[HN Gopher] AMD signs AI chip-supply deal with OpenAI, gives it ...
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AMD signs AI chip-supply deal with OpenAI, gives it option to take
a 10% stake
Author : chillax
Score : 355 points
Date : 2025-10-06 12:17 UTC (10 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| robotswantdata wrote:
| Infinite money glitch
| BoredPositron wrote:
| I wonder what we will do with all that compute if no one is going
| to use it...even if we achieve AGI it won't run on this
| generation of hardware. Are we just gonna brute force
| architectures or wtf is going on?
| grim_io wrote:
| Cheap cloud gaming.
|
| Those GPU's will finally push pixels again :)
| krige wrote:
| Cloud gaming sucks due to latency, not price.
| LogicFailsMe wrote:
| Which is something we already knew a decade ago.
|
| Just like we knew self-driving AIs are not reliable.
|
| The magical thinking was assuming they would just get
| better.
| ptsneves wrote:
| Played forza motorsport 5 on xbox cloud gaming and could
| not notice it. Of course I am the most non-serious player
| ever, but I really tried to notice, and for my standards it
| was fine.
| fkyoureadthedoc wrote:
| maybe I'm just over sensitive to it, but I can't even
| stand playing when the tv isn't on game mode. can't
| imagine waiting for controller input to make a server
| roundtrip
| admaiora wrote:
| Not even an issue anymore. I have no issue playing FPS
| games like call of duty multiplayer via GeForce Now and can
| be decently competitive. I do live close to the servers
| though.
| TiredOfLife wrote:
| Cloud gaming can have lower latency than local consoles.
| https://www.eurogamer.net/digitalfoundry-2022-geforce-now-
| rt...
| palmotea wrote:
| > Cheap cloud gaming.
|
| > Those GPU's will finally push pixels again :)
|
| Have they ever? I wonder if, say, an H100 even supports
| graphics APIs.
| thiago_fm wrote:
| H100s have certain tradeoffs that makes gaming not as
| energy efficient.
|
| Funnily enough, H100s are already old hardware, and soon
| will all get fully depreciated.
|
| Billions and billions of depreciated assets!
| Havoc wrote:
| They won't. High end AI GPUs get stomped by mid tier gaming
| GPUs on pixels
|
| There will definitely be takers though. Can see scientific
| community for example loving some cheap GPUs
| nharada wrote:
| I assume there's at least one generation of re-sale value.
| There's a lot of smaller companies that could use GPU capacity
| and would if it was cheaper. I wonder how the math works out
| though -- are power requirements such that the actual costs
| aren't worth it? How long before the chips just get thrown
| away?
| didntknowyou wrote:
| they're just printing money for each other at this point
| alberth wrote:
| Some refer to it as "circular financing".
|
| It's "seller financing" but to a degree we've never seen before
| in an industry (which create these "circular" effects).
|
| There's a good HN thread from 2-days ago on this subject (200+
| comments).
|
| https://news.ycombinator.com/item?id=45473033
| bee_rider wrote:
| What a mess. When they have to write about how "circular
| financing" became highly regulated in the future, I hope they
| know that the problem was not confusing in the big picture.
|
| Maybe I can get quoted in a sidebar:
|
| "Hey Econ students, we normal people could see that the AI
| market was extremely gamed. We can see the investment
| feedback loop. It is just that the organizations continuing
| it have control over so much money, they don't have to stop
| and ask society in general for permission to continue. Really
| this is a symptom of the wealth inequality crisis that they
| covered chapter..."
| tjwebbnorfolk wrote:
| This method of financing is not novel. But anytime you see
| an unnecessarily complex deal like this, one should think
| very carefully about why they didn't opt for a simpler
| method, e.g. simply selling stock in the open market.
|
| The reasoning behind such a deal are usually not a good
| sign for the underlying health of the companies involved.
| og_kalu wrote:
| I'm assuming this is what you mean by 'simply selling
| stock in the open market' so correct me if I'm wrong but
| Why would Open AI go public when they can raise so much
| private money they're valued at 500B ?
|
| It certainly wouldn't be for fear of a lack of
| investment. AMD is up 30% from this announcement alone.
