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AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

reuters.com

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Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#121

Post by neya »

giancarlostoro wrote: post #57
cs702 wrote: post #55

OpenAI now has an option to buy 10% of AMD for $0.01 per share, subject to certain milestones. Basically, AMD is giving up equity to buy its way into the AI market. It's fantastic news , because OpenAI and AMD will now work together to develop decent software libraries for AI on AMD chips. We all want an alternative to Nvidia and cuda. This partnership could deliver it in the not too distant future.

My understanding from the more hardware savvy friends I have is that AMD is better for inference (so when you run a model) vs for training Nvidia is still king. Would be interesting if OpenAI does in fact take AMD's offer and how they use it (if they even share openly).

> OpenAI

> "If they even share openly"

That fact that this even needs to be pointed out but is normalized in the AI industry. Sadly, in the history of Open AI, they've been anything but open.

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#122

Post by rchaud »

theli0nheart wrote: post #92
lotsofpulp wrote: post #60

Earlier quoted context omitted.

It isn’t printing money (money supply was not increased, and no one has access to more money due to the contract signed between the two parties), but I assume it makes the poster feel good to be outraged and express it by writing something like that.

AMD's valuation increased by over 30% this morning, so to say no one has access to more money because of this news is untrue. I'm not outraged at all, I just think this sort of bizarre financial engineering is not a good sign. If the ROI was so obvious, why not, for example, simply issue bonds and buy AMD stock on the open market?

If OAI issued bonds, they'd be carrying all the risk. With these deals with Microsoft, Nvidia and now AMD, they're shifting some of that risk to powerful players in the "too big to let fail" category.

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#123

Post by wqaatwt »

j4hdufd8 wrote: post #94
ralfn wrote: post #80

Earlier quoted context omitted.

Because of the vesting milestones the stock price of AMD would go up by such an extent that creating more s hares would not dilute the share price. Obviously, for the stock price to go up money needs to come from somewhere. It makes sense that this deal would lower the NVidia stock price, so technically it will be NVidia investors waiting too long to respond to this news that will be paying for this. A tax on the mis…

> A tax on the mistaken believe that NVidia has an monopoly on putting transitions in a particular configuration which they obviously don't NVIDIA doesn't place transistors in particular configurations. Foundries do that for them. And it is currently common sense that the software is the moat, not the hardware design. Good luck changing the ecosystem to use AMD.

> that the software is the moat, not the hardware design.

For inference that’s hardly relevant, though?

For training its not exactly insurmountable either.

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#124

Post by CyanLite2 »

N70Phone wrote: post #89
yousif_123123 wrote: post #39

Earlier quoted context omitted.

I think at least part of the 10% is if AMD stock reaches 600. Not that I disagree that this looks weird. Why was that needed to be offered? Couldn't they just buy the AMD chips if they're good enough? Or Nvidia is it's better? I also don't get why there commiting so much to the future, are they sure of the quality of the products and their demand that much?

> I also don't get why there commiting so much to the future, are they sure of the quality of the products and their demand that much? It's one big game of musical chairs, and everyone can hear the phonograph slowing down. OpenAI is making these desperation plays because they've ran out of hype. GPT-5 "bombed", the wider public doesn't believe AI is going to keep getting exponentially better anymore. They're out of o…

On the flip side of it (and where most institutional investors are mentally) is that if OpenAI is to ever achieve AGI, it must invest nearly a trillion dollars towards that effort. We all know LLMs have their limitations, but next phase of AI growth is going to come from OpenAI, Anthropic, Google, maybe even Microsoft, and not some stealth startup. E.g., Only Big Tech can get us to AGI due to sheer massive amounts of investments, not a traditional silicon valley garage startup looking for their Series A. So institutional investors have no choice but to continue to throw money into Big Tech hoping for the Big Payoff, rather than investing in VC funds like 10 years ago.

AMD did this deal because it's literally offering financing to them. OpenAI doesn't have access to capital markets like AMD does. So it's selling off shares of its own stock to finance the purchase of billions of dollars worth of GPUs. And the trick appears to be working since the stock is up 30% today, meaning it has paid for itself and then some.

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#125

Post by DebtDeflation »

hmm37 wrote: post #119
DebtDeflation wrote: post #102

Earlier quoted context omitted.

Oh, we saw it before. 1998-2000. Cisco, Sun, et al, "investing" in the dotcoms so those dotcoms could turn around and use the funds to buy servers and routers from them.

It's the opposite here. It's as if the dotcom is investing into Cisco and Sun, so that it can buy servers and routers from them.

Not really. This is AMD investing in OpenAI (albeit in an unusual way, with stock options) not the reverse. Same as the Nvidia deal. Same as hyperscaler investment in OpenAI and Anthropic. The people selling stuff to the AI Labs are the same ones funding them.

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#126

Post by alberth »

yousif_123123 wrote: post #39
nerdix wrote: post #10

The title didn't make this obvious (at least not to me) but it's OpenAI that has the option to buy 10% of AMD. Not the other way around. In case you're wondering how OpenAI could afford to buy 10% of AMD while they are hemorrhaging money -- the terms of the deal allows OpenAI to buy 160 million shares at 1 cents a share. I could be thinking about this the wrong way but it appears that AMD is basically subsidizing the…

I think at least part of the 10% is if AMD stock reaches 600. Not that I disagree that this looks weird. Why was that needed to be offered? Couldn't they just buy the AMD chips if they're good enough? Or Nvidia is it's better? I also don't get why there commiting so much to the future, are they sure of the quality of the products and their demand that much?

> allows OpenAI to buy 160 million shares at 1 cents a share.

> I think at least part of the 10% is if AMD stock reaches 600.

AMD market cap today is $350B (at $200/share).

AMD would need to 3x their market cap ($1,000B) to be at $600/share.

Which would mean that OpenAI could gain $100B in AMD stock, for the minuscule cost of only $1.6 million (160 million shares at 1 cent each).

--

Sam is spinning the world on his finger tip with these deals he's crafting.

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#128

Post by Jlagreen »

SecretDreams wrote: post #105
Jlagreen wrote: post #85

Earlier quoted context omitted.

And you have that right. And now imagine what will happen when OpenAI makes deals with Nvidia and AMD. Do you think Hyperscalers will just watch? I expect Musk to make a $1 trillion deal soon. I guess, that's why he wants to get the $1 trillion from Tesla. And do you think Meta, Amazon, Microsoft and Google will stand by while Altman and Musk are buying future supply from Nvidia and AMD? I love that. As an investor i…

Trading any of this, the only question that you need to answer is: What is more painful to you, missing some gains on the way up or holding positions that have flipped from positive to negative very rapidly? Markets like this, the moves will be violent in both directions, not just on the way up.

My cost base of Nvidia is $1 so for me to lose is that Nvidia gets back to way before COVID valuation.

Nvidia is more worth than $1 per share on gaming alone.

Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake

#130

Post by theli0nheart »

rchaud wrote: post #122
theli0nheart wrote: post #92

Earlier quoted context omitted.

AMD's valuation increased by over 30% this morning, so to say no one has access to more money because of this news is untrue. I'm not outraged at all, I just think this sort of bizarre financial engineering is not a good sign. If the ROI was so obvious, why not, for example, simply issue bonds and buy AMD stock on the open market?

If OAI issued bonds, they'd be carrying all the risk. With these deals with Microsoft, Nvidia and now AMD, they're shifting some of that risk to powerful players in the "too big to let fail" category.

Well, yeah, that's exactly my point. OpenAI is not issuing bonds because these transactions are way riskier than people are willing to admit.
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