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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

#221

Post by echelon »

stri8ted wrote: post #93
randomname4325 wrote: post #33

Earlier quoted context omitted.

Based on the recently released graph of how people are using chatgpt. ~80% of use cases (practical guidance, seeking information, writing) could presumably run on a local model.

For video use cases, which will become increasingly popular, we are a long ways away.

Wan runs on local GPUs and looks amazing.

Sora 2 takes a lot of visual shortcuts. The innovation is how it does the story planning, vocals, music, and lipsync.

We'll have that locally in 6 months.

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

#222

Post by dboreham »

thiago_fm wrote: post #41

When the bubble pops, the US' FTC will need to place limits on those circular deals like this. Literally the whole big tech will melt. There are banks that are backing up certain GPU deals and those will be hit with billion losses as well. Imagine once they have to depreciate those $1T+ of GPUs, data centers and the like that can't even be on resale for gaming. Imagine when economic blocks like the EU and BRICs start…

> US' FTC will need to place limits on those circular deals

So...after the next election and a bunch of significant US governance reforms.

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

#223

Post by zerosizedweasle »

lotsofpulp wrote: post #143
DebtDeflation wrote: post #96

Earlier quoted context omitted.

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.

It's circular money flows.

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

#224

Post by Ekaros »

pixl97 wrote: post #141
Havoc wrote: post #108

Earlier quoted context omitted.

> 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.

You can keep inflating imaginary piles of money until someone tries to grab too much of it... Add in loaning against the valuations and you can keep doing it even longer...

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

#225

Post by razoorka »

bwfan123 wrote: post #202
razoorka wrote: post #171

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…

What surprises me is the pace and size of these announcements. So many announcements so fast and each one at least 100B all involving openai. Reminds me of a quote by Chuck Prince - Citigroup CEO from 2008 - "As long as the music is playing, you've got to get up and dance"

Pretty much. Strip away the AI narrative and there’s not much else driving growth right now - manufacturing’s flat, consumer spending’s slowing, and traditional tech margins are shrinking.

This artificial boom in “AI infrastructure” is basically the last engine keeping the charts pointing up. When that music stops, there’s nothing underneath it but leverage and power bills.

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

#226

Post by mrandish »

agentcoops wrote: post #196
HarHarVeryFunny wrote: post #157

Earlier quoted context omitted.

AMD is giving OpenAI warrants (cf options) to buy AMD shares at 1c/share, but these only vest if OpenAI goes thru with AMD purchases as intended. It seems to basically give OpenAI an incentive to go thru with the deal.

I’ve seen a lot of confusion about this type of deal recently: notably, it is often taken to imply something more or less shady is going on. I’m not sure when such arrangements became a thing, but I know equity stakes have long been an important part of enterprise SaaS deals. The reasoning is relatively straight-forward: if a large client commits to a vendor in a way that holds some risk to the former and will materi…

I generally agree with your point. OpenAI committing to buying a bunch of AMD hardware and doing the work to integrate support for it in their systems is a risk for OpenAI and a benefit for AMD (as demonstrated by the AMD stock popping on the announcement). So the warrants give OpenAI equity upside to offset risk.

I think the skepticism comes from the recent OpenAI/Oracle deal which seemed kind of circular due to paying with equity whose value was being inflated by the deal itself (if I understand it correctly). This deal seems more like an outright gift of equity if OpenAI goes through with the deal - so it could be thought of as almost a rebate or net discount on the cost of the GPUs.

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

#227

Post by zerosizedweasle »

rhetocj23 wrote: post #131
CyanLite2 wrote: post #124

Earlier quoted context omitted.

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.

In other words they are stealing capital from the rest of the economy. Starving it.

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

#228

Post by rsynnott »

alwahi wrote: post #166
SecretDreams wrote: post #51

This industry is the most intense game of musical chairs I've seen in a long time.

i grew up thinking finance was boring. after 2008, i started to pay a bit of attention, but the last few years of financial shenanigans have been absolute cinema, it feels like we are approaching the season finale.

Alternatively, they're just doing a clips episode based on 2000.

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

#229

Post by gmerc »

agentcoops wrote: post #196
HarHarVeryFunny wrote: post #157

Earlier quoted context omitted.

AMD is giving OpenAI warrants (cf options) to buy AMD shares at 1c/share, but these only vest if OpenAI goes thru with AMD purchases as intended. It seems to basically give OpenAI an incentive to go thru with the deal.

I’ve seen a lot of confusion about this type of deal recently: notably, it is often taken to imply something more or less shady is going on. I’m not sure when such arrangements became a thing, but I know equity stakes have long been an important part of enterprise SaaS deals. The reasoning is relatively straight-forward: if a large client commits to a vendor in a way that holds some risk to the former and will materi…

It's called Channel Stuffing and was always at least a red flag.
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