| graeme wrote:
| Openai can't go public at present. They have an irregular
| non profit structure. They've been negotiating with
| Microsoft but can't convert out of their current
| structure without getting a new deal from Microsoft
| accepting the conversion.
| DebtDeflation wrote:
| Oh, we saw it before. 1998-2000. Cisco, Sun, et al,
| "investing" in the dotcoms so those dotcoms could turn around
| and use the funds to buy servers and routers from them.
| hmm37 wrote:
| It's the opposite here. It's as if the dotcom is investing
| into Cisco and Sun, so that it can buy servers and routers
| from them.
| DebtDeflation wrote:
| Not really. This is AMD investing in OpenAI (albeit in an
| unusual way, with stock options) not the reverse. Same as
| the Nvidia deal. Same as hyperscaler investment in OpenAI
| and Anthropic. The people selling stuff to the AI Labs
| are the same ones funding them.
| didibus wrote:
| I can't figure who is actually investing in who?
|
| OpenAI may own 10% of AMD, and that seems like OpenAI
| investing in AMD in exchange for buying 6GW of GPUs and
| 160million in stock.
| DebtDeflation wrote:
| OpenAI isn't giving AMD money to get AMD stock. AMD is
| giving OpenAI its stock (in the form of a call option
| with a $0.01 strike).
| didibus wrote:
| I understood it as, OpenAI is giving AMD money, by buying
| 6GW of GPUs from them.
|
| But if it results in their stock reaching 600$, then AMD
| will give back the money that OpenAI spent on GPUs as 10%
| stock options into AMD.
|
| Which sounds like, no one is really investing in each
| other, they're both like exchanging money back and forth,
| where both hope to gain some extra money by propping up
| the AMD stock with the announcement, hoping it helps make
| AMD more competitive on the GPU landscape.
|
| Did I get it right?
| lvl155 wrote:
| Nvidia owns a piece of OAI, and now Nvidia would own a piece
| of AMD. I am just waiting for Samsung type of circular
| ownership structures here in the US.
| jpadkins wrote:
| The real, sustained value creation for AMD is if their GPUs
| can be competitive with Nvidia for inference or training. The
| market is currently betting that AMD will get that
| "spillover" effect from working with OpenAI to get their
| chips + software in a state that openAI can use at scale.
|
| So day 1 valuation is mostly hype, but that hype may
| translate into real value later.
| tesdinger wrote:
| No it is not printing money. Shares are not money.
| melenaboija wrote:
| 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
| Mistletoe wrote:
| 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.
| melenaboija wrote:
| I don't know, just intuition. Each crisis is different and
| impossible to predict, otherwise I'd be retired, which I'm
| not.
|
| Completely agree, I'd expect all of those to take a big
| hit, and some more than others, but I don't think Microsoft
| or Google would disappear. As for the SP issue, if this
| trend continues, people might start seeing the SP as the
| opposite of diversification (at least in the stocks market
| sense) and will have to start looking for something else.
|
| BTW, I'm almost an all-in SP investor myself so I'll have
| to navigate that dip too, lol
| Theodores wrote:
| 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?
| cluckindan wrote:
| Great: once the bubble pops, all camps will suffer.
| randomname4325 wrote:
| 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.
| aswegs8 wrote:
| What's the advantage of that, exactly? Why would you want
| something very compute intensive run on your phone instead of
| just using an API to data centers with great economy of scale?
| randomname4325 wrote:
| My assumption is that most users won't actually care if the
| LLM is in the cloud or device. That said, quite a few folks
| have iPhones and Apple's only way into the AI race is to go
| to it's strength, 1B+ hardware devices that they design the
| silicon for. They will produce a phone that runs a local LLM
| and market it as private and secure. People upgrade every
| couple of years (lose or breaks) so this will drive adoption.
| I'm not saying people will vibe code on their iphones.
| lelanthran wrote:
| Price, for one. I don't mind running a local model at half
| the speed if all it costs is electricity.
|
| A local model basically allows me to experiment with running
| an agent 24x7, 365 days a year with continuous prompting.
|
| SaaS won't be able to match that.
