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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

#241

Post by strangattractor »

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…

Maybe they are using the $100 Billion NVidia investment to pay for this:)

If this ship sinks they are all going down together.

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

#242

Post by whitehexagon »

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.

Or just a mini configured default 128GB or 256GB.

I've been using Qwen3:32b on a 32GB M1 (asahi) and it does most of what I need, albeit a bit slow, but not slow enough that I´d pay monthly for remote ad delivery.

I suspect this huge splurge of hardware spending is partially an attempt to starve the market of cheap RAM and thus limit companies releasing 128GB/256GB standalone LLM boxes.

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

#243

Post by ptero »

NaomiLehman wrote: post #239
stingraycharles wrote: post #217

Earlier quoted context omitted.

The stock popped quite a bit today, so investors seem to think this is a good deal for AMD. I tend to agree, may finally enable AMD to get a foot in the door in the whole large scale AI market.

AMD cards are good for inference or new low-level stuff anyway and more cost-effective. it's a good deal for everyone.

AMD has great hardware, but its software still leaves a lot to be desired for AMD to be a major AI hardware player. It takes years of unwavering leadership focus and hundreds of millions (probably billions) of dollars to get the software that works well for AI users.

The role the software played to get NVIDIA from a run-of-the-mill video card manufacturer to the top dog in AI hardware with 4T market cap is often underappreciated. My 2c.

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

#244

Post by CyanLite2 »

jakewins wrote: post #135
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…

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 inno…

The barrier of entry is too high for traditional SV startups or a group of folks with a good research idea like transformers. You now need hundreds of billions if not trillions to get access to compute. OpenAI themselves have cornered 40% of global output of DRAM modules. This isn't like 2012, where you could walk into your local BestBuy, get a laptop, open an AWS account, and start a SaaS over the weekend. Even the AI researchers themselves are commanding 7- and 8-figure salaries that rival NFL players.

At best, they can sell their IP to BigTech, who will then commercialize it.

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

#245

Post by cs702 »

rs186 wrote: post #235
cs702 wrote: post #193

Earlier quoted context omitted.

OpenAI and AMD both have strong incentives to chip away at Nvidia's dominant position, and the best way to do that is by releasing software tools to the public. Ask yourself: What would first-class PyTorch/Triton and Jax support for AMD hardware do to Nvidia's dominance and pricing power?

That argument could apply to every company who build their business on AI (except Nvidia) but we haven't seen any notable initiative or any significant movement in the past 3 years. I would not put my bets on private companies' goodwill. I'd rather believe they'll do whatever is most important for their business priority, understand things at their face value, and then hope for the best.

I disagree. My argument could not apply to other companies, because AMD is the only other maker of GPU hardware that could conceivably compete with Nvidia at scale in the AI market. Intel's GPUs have never been in the same league. New alternatives like Cerebras, etc. are too small, too different, and too unproven at scale.

I'm not betting on anyone's goodwill, I'm betting on OpenAI's and AMD's self-interest. Please don't attack a straw-man.

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

#246

Post by wmf »

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?

Market validation I guess.

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

#247

Post by delusional »

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.

The traditional "efficient market" theory would be: synergies. The market believes that AMDs value increased BECUASE OpenAI now owns it. That is to say, the market believes that OpenAI taking a stake in AMD increases the value of AMD.

There are a host of different hypothesis you could pose to explain that. Maybe OpenAI has some secret sauce they'll share with AMD now that they have a stake. Maybe OpenAI will be more likely to buy from AMD in the future. Maybe AMD can use the experience they get serving OpenAI to better their products. Heck, maybe OpenAI will pump the stock by having Sam Altman talk about it on some podcasts.

It's impossible to disentangle all of those theories, because different investors will have different beliefs and you only get an aggregate.

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

#248

Post by SecretDreams »

rsynnott wrote: post #228
alwahi wrote: post #166

Earlier quoted context omitted.

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.

Definitely some déjà vu

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

#249

Post by noir_lord »

ptero wrote: post #243
NaomiLehman wrote: post #239

Earlier quoted context omitted.

AMD cards are good for inference or new low-level stuff anyway and more cost-effective. it's a good deal for everyone.

AMD has great hardware, but its software still leaves a lot to be desired for AMD to be a major AI hardware player. It takes years of unwavering leadership focus and hundreds of millions (probably billions) of dollars to get the software that works well for AI users. The role the software played to get NVIDIA from a run-of-the-mill video card manufacturer to the top dog in AI hardware with 4T market cap is often unde…

> AMD has great hardware, but its software still leaves a lot to be desired for AMD to be a major AI hardware player. It takes years of unwavering leadership focus and hundreds of millions (probably billions) of dollars to get the software that works well for AI users.

It does but they have a capable CEO with a vision and broad support from the board - Ryzen was a decade long over night success.

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