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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

#261

Post by TheAlchemist »

OtherShrezzing wrote: post #52

Feels like we're living through a Michael Lewis book. OpenAI estimate that it takes around $50bn to stand up a 1GW datacenter. This deal is 6GW worth of chips. Their projected revenues out to YE-2029 are $300bn. OpenAI will spend a decades worth of revenues building & filling the datacenters to house these chips, before accounting for their AI research, training, or inference spend.

"Feels like we're living through a Michael Lewis book."

We definitely are ! The BIG question is - what chapter are we in ?

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

#262

Post by N70Phone »

programjames wrote: post #207
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…

I find it funny how people say GPT-5 "bombed". I noticed a significant improvement in maths and coding with GPT-5. To quantify were I've found the models useful: - GPT 3.5: Good for finding reference terms. I could not trust anything it said, but it could help me find some general terms in fields I was unfamiliar with. - GPT 4: Good for cached, obscure knowledge. I generally could trust the stuff it said to be true,…

> I find it funny how people say GPT-5 "bombed".

I used scare quotes for a reason. It didn't "bomb" in the sense of failing [insert metric], it bombed in the sense that OpenAI needed it to generate exponentially more hype and it just didn't. (And on a lesser level, GPT-5 was supposed to cut OpenAI's costs but has failed to do so)

> I can trust its proofs or code to be about as correct as my own.

I have little to say about this, as I find such claims to be broadly irreplicable. GPT-5 scores better on the metrics, but still has the same "classes" of faults.

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

#263

Post by lotsofpulp »

theli0nheart wrote: post #200
lotsofpulp wrote: post #179

Earlier quoted context omitted.

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

Do you recall what “people familiar with finance” did with CDOs and mortgage-backed securities during the financial crisis? That didn’t work out so well either, despite all parties being aware of the risks. It bears repeating my original question: if the risks are so minor, why is OpenAI simply not issuing bonds and buying AMD stock with the proceeds?

I didn’t claim the risks are minor, I am just arguing against the notion of it being “printing money”, as if they have the powers of the Treasury.

> Do you recall what “people familiar with finance” did with CDOs and mortgage-backed securities during the financial crisis? That didn’t work out so well either, despite all parties being aware of the risks.

There was straight up fraud involved in the underwriting for the mortgages where verification (or rather underwriting itself) was not being done.

This deal is a transparent bet on an outcome with no deceived party.

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

#264

Post by johnnyanmac »

zerosizedweasle wrote: post #223
lotsofpulp wrote: post #143

Earlier quoted context omitted.

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.

Two circular flows now. Nvidia Oracle and OpenAI, and now this loop with OpenAI and AMD.

This really isn't the sign of a healthy economy.

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

#265

Post by resters »

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?

There is not. AMD didn't invest in tooling and interconnect technology the way Nvidia has, probably because of antitrust fears (or maybe mismanagement). But in terms of core GPU technology and fab, AMD is close to being a peer.

I've been saying this for several years now and it seems that someone finally listened :)

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

#266

Post by Theodores »

Mistletoe wrote: post #191
melenaboija wrote: post #186

Earlier quoted context omitted.

The good part is that the next financial crisis when OpenAI sinks probably won’t be a systemic one, it will definitely drag others down and the stock market will readjust, but hopefully the US economy will remain afloat

Can you explain why you think that is? The SP500 has never been more top heavy and when those 7 or so all AI associated incest stocks falter I can't see anyway it's not going to be a bloodbath of the decade long type.

With some booms you have something to show for it, for example, a railway network. With others, such as tulips, there is nothing to show.

After the predicted bloodbath, do we get some infrastructure and products worth keeping at the end of it? If so, does that mean the system can limp on, after even more money has printed, or do we get to another big fork in the road where systematic change is required?

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

#267

Post by formerly_proven »

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.

These are options with a 99.995% discount (as of this writing) on AMD stock.

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

#268

Post by munksbeer »

kalap_ur wrote: post #216
Aurornis wrote: post #165

Earlier quoted context omitted.

> 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…

They sign the purchase order on 1/1/26. AMD issues invoice to be paid in 30 days, that is 2/1/26. OpenAI triggers warrant and informs AMD on 1/2/26. OpenAI receives shares on 1/4/26. On 1/5/26 OpenAI and AMD announce the GPU purchase deal. On 1/30/26 OpenAI sells its shares in AMD. From proceeds, OpenAI pays AMD on 2/1/26. Thus, AMD financed OpenAI's GPU purchase via AMD's shares.

The rest of the world trying to decipher this post because of the date format :headscratch:

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

#269

Post by jpadkins »

tanh wrote: post #69

I don't know why Bloomberg TV are asking where this money comes from for OpenAI. It comes from the AMD stock holders. If the AMD stock pumps then OpenAI gets free money to buy more, without giving up equity. If it doesn't then OpenAI just walk away.

specifically, it's coming from new AMD stock holders that are buying shares at much higher than current prices. And those shareholders are buying a company that they value more because AMD is better positioned in the LLM market because of the side effects of the OpenAI integration.

Existing AMD shareholders are getting a great deal; their shares are worth 30% more today and will be worth 5X more if OpenAI gets to use their option. Yes, there is some dilution for existing shareholders, but only after a 5X gain.

OpenAI basically self financed the buying of tens of billions of dollars of GPUs by increasing the enterprise value of AMD, and taking a cut of that. And the increase in value is not just the announcement, but the integration work needed to make AMD GPUs as good as Nvidia for inference.

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

#270

Post by hristov »

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…

It sure seems that way. The stock options are worth, at the current price of AMD stock, about 32.8 Billion dollars. AMD is giving out these stock options essentially for free in exchange of open ai purchasing chips from AMD.

So open ai are getting a 32.8 billion dollars rebate. But on what? Here the press releases are a bit vague. They say that Open ai committed to buying six gigawatts of AMD chips. Anybody know how to convert that into money?

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