| kcb wrote:
| What's the benefit to running LLMs locally? Data is already
| remote, LLM inferencing isn't particularly constrained by
| Internet latency. So you get worse models, performance, and
| battery life. Local compute on a power constrained mobile
| device is required for applications that require low latency or
| significant data throughput and LLM inferencing is neither.
| fkyoureadthedoc wrote:
| > What's the benefit to running LLMs locally?
|
| At work:
|
| That I don't rent $30,000 a month of PTUs from Microsoft.
| That I can put more restricted data classifications into it.
|
| > LLM inferencing isn't particularly constrained by Internet
| latency
|
| But user experience is
| kcb wrote:
| 30k in a month is an enormous amount of tokens with Claude
| through AWS Bedrock. And companies already commonly trust
| AWS with their most sensitive data.
| mrweasel wrote:
| The data you need is mostly not remote. A friend works at a
| software development company, they can use LLMs, but only
| local ones (local as in their datacenter) and it can only be
| trained on their code base). Customer service LLMs need to be
| trained on in-house material, not generic Internet sources.
|
| The general advantage is that you know that you're not
| leaking information, because there's nowhere to leak it to.
| You know the exact input, because you provided it. You also
| get the benefit of being able to have on device encryption,
| the data is no good in the datacenter if it's encrypted.
| kcb wrote:
| Local as in datacenter is the key there. The original
| comment was about end user devices.
| jeswin wrote:
| 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.
| randomname4325 wrote:
| 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.
| stri8ted wrote:
| For video use cases, which will become increasingly
| popular, we are a long ways away.
| echelon wrote:
| 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.
| baq wrote:
| that's... some years... from now
| simianwords wrote:
| why do you think LLM's will get good enough that they can run
| locally but the ones requiring nvidia GPU's will not get
| better?
| vachina wrote:
| ok, you can technically upload all your photos to Google
| cloud for all the same semantic labeling features as iOS
| Photos app, but having local, always available and fast local
| inferencing is arguably more useful and valuable to the end
| user.
| nerdix wrote:
| The models running on $50k GPUs will get better but the
| models running on commodity hardware will hit an inflection
| point where they are good enough for most use cases.
|
| If I had to guess I would say that's probably 10 or 15 years
| away for desktop class hardware and longer for mobile (maybe
| another 10 years).
|
| Maybe the frontier models of 2040 are being used for more
| advanced things like medical research and not generating CRUD
| apps or photos of kittens. That would mean that the average
| person is likely using the commodity models that are either
| free or extremely cheap to use.
| TiredOfLife wrote:
| The new iPhones barely got 12gb of ram. The way Apple is going
| iPhones will have enough ram for llms in about 100 years
| vachina wrote:
| Trying to compare RAM size and CPU cores is so yesterday.
| Apple owns the entire stack they can make anything fit into
| their core if they so desire.
| whitehexagon wrote:
| 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.
| theli0nheart wrote:
| > _As part of the arrangement, AMD issued a warrant that gives
| OpenAI the ability to buy up to 160 million shares of AMD for 1
| cent each over the course of the chips deal. The warrant vests in
| tranches based on milestones that the two companies have agreed
| on._
|
| This is money printing, just in the private sector. We know what
| happens when governments do it, and it's not good.
| john-h-k wrote:
| It's quite specifically _not_ money printing, because it's
| backed by something.
|
| It could be bad sure but it's not money printing
| theli0nheart wrote:
| Backed by what?
| kaptainscarlet wrote:
| Compute resources.
| w3ll_w3ll_w3ll wrote:
| So like Bitcoin?
| denismenace wrote:
| Not the same, since if you buy Bitcoin, you don't have
| partial ownership of the machines used to mine and also
| these machines being used for a singular purpose which
| you cannot change.
| vel0city wrote:
| And high end networking gear will always have a buyer,
| right Nortel?
| dsr_ wrote:
| Lucent agrees: even used, the product will retain 90% of
| list price because the market has an infinite number of
| VC-backed buyers.
| rvba wrote:
| It is backed by AMD stockholders, whose stock just got
| diluted.
|
| It's like in that movie "Social network"
| aurareturn wrote:
| Ownership in a company.
