Earlier quoted context omitted.
Backed by what?
Compute resources.
And high end networking gear will always have a buyer, right Nortel?
AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake
91–100 of 390 posts
Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake
#92Earlier quoted context omitted.
I'm very ignorant, will AMD shares get diluted? or how is it money printing?
It isn’t printing money (money supply was not increased, and no one has access to more money due to the contract signed between the two parties), but I assume it makes the poster feel good to be outraged and express it by writing something like that.
AMD's valuation increased by over 30% this morning, so to say no one has access to more money because of this news is untrue.
I'm not outraged at all, I just think this sort of bizarre financial engineering is not a good sign. If the ROI was so obvious, why not, for example, simply issue bonds and buy AMD stock on the open market?
Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake
#93Earlier quoted context omitted.
As a local LLM enthusiast, I can tell you that it's useless for most real work - even on desktop form factors. Phones catching up is ever farther out.
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.
Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake
#94The 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…
Because of the vesting milestones the stock price of AMD would go up by such an extent that creating more s hares would not dilute the share price. Obviously, for the stock price to go up money needs to come from somewhere. It makes sense that this deal would lower the NVidia stock price, so technically it will be NVidia investors waiting too long to respond to this news that will be paying for this. A tax on the mis…
> A tax on the mistaken believe that NVidia has an monopoly on putting transitions in a particular configuration which they obviously don't
NVIDIA doesn't place transistors in particular configurations. Foundries do that for them. And it is currently common sense that the software is the moat, not the hardware design.
Good luck changing the ecosystem to use AMD.
Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake
#95I 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.
OpenAI is supposed to be buying something like $100 billion of chips from AMD. On top of the hundreds of billions to like five other companies for AI chips and other compute. Where do those several hundred billions come from? That's the question being asked here.
Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake
#96Earlier quoted context omitted.
I think at least part of the 10% is if AMD stock reaches 600. Not that I disagree that this looks weird. Why was that needed to be offered? Couldn't they just buy the AMD chips if they're good enough? Or Nvidia is it's better? 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?
>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.
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.
Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake
#97[dead]
Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake
#98Earlier 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.
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.
Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake
#99https://geohot.github.io//blog/jekyll/update/2025/03/08/AMD-...
It was inevitable, this basically marks the end of affordable gaming GPUs, upgrade while you still can
Re: AMD signs AI chip-supply deal with OpenAI, gives it option to take a 10% stake
#100Earlier quoted context omitted.
AMD issues new shares and gets a penny (read: effectively zero) back for them. ALL ELSE BEING EQUAL this means everyone holding AMD has 10% of their equity/value taken away and handed to OpenAI. But all else is not equal. OpenAI only gets the shares if they buy AMD GPUs. The intent is that this offsets the dilution by making AMD overall more valuable. (This is why the stock price jumped on the announcement) It's a GP…
> ALL ELSE BEING EQUAL this means everyone holding AMD has 10% of their equity/value taken away and handed to OpenAI. But the stock is up 30% on the news. So lose 10%, but gain 30%, so net 20% beneficial to equity holders?
Percentage math doesn't quite work that way. (130% * 90% for gaining 30% and then giving away 10% of that, is 117% not 120%)
But yes. That's the intent.
The "problem" is that OpenAI doesn't have any of the shares yet, and it's unclear how much they actually will get. Right now AMD shareholders have the full +30% gain with none of the loss. But will the +30% gain be wiped out on the news OpenAI won't be buying as many AMD GPUs? Only time can tell.