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

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

#131

Post by rhetocj23 »

CyanLite2 wrote: post #124
N70Phone wrote: post #89

Earlier quoted context omitted.

> 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…

Theres a phrase for this. Financial engineering.

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

#132

Post by SirMaster »

alberth wrote: post #126
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?

> 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 f…

Is there any real reason AMDs market cap can't be close to what Nvidia's is? Or like even half of what Nvidia's is?

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

#133

Post by denismenace »

w3ll_w3ll_w3ll wrote: post #83
kaptainscarlet wrote: post #42

Earlier quoted context omitted.

Compute resources.

So like Bitcoin?

Not the same, since if you buy Bitcoin, you don't have partial ownership of the machines used to mine and also these machines being used for a singular purpose which you cannot change.

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

#134

Post by tjwebbnorfolk »

bee_rider wrote: post #50
alberth wrote: post #9

Earlier quoted context omitted.

Some refer to it as "circular financing". It's "seller financing" but to a degree we've never seen before in an industry (which create these "circular" effects). There's a good HN thread from 2-days ago on this subject (200+ comments). https://news.ycombinator.com/item?id=45473033

What a mess. When they have to write about how “circular financing” became highly regulated in the future, I hope they know that the problem was not confusing in the big picture. Maybe I can get quoted in a sidebar: “Hey Econ students, we normal people could see that the AI market was extremely gamed. We can see the investment feedback loop. It is just that the organizations continuing it have control over so much mo…

This method of financing is not novel. But anytime you see an unnecessarily complex deal like this, one should think very carefully about why they didn't opt for a simpler method, e.g. simply selling stock in the open market.

The reasoning behind such a deal are usually not a good sign for the underlying health of the companies involved.

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

#135

Post by jakewins »

CyanLite2 wrote: post #124
N70Phone wrote: post #89

Earlier quoted context omitted.

> 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…

That “only big tech can solve AGI” bit doesn’t make sense to me - the scale argument was made back when people thought just more scale and more training was gonna keep yielding results.

Now it seems clear that what’s missing is another architectural leap like transformers, likely many different ones. That could come from almost anywhere? Or what makes this something where big tech is the only potential source of innovation?

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

#136

Post by dbbr »

SirMaster wrote: post #132
alberth wrote: post #126

Earlier quoted context omitted.

> 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 f…

Is there any real reason AMDs market cap can't be close to what Nvidia's is? Or like even half of what Nvidia's is?

My uneducated one word answer: CUDA.

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

#137

Post by rvba »

giancarlostoro wrote: post #36
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…

Similar to how Microsoft bought out nearly half of OpenAI, though they offered compute credits IIRC. I wonder how much into Microsoft's investment OpenAI is in. Edit: Apparently what Microsoft owns is 49% profit-sharing interest in OpenAI, specifically in the 'capped profit' for profit subsidiary. So weird, but hey, it's still a slice of the pie. Plus they can exclusively sell access to the models.

Microsoft seems to have made a good deal: it got the models AND profits.

Also microsoft is pushing copilot to office and I think it will sell. Since they sell to general B2B and not only to the peogrammer niche.

AMD is trying to buy market share by donating 10% equity. I also think it is crazy

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

#138

Post by lucianbr »

alberth wrote: post #126
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?

> 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 f…

What is AMD getting that's worth giving OpenAI $100B? Sure, they're giving it from other stockholders not from their pocket, but still. It's presumably a lot of value, there has to be a good reason, no?

Is it that Sam promises to somehow make AMD increase their market cap, or help at least?

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

#140

Post by [deleted] »

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.

[deleted]
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