| SecretDreams wrote:
| > because it's backed by something
|
| If I finance a car backed by hopes and dreams, I'd be driving
| real good.
| fauigerzigerk wrote:
| You're right. It's not really money printing, at least not
| directly. Only banks can print money.
|
| What these recent deals do is inflate asset prices by making
| (future) revenues appear higher or perhaps just more certain
| than they really are.
|
| Assets can be used as collateral for loans. If someone were
| to use their AMD shares as collateral for a loan at a
| commercial bank (not a margin loan), that would be money
| printing and you could print more of it today than before the
| deal was announced.
| diego_sandoval wrote:
| I'm very ignorant, will AMD shares get diluted? or how is it
| money printing?
| lotsofpulp wrote:
| 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.
| theli0nheart wrote:
| 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?
| lotsofpulp wrote:
| I wrote:
|
| > and no one has access to more money due to the contract
| signed between the two parties
|
| If a third party decides to pay a higher price for a
| publicly listed share because of the news of this
| contract, that is not printing money. The buyer of the
| shares loses money, the seller gains it, for a net change
| of zero in money supply.
| rchaud wrote:
| If OAI issued bonds, they'd be carrying all the risk.
| With these deals with Microsoft, Nvidia and now AMD,
| they're shifting some of that risk to powerful players in
| the "too big to let fail" category.
| theli0nheart wrote:
| Well, yeah, that's exactly my point. OpenAI is not
| issuing bonds because these transactions are way riskier
| than people are willing to admit.
| lotsofpulp wrote:
| Who is "people"? Investors and people familiar with
| finance are well aware of the deal and its risks, as they
| are public information.
| theli0nheart wrote:
| 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?
| lotsofpulp wrote:
| 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.
| rhetocj23 wrote:
| Indeed. Youre one of the few posters ive seen on here
| that gets it.
| tesdinger wrote:
| It is dilution. 160 million shares of AMD for 1 cent will be
| added. The idea is that the value increase of the remaining
| shares enabled by the OpenAI cooperation will be stronger
| than the decrease caused by dilution.
| N70Phone wrote:
| 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 GPU
| subsidy paid for by AMD's shareholders rather than AMD
| itself.
|
| The real risk is that this further entangles AMD in the AI
| bubble. OpenAI already has enormous datacenter construction
| obligations. The likelihood of them failing to meet these new
| obligations, and thus this deal falling through or otherwise
| not materialising, is pretty high. If the AI bubble goes
| *POP*, AMD will be hurting a lot more than before this deal.
| dist-epoch wrote:
| > 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?
| N70Phone wrote:
| 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.
| rchaud wrote:
| The shares haven't been issued yet, so there isn't any
| dilution. Equity holders could sell their holdings now
| and benefit, because when OAI exercises the option and
| gets 160m shares for peanuts, they will sell those shares
| ASAP to bring in cash to pay for their orders of AMD
| chips.
| tesdinger wrote:
| It's not money printing because shares are not classified as
| money in economics. Money is used for transactions while shares
| primary purpose is not transactions.
| nerdix wrote:
| 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 cost of the GPUs with equity.
| giancarlostoro wrote:
| Similar to how Microsoft bought out nearly half of OpenAI,
| though they offered compute credits IIRC. I wonder how much
| into Microsoft's investment OpenAI is in.
|
| Edit: Apparently what Microsoft owns is 49% profit-sharing
| interest in OpenAI, specifically in the 'capped profit' for
| profit subsidiary. So weird, but hey, it's still a slice of the
| pie. Plus they can exclusively sell access to the models.
| rvba wrote:
| Microsoft seems to have made a good deal: it got the models
| AND profits.
|
| Also microsoft is pushing copilot to office and I think it
| will sell. Since they sell to general B2B and not only to the
| peogrammer niche.
|
| AMD is trying to buy market share by donating 10% equity. I
| also think it is crazy
| giancarlostoro wrote:
| Yeah, I heard about when ChatGPT removed I think it was O4?
| apparently there's an entire community devoted to "role
| playing" or rather dating a character powered by the model.
