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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

#171

Post by razoorka »

This whole thing looks like a bubble in slow motion.

A “non-profit” that somehow buys stakes, signs multi-billion supply deals, and moves markets based on promises of future models — all while technically owning nothing tangible. They’re leveraging their own paper value to buy more paper value.

It’s circular finance at scale: every deal increases the perceived valuation, which then becomes collateral for the next one. No audited revenue stream, no proven business model - just a loop of hype, compute contracts, and self-referenced worth.

At some point, someone’s going to ask what exactly is being sold here besides narrative.

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

#172

Post by AlanYx »

Aurornis wrote: post #165
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.

> The "genius" of this deal is that AMD is "giving away" 10% of the company (at $0.01/share) to OpenAI. There's no giving away of anything in the deal. The $0.01 per share price is only available if they purchase the GPUs. It's more like one of those "free with purchase" deals where you're still paying for the product, but they throw in something to sweeten the deal. They're not actually getting AMD shares at $0.01 e…

Yes, I was being somewhat flippant in my description of the transaction. But the net result of the transaction is the same. OpenAI can finance the GPU purchases by borrowing against the contractual guarantees it received from AMD to receive warrants in exchange for acquiring AMD GPUs. Whether the transaction is partially or entirely financed will depend on AMD's share price movement in the interim.

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

#174

Post by dehrmann »

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.

This looks like the house money effect. It's sort of a corollary to the sunk cost fallacy.

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

#176

Post by Der_Einzige »

andrewstuart wrote: post #56
thejohnconway wrote: post #31

Earlier quoted context omitted.

> But Lisa Su can’t bring herself to compete. Which is very strange because she brutally competed with and destroyed Intel. Maybe making cutting-edge GPUs is actually quite an engineering challenge, and not entirely down to the competitive will of the CEO?

AMD already make GPUs that are competitive with Nvidia at every tier except the very top end. It’s the positioning and pricing that isn’t competitive.

And software

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

#177

Post by jerf »

lucianbr wrote: post #163
delusional wrote: post #149

Earlier quoted context omitted.

> What is AMD getting that's worth giving OpenAI $100B? The other $300B

Where is this other $300B coming from? Is OpenAI paying AMD $400B or what? I looked at the article but it seems disjointed and hard to parse for me. And I don't see where it mentions some $400B coming to AMD one way or another. It's implied... how? Sorry, this isn't sarcasm or anything like it. I just don't get it and your answer does not help.

You have put your finger on the AI bubble's biggest problem right now. Companies are making promises that they are currently completely incapable of fulfilling, in the hopes that someday they can, and the stock market are valuating these promises as done deals.

Predicting the end of bubbles is well known to be a fool's errand, but if this AI bubble is still going in a year I can only imagine how casually these companies will have to be throwing around multi-trillion dollar promises to each other to keep the stocks pumped up.

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

#178

Post by wmf »

lesuorac wrote: post #98
rhetocj23 wrote: post #74

Earlier quoted context omitted.

Financing made out of thin air. Hilarious

Not thin air. Existing AMD shareholders will have their holding diluted. Or assuming banks loan them money, if say OpenAI goes under then the banks just lose that money.

When the stock goes from $150 to $600 that's not called dilution. Nobody cares about the number of shares in that situation.

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

#179

Post by lotsofpulp »

theli0nheart wrote: post #130
rchaud wrote: post #122

Earlier quoted context omitted.

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.

Who is “people”? Investors and people familiar with finance are well aware of the deal and its risks, as they are public information.

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

#180

Post by rs186 »

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.

> It's fantastic news, because OpenAI and AMD will now work together to develop decent software libraries for AI on AMD chips.

Too fast to jump to conclusion. I'd say they will work together to develop software specifically designed for OpenAI products. It is a giant question mark whether we'll get libraries for general purpose computing out of this.

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