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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

#321

Post by diamond559 »

jpadkins wrote: post #269
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…

They are getting a meaningless deal unless they can nearly triple their market value from here. Sam isn't buying AMD shares for more than a penny, what should we value it at?

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

#322

Post by nickysielicki »

rfv6723 wrote: post #309
nickysielicki wrote: post #253

I wonder what they intend to use for networking, it’s not really clear from this.

AMD Pensando DPU https://www.amd.com/en/products/accelerators/pensando.html

This isn't stated in any of their press releases.

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

#323

Post by lmm »

joenot443 wrote: post #297
coliveira wrote: post #288

Earlier quoted context omitted.

It seems that these American companies have decided, with the government blessing, to form a cartel to split the imaginary money they assume will exist for AI technologies. This is an extremely disturbing notion that will only increase the combined power of these tech companies over our daily lives, but may also spell the doom of the economy in a not-so-distant future.

Fully anecdotal, but nearly every knowledge worker I know has Copilot or ChatGPT or some kind of corporate LLM subscription included in their job now. I don’t think the majority use it very well, but I know at least a handful who do. Corporate America seems ready to spend real money on AI, at least for now. This money being spent today doesn’t come close to recouping the investment OpenAI et al have made, but the tri…

> Corporate America seems ready to spend real money on AI, at least for now. This money being spent today doesn’t come close to recouping the investment OpenAI et al have made, but the trickle’s begun. The money’s not all imaginary.

It's still pretty funny money. Companies are buying those subscriptions to show their shareholders how trendy they are, not because they're useful to them. And the subscription price points are widely speculated to not even have positive gross margin, yet alone starting to recoup any investment. It's far from clear that there's any kind of viable business here.

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

#324

Post by plorg »

JumpinJack_Cash wrote: post #301
fancyfredbot wrote: post #260

This $100bn deal didn't cost anything and isn't worth anything. Remember back two weeks ago when Nvidia gave OpenAI $100bn so they can keep buying Nvidia GPUs? This is AMD trying to do the same, but they don't have $100bn so they are offering OpenAI share options to buy GPUs. The share options will be worth at least $100bn too, if the conditions are met. But meeting the conditions will require buying huge numbers of…

> > Infact if OpenAI don't find a profitable use for them then both their stock price, and AMD's will go down. In theory yes but OpenAI doesn't have a stock and in the word of AntiChrist Peter Thiel : "We only have AI, there is nothing else out there except for AI" so with the belief still strong to carry at least up until GPT 7 OpenAI will find ways to present itself to the world as capable of putting to use the AMD…

Imagine if the answer to the Fermi paradox ends up being not "they destroyed themselves through war" but "they destroyed themselves trying to find meaning in money and fake thinking machines".

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

#325

Post by tyre »

lesuorac wrote: post #273
gowld wrote: post #258

Earlier quoted context omitted.

What Musk suit are you talking about? The rest of your comment doesn't make sense.

His 56 billion pay package [1]. In order for him to receive it the stock would need to increase 13x [2] (the AMD stock increase from 150 to 600 is only 4x). Despite succeeding at doing that, he and Tesla were sued over the pay package. If OpenAI fails then its going to have to liquidate the company. Selling 160M shares of AMD is going to tank it's price. [1]: https://en.wikipedia.org/wiki/List_of_lawsuits_involving_T…

It's not really a similar situation. His pay package was invalidated because of how much control Elon had over the board and the shareholders not being fully informed of the likelihood that the necessary goals would be hit.

Whatever the merits of the lawsuit, it wasn't about the pay package being too diluting.

If OpenAI fails, it will be acquired and/or the shares will be sold in bulk. They're not going to log in to etrade and sell 160m shares on the open market.

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

#327

Post by cebert »

coliveira wrote: post #288
fancyfredbot wrote: post #260

This $100bn deal didn't cost anything and isn't worth anything. Remember back two weeks ago when Nvidia gave OpenAI $100bn so they can keep buying Nvidia GPUs? This is AMD trying to do the same, but they don't have $100bn so they are offering OpenAI share options to buy GPUs. The share options will be worth at least $100bn too, if the conditions are met. But meeting the conditions will require buying huge numbers of…

It seems that these American companies have decided, with the government blessing, to form a cartel to split the imaginary money they assume will exist for AI technologies. This is an extremely disturbing notion that will only increase the combined power of these tech companies over our daily lives, but may also spell the doom of the economy in a not-so-distant future.

Does anyone here who lived through the dotcom bubble feel like we're in a similar situation with AI? I am excited about AI and recognize its potential. However, the increasing number of business deals like this one is raising my concerns that we may be heading toward a harsh bubble.

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

#328

Post by lesuorac »

tyre wrote: post #325
lesuorac wrote: post #273

Earlier quoted context omitted.

His 56 billion pay package [1]. In order for him to receive it the stock would need to increase 13x [2] (the AMD stock increase from 150 to 600 is only 4x). Despite succeeding at doing that, he and Tesla were sued over the pay package. If OpenAI fails then its going to have to liquidate the company. Selling 160M shares of AMD is going to tank it's price. [1]: https://en.wikipedia.org/wiki/List_of_lawsuits_involving_T…

It's not really a similar situation. His pay package was invalidated because of how much control Elon had over the board and the shareholders not being fully informed of the likelihood that the necessary goals would be hit. Whatever the merits of the lawsuit, it wasn't about the pay package being too diluting. If OpenAI fails, it will be acquired and/or the shares will be sold in bulk. They're not going to log in to…

> Whatever the merits of the lawsuit, it wasn't about the pay package being too diluting.

But this is exactly the point. If somebody is going to sue Elon when he 13x the share price then of course somebody is willing to sue AMD if they 4x it.

Elon's pay package was voted on by shareholders. AMD's deal with OpenAI had none of that so if anything it's more ripe for a lawsuit.

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

#329

Post by geerlingguy »

PessimalDecimal wrote: post #314
didntknowyou wrote: post #306

Earlier quoted context omitted.

it kinda worked in a way. AMD offered OpenAI 160 million stock options. With AMD's stock jump today it's net worth increased about $35billion, close enough in value to those stocks option they gave away (if it was redeemed instantly). It's too much of a coincidence so I'm guessing market makers and institutional shareholders priced it in their trading today.

If a company gave away some portion of is assets, shouldn't its market cap go _down_ by that amount not up? That's how stocks trade ex dividend e.g.

You assume the market is in any way rational...

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

#330

Post by [deleted] »

throwaway2037 wrote: post #312
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.

Can someone with banking / deal-making experience explain to me how this warrant works? My point: If OpenAI exercises the warrant and buys 10% of AMD for 1 penny per share, where does AMD get the shares? Or will they do a secondary offering and dilute existing shares? Or do they take from treasury holdings (of shares)? Or does AMD coordinate a buyback of shares, then deliver to OpenAI?

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