| GPT5 broke their entire relationship. Me and a few friends
| agreed it might have been worth spinning up a dating GPT O4
| based service for those people to pay to migrate their AI
| 'companions' to. Azure still has these "abandoned" models.
|
| On the other note, it also helps OpenAI because they don't
| have to manage setting up all that infrastructure just to
| let others use the model.
| yousif_123123 wrote:
| 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?
| AlanYx wrote:
| >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.
| rhetocj23 wrote:
| Financing made out of thin air. Hilarious
| lesuorac wrote:
| 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.
| wmf wrote:
| When the stock goes from $150 to $600 that's not called
| dilution. Nobody cares about the number of shares in that
| situation.
| lesuorac wrote:
| The CEO of Tesla, Elon Musk, was sued over an extremely
| similar situation. So somebody will care.
|
| That said, this is really about the principal. Sure, if I
| give you $10 and you give me a hamburger it's not like
| some illegal transaction. But to say the $10 comes from
| thin air is wrong. It doesn't come from thin air.
|
| I would bet that if one day OpenAI decided to sell 10% of
| AMD the stock would crash from $600 to below $150. IIUC,
| there's 1.6B shares of AMD while only 54M shares trade
| daily so dumping 160M shares would tank their price [1].
| If AMD gives OpenAI 10% of the company and OpenAI goes
| under, it's going to take AMD's share price with it.
|
| [1]: https://www.marketwatch.com/investing/stock/amd
| gowld wrote:
| What Musk suit are you talking about?
|
| The rest of your comment doesn't make sense.
| lesuorac wrote:
| 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_invol
| ving_Tes...
|
| [2]: https://ir.tesla.com/press-release/tesla-announces-
| new-long-...
| wmf wrote:
| I think there's a covenant preventing OpenAI from dumping
| AMD shares on the open market. Obviously AMD's price will
| move down during the crash but at least the shares will
| be liquidated in an orderly fashion.
| zerosizedweasle wrote:
| It's a joke that it is so obvious what they are doing.
| DebtDeflation wrote:
| 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.
| lotsofpulp wrote:
| 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.
| zerosizedweasle wrote:
| It's circular money flows.
| johnnyanmac wrote:
| 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.
| formerly_proven wrote:
| These are options with a 99.995% discount (as of this
| writing) on AMD stock.
| Pet_Ant wrote:
| It seems to me that there is an aspect of marketing to this
| deal. Nvidia has the mindshare, so this would help
| legitimise AMD offerings. This is almost product
| placement/sponsorship for AMD.
|
| Also, this would battle test AMD's platform and provide
| enhancements so it's also a beta-testing service.
| Aurornis wrote:
| > 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 each with
| no strings attached like many of the comments are assuming.
| AlanYx wrote:
| Yes, I was being somewhat flippant in my description of
| the transaction. But the net result of the transaction is
| the same. OpenAI can finance the GPU purchases by
| borrowing against the contractual guarantees it received
| from AMD to receive warrants in exchange for acquiring
| AMD GPUs. Whether the transaction is partially or
| entirely financed will depend on AMD's share price
| movement in the interim.
| kalap_ur wrote:
| 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.
| munksbeer wrote:
| The rest of the world trying to decipher this post
| because of the date format :headscratch:
| Keyframe wrote:
| translated, AMD buys GPU from itself and gives them to
| OpenAI for free. OpenAI gets GPUs for free, AMD hopes the
| market will reward the deal enough to increase its
| valuation by more than the dilution cost.
|
| I have to ask - is this even legal? I understand it can
| be, but somehow it feels wrong. I guess AMD would report
| revenue of those GPU sale and equity issuance / dilution
| as part of payment terms, and OpenAI would record
| hardware purchase expense as well as investment income or
| maybe capital gain when selling those shares. What makes
| it legal is probably it all needs to be transparently
| communicated in time?
| N70Phone wrote:
| > 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 options to generate new hype beyond spewing
| ever larger numbers into the news cycle.
|
| AMD is making this desperation play because soon, once the AI
| bubble pops, there'll be a flood of cheap unused GPUs & GPU
| compute. Nobody's going to be buying their new cards when you
| can get Nvidia's prior gen for pennies on the dollar.
