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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

#141

Post by pixl97 »

Havoc wrote: post #108
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…

> Obviously, for the stock price to go up money needs to come from somewhere. Not convinced that’s true anymore in current climate. Bigger numbers announcements and AI Pixie dust works too apparently lol

I mean the potential value comes from the future either way.

If you just print money and nothing else, it inflates and becomes worthless affecting all involved.

If the money turns into technical progress or products then the entire economy grows.

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

#142

Post by SecretDreams »

Jlagreen wrote: post #128
SecretDreams wrote: post #105

Earlier quoted context omitted.

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.

Totally fair. If you've got a great cost basis, you can stress less. The question then becomes what feels worse:

Watching a position you sold double or watching a position you're holding get cut in half?

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

#143

Post by lotsofpulp »

DebtDeflation wrote: post #96
AlanYx wrote: post #68

Earlier quoted context omitted.

>Couldn't they just buy the AMD chips if they're good enough? OpenAI would presumably need to raise money to buy the AMD chips. The "genius" of this deal is that AMD is "giving away" 10% of the company (at $0.01/share) to OpenAI. Then OpenAI will presumably turn around and sell those shares (or borrow against them) to raise enough money to purchase the AMD GPUs.

It's just round tripping with an extra step or two. AMD giving OpenAI money (via stock options) that they can use to buy AMD chips.

That “just” is doing a lot of work equivocating stock options with money.

If that were true, there would never be any business that failed.

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

#144

Post by vachina »

simianwords wrote: post #37
randomname4325 wrote: post #6

The bubble pops when Apple releases an iPhone that runs a good enough for most things LLM locally. At that point cloud hardware investments will plateau (unless some new GPU melting use case comes out). Investors will move from nvidia, AMD into Apple.

why do you think LLM's will get good enough that they can run locally but the ones requiring nvidia GPU's will not get better?

ok, you can technically upload all your photos to Google cloud for all the same semantic labeling features as iOS Photos app, but having local, always available and fast local inferencing is arguably more useful and valuable to the end user.

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

#145

Post by vachina »

TiredOfLife wrote: post #44
randomname4325 wrote: post #6

The bubble pops when Apple releases an iPhone that runs a good enough for most things LLM locally. At that point cloud hardware investments will plateau (unless some new GPU melting use case comes out). Investors will move from nvidia, AMD into Apple.

The new iPhones barely got 12gb of ram. The way Apple is going iPhones will have enough ram for llms in about 100 years

Trying to compare RAM size and CPU cores is so yesterday. Apple owns the entire stack they can make anything fit into their core if they so desire.

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

#146

Post by didibus »

DebtDeflation wrote: post #125
hmm37 wrote: post #119

Earlier quoted context omitted.

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.

I can't figure who is actually investing in who?

OpenAI may own 10% of AMD, and that seems like OpenAI investing in AMD in exchange for buying 6GW of GPUs and 160million in stock.

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

#147

Post by rhetocj23 »

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?

Indeed. Youre one of the few posters ive seen on here that gets it.

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

#148

Post by nerdix »

simianwords wrote: post #37
randomname4325 wrote: post #6

The bubble pops when Apple releases an iPhone that runs a good enough for most things LLM locally. At that point cloud hardware investments will plateau (unless some new GPU melting use case comes out). Investors will move from nvidia, AMD into Apple.

why do you think LLM's will get good enough that they can run locally but the ones requiring nvidia GPU's will not get better?

The models running on $50k GPUs will get better but the models running on commodity hardware will hit an inflection point where they are good enough for most use cases.

If I had to guess I would say that's probably 10 or 15 years away for desktop class hardware and longer for mobile (maybe another 10 years).

Maybe the frontier models of 2040 are being used for more advanced things like medical research and not generating CRUD apps or photos of kittens. That would mean that the average person is likely using the commodity models that are either free or extremely cheap to use.

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

#149

Post by delusional »

lucianbr wrote: post #138
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…

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?

> What is AMD getting that's worth giving OpenAI $100B?

The other $300B

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

#150

Post by famouswaffles »

tjwebbnorfolk wrote: post #134
bee_rider wrote: post #50

Earlier quoted context omitted.

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.

I'm assuming this is what you mean by 'simply selling stock in the open market' so correct me if I'm wrong but Why would Open AI go public when they can raise so much private money they're valued at 500B ?

It certainly wouldn't be for fear of a lack of investment. AMD is up 30% from this announcement alone.

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