agreement. Oracle, a top-five cloud provider, brings steady demand from enterprise clients in finance, healthcare, and retail — sectors hungry for affordable AI compute. Deploying 50,000 chips equates to roughly 700 full racks (at 72 chips per rack), forming a massive supercluster capable of zettascale performance.
For AMD, this translates to significant revenue upside. Analysts estimate each MI450 chip could sell for $20,000 to $30,000, implying a $1 billion to $1.5 billion deal value, though exact pricing remains undisclosed. Spread over 2026 and 2027, it could boost AMD’s data center segment — already 25% of total revenue — by 10% to 15% annually.
Profit margins matter too: AI GPUs carry 60% to 70% gross margins for AMD, far above its CPU lines. This deal enhances pricing power and reduces exposure to cyclical PC markets. Long-term, it accelerates AMD’s trajectory toward 20% to 25% AI market share by 2030.
Success here could trigger follow-on orders, as seen with Nvidia’s ecosystem lock-in. It also bolsters ROCm adoption, drawing developers to AMD’s open platform. Risks persist, of course. Delays in 5 nanometer production or software maturity could hinder a rollout, but Oracle’s vote of confidence signals AMD is closing the gap. Investors see this as a catalyst for sustained growth, with earnings potentially rising 20% in 2027 from AI ramps.
Key Takeaway
This major expansion of Oracle and AMD’s partnership to support large-scale AI computing marks one of AMD’s biggest supply deals for its upcoming MI450 AI accelerators. It positions AMD as a viable Nvidia alternative, fostering a multi-vendor cloud ecosystem that drives innovation and cost competition.
Despite the gains AMD stock has already made this year, Oracle gave investors tens of thousands of reasons to buy shares now.
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