| CyanLite2 wrote:
| 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 investments, not a
| traditional silicon valley garage startup looking for their
| Series A. So institutional investors have no choice but to
| continue to throw money into Big Tech hoping for the Big
| Payoff, rather than investing in VC funds like 10 years
| ago.
|
| AMD did this deal because it's literally offering financing
| to them. OpenAI doesn't have access to capital markets like
| AMD does. So it's selling off shares of its own stock to
| finance the purchase of billions of dollars worth of GPUs.
| And the trick appears to be working since the stock is up
| 30% today, meaning it has paid for itself and then some.
| rhetocj23 wrote:
| Theres a phrase for this. Financial engineering.
| zerosizedweasle wrote:
| In other words they are stealing capital from the rest of
| the economy. Starving it.
| CuriouslyC wrote:
| The difference this time is that it's global coordinated
| collusion, and it's not just the superwealthy, it's
| states that are willing to go all in on this. If you
| thought the banks were too big to fail, the result here
| is going to be a nationalization of AI resources and
| doubling down.
| jakewins wrote:
| 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 innovation?
| nemomarx wrote:
| If it comes from anywhere else but it needs a lot of
| capital to execute, big tech will just acquire them
| right? They'll have all the data centers and compute
| contracts locked up I guess.
| CuriouslyC wrote:
| Yup. LLMs can get arbitrarily good at anything with RL,
| but RL produces spiky capabilities, and getting LLMs
| arbitrarily good at things they're not designed for (like
| reasoning, which is absolutely stupid to do in natural
| language) is very expensive due to the domain mismatch
| (as we're seeing in realtime).
|
| Neurosymbolic architectures are the future, but I think
| LLMs have a place as orchestrators and translators from
| natural language -> symbolic representation. I'm working
| on an article that lays out a pretty strong case for a
| lot of this based on ~30 studies, hopefully I can tighten
| it up and publish soon.
| CyanLite2 wrote:
| 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.
| jakewins wrote:
| Sorry I still don't understand.
|
| Are you saying you disagree that a new architectural leap
| is needed and just more compute for training is enough?
| Or are you saying a new architectural leap is needed
| _and_ that or those new architectures will only be
| possible to train with insane amounts of compute?
|
| If the latter I dont understand how you could know that
| about an innovation that's not yet been made
| N70Phone wrote:
| > And the trick appears to be working since the stock is
| up 30% today, meaning it has paid for itself and then
| some.
|
| It's a bubble. The tricks keep working until they
| suddenly don't, and then all the prior tricks unwind
| themselves.
| chasd00 wrote:
| no amount of investment is going to make AGI just appear.
| It's looking more and more like current architectures are
| a dead end and then it's back to the AI drawing board
| just like the past 30 years.
| programjames wrote:
| 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, but none of its
| logic or conclusions.
|
| - GPT 4.5: Good for reference proofs/code. I cannot trust
| its proofs or code, but I can get a decent outline for
| writing my own.
|
| - GPT 5: Good for directed thinking. I cannot trust it to
| come up with the _best_ solution on its own, but if I tell
| it what I 'm working on, it's pretty decent at using all
| the tricks in its repertoire (across many fields) to get me
| a correct solution. I can trust its proofs or code to be
| about as correct as my own. My main issues are I cannot
| trust it to point out confusion or ask me, "is this
| actually the problem we should be solving here?" My guess
| is this is mostly a byproduct of shallow human feedback,
| rather than an actual issue with intelligence (as it will
| often ask me _at the end of spending a bunch of
| computation_ if I want to try something mildly different).
|
| For me, GPT 5 is way more useful than the previous models,
| because I don't have a lot of paper-pushing problems I'm
| trying to solve. My guess is the wider public may disagree
| because it's hard to tell the difference between something
| better at the task than you, and something _much better_.
| CuriouslyC wrote:
| Gemini 2.5 was the first breakthrough model, people
| didn't know how to use it but it's incredibly powerful.
