AMD’s stock surged by 37% in early October following a strategic GPU supply partnership with OpenAI. On October 6, 2025, the two companies signed a multi-year agreement where OpenAI committed to using up to 6 gigawatts of AMD Instinct GPUs. In return, AMD issued warrants for 160 million shares to OpenAI, conditional on meeting supply and share price milestones. AMD estimates this deal could yield significant revenue, potentially drawing new customers.

The market’s positive response suggests AMD is now seen as a credible competitor to Nvidia in the AI GPU sector. This shift highlights OpenAI’s influence in shaping AMD’s future strategy beyond merely purchasing chips. However, the initial excitement doesn’t sustain unless there is evidence of strong revenue growth from this partnership. Key factors include AMD successfully selling MI300X shipments and maintaining strong profit margins.

Further potential lies in extending partnerships to companies like Meta, Google, AWS, or Oracle, although such developments are not yet factored into the current stock price. With OpenAI GPU shipments set for late 2026 and no immediate milestones met, the focus is now on AMD’s execution and attracting additional partnerships to sustain growth momentum. In the interim, stock performance may stabilise until new developments drive further movement.

After the massive 37% rally, implied volatility in AMD options has exploded, with 30-day IV likely spiking above 80% this week. This makes buying options extremely expensive, and we believe the easy, directional money on this news has already been made. The market has priced in the deal’s announcement, but not its execution, which is still more than a year away.

Given the expected “quiet zone” with no major catalysts until 2026, selling option premium looks attractive. We see an opportunity in strategies like iron condors or credit spreads, which can profit if AMD’s stock consolidates or drifts sideways in the coming weeks. The high volatility means the premiums collected are currently very rich, providing a good cushion.

We are watching the resistance from March 2024 very closely, as the recent spike has formed a potential double top on the charts. For those looking to hedge or speculate on a pullback, buying costly puts is ill-advised. A better approach would be using put debit spreads, which defines the risk and significantly lowers the cost of entry.

This situation is reminiscent of what we saw with Nvidia’s stock in 2023, when huge forecast-driven rallies were followed by months of consolidation before the next leg up. Historical data on similar semiconductor rallies shows that after an initial spike of over 30%, a stock typically enters a digestion phase. We need to see actual revenue conversion before justifying another major move.

Any confirmation of a follow-on deal with another hyperscaler, like Meta or Google, would be a new upside catalyst that is not currently priced in. Traders positioning for that possibility should look at longer-dated call spreads, targeting mid-2026 expirations. This strategy allows time for the story to develop while managing the high cost of near-term options.