| GPT5 is the second true breakthrough model, it's ability
| to deal with math/logic/etc complexity and its depth of
| knowledge in engineering/science is amazing. Every time I
| talk to someone who stans Claude and is down on GPT5 I
| know they're building derivative CRUD apps with simple
| business logic in Python/Typescript.
| N70Phone wrote:
| > 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.
| alberth wrote:
| > 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 finger tip with these deals
| he's crafting.
| SirMaster wrote:
| 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?
| dbbr wrote:
| My uneducated one word answer: CUDA.
| alwahi wrote:
| if your castle had a moat like CUDA....
| CuriouslyC wrote:
| CUDA isn't even a moat for inference, only for training.
| jakogut wrote:
| How's Microsoft's Direct3D moat working out for them now?
| It's turned out to have been much less of a moat than it
| once was. Triple-A titles that are developed for Windows
| using Direct3D 12 are getting support on Linux through
| Proton within days of release, or even at launch
| sometimes.
| preisschild wrote:
| Could quickly change if open alternatives were suddenly
| more popular or with stuff like ZLUDA
|
| https://github.com/vosen/ZLUDA
| blihp wrote:
| Try to use AMD GPU's for AI and you'll understand. Unless
| you have lots of your own engineers to throw at making
| their stuff work, it's easier for most companies just to
| keep throwing money nVidia's way.
| SirMaster wrote:
| I understand that it's that way today. But I am talking
| about "potential". If OpenAI and AMD engineers get their
| heads together and make some new software etc, couldn't
| AMD in theory become as valuable as Nvidia or at least
| half as valuable?
|
| It seems like to take a 350M market cap company to 2B+ or
| a 6x+ increase in stock price would be worth doing for a
| few hundred million dollar investment in software and
| such?
| resters wrote:
| 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 :)
| lucianbr wrote:
| 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?
| delusional wrote:
| > What is AMD getting that's worth giving OpenAI $100B?
|
| The other $300B
| lucianbr wrote:
| 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.
| jerf wrote:
| You have put your finger on the AI bubble's biggest
| problem right now. Companies are making promises that
| they are currently completely incapable of fulfilling, in
| the hopes that someday they can, and the stock market are
| valuating these promises as done deals.
|
| Predicting the end of bubbles is well known to be a
| fool's errand, but if this AI bubble is still going in a
| year I can only imagine how casually these companies will
| have to be throwing around multi-trillion dollar promises
| to each other to keep the stocks pumped up.
| chasd00 wrote:
| > Companies are making promises that they are currently
| completely incapable of fulfilling, in the hopes that
| someday they can, and the stock market are valuating
| these promises as done deals.
|
| That reminds me a lot of Enron. As long as the stock
| keeps going up everything is fine but when it does t
| everything comes crashing down.
| delusional wrote:
| 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.
| lucianbr wrote:
| Thanks for explaining.
|
| Imho AMD itself needs to have a theory, which underpins
| their signing of the deal. For my clueless self, that
| investors have various theories and we don't know what
| they are is ok-ish, but that AMD has a theory but keeps
| it secret yet it gets the result of stock rise... is
| fishy.
|
| Everyone is going in circles making suppositions and
| estimations based on who knows what. That can't be
| healty, can it? There used to be requirements that
| publicly listed companies act with some level of
| transparency, and those requirements existed for a
| reason. I guess. I am certainly no expert in finance.
| delusional wrote:
| > but that AMD has a theory but keeps it secret yet it
| gets the result of stock rise... is fishy.
|
| It's not secret at all. Companies announcing a deal like
| this usually include some PR material alongside it [1].
| In this one, the quote is: "Our
| partnership with OpenAI is expected to deliver tens of
| billions of dollars in revenue for AMD while accelerating
| OpenAI's AI infrastructure buildout," said Jean Hu, EVP,
| CFO and treasurer, AMD. "This agreement creates
| significant strategic alignment and shareholder value for
| both AMD and OpenAI and is expected to be highly
| accretive to AMD's non-GAAP earnings-per-share."
|
| "significant strategic alignment", "shareholder value",
| and "billions of dollars in revenue" are all things that
| should be expected to move the market cap. The "tens of
| billions in revenue" would generate upwards of 100
| billion in market cap alone, assuming AMD's current
| multiple.
|
| [1]: https://www.amd.com/en/newsroom/press-
| releases/2025-10-6-amd...
| didibus wrote:
| I think the idea is that, OpenAI using AMD GPUs will help
| AMD become competitive against Nvidia in the AI space. If
| OpenAI is able to use them for their models, other
| companies will see AMD as a legitimate option and might
| switch to AMD for GPUs as well.
|
| This would be where AMD is to gain new money.
|
| OpenAI also has to gain, if it means access to more GPUs
| allows it to compete and be the winner of the LLM race.
| As the winner of the race, it would make new money, but
| also likely need to spend even more money on AMD to buy
| even more GPUs for years to come.
| wmf wrote:
| Market validation I guess.
| lacker wrote:
| > Sam is spinning the world on his finger tip with these
| deals he's crafting.
|
| That was my reaction too, this sort of weird deal seems
| very Sam Altman style.
|
| Like Elon Musk - ironically, the archenemies are very
| stylistically similar.
| zerosizedweasle wrote:
| This is too top of the top to ignore. Everyone can see the
| scam now, it's a joke
| dagaci wrote:
| Lol and I had to pay >$60 a share for my little bundle of AMD!
| ralfn wrote:
| 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 mistaken believe that NVidia has an
| monopoly on putting transitions in a particular configuration
| which they obviously don't. The rest is just momentum and this
| would kill that.
|
| The real winners will be TSMC and ASML
| j4hdufd8 wrote:
| > 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.
| wqaatwt wrote:
| > that the software is the moat, not the hardware design.
|
| For inference that's hardly relevant, though?
|
| For training its not exactly insurmountable either.
| j4hdufd8 wrote:
| GPUs are also used to speed up inference (the math is
| virtually the same). You think your ChatGPT queries are
| running on x86 servers?
| ralfn wrote:
| But do you think with the profit margins of NVidia,
| others won't be offering competing chips? Google already
| has their own for example.
|
| From that perspective the notion that NVidia will own
| this AI future while others such as AMD and Intel
| standby, would be silly.
|
| Im already surprised it took this long. The NVidia moat
| might he software, but not anything that warrants these
| kind of margins at this scale. It is likely there will be
| strong price competition on hardware for inference.
| Havoc wrote:
| > 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
| pixl97 wrote:
| 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.
| Havoc wrote:
| > potential value comes from the future
|
| In a strictly commercial sense yes but stock markets
| decoupled from that long ago. Whether it's wallstreetbets
| up to shenanigans or a market crash it's got little to do
| with actual future and more With sentiments. You'd hope
| it would revert to fundamentals eventually but markets
| sure seem happy to not do that
| Ekaros wrote:
| 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...
| barchar wrote:
| The money actually has to be spent on real goods for
| which supply is inelastic for this to happen. If it's
| instead saved or used to pay taxes it won't cause any
| inflation.
|
| I suppose the increased savings means there more
| potential for the private sector to cause inflation if
| everyone decides to dissave at once, but that's sorta a
| last resort.
| dist-epoch wrote:
| > I could be thinking about this the wrong way but it appears
| that AMD is basically subsidizing the cost of the GPUs with
| equity.
|
| Yes, you are reading it wrong. The big winner here is AMD, not
| OpenAI.
|
| If there is any signal here, it's that AMD is still in the AI
| game. AMD stock is up 30% on this news.
| boringg wrote:
| Its called hedging your risk: making sure Nvidia isn't the
| only game in town.
| nerdix wrote:
| I didn't mean to imply that there was a winner or loser. Just
| that AMD was subsidizing it's GPUs with equity.
|
| I think there are logical reasons for both companies to agree
| to this deal. AMD is trying to break CUDA dominance. OpenAI
| is getting extremely cheap compute for expansion and they'd
| also benefit from the Nvidia monopoly falling if that ever
| happens.
| orky56 wrote:
| OpenAI isn't publicly listed so it's hard to tell how this
| affects them from a "share price" concept. However for a
| company that's not public and only has capital from financing
| rounds and revenue, this gives OpenAI a lot more flexibility
| for the future and hedges risk while maximizing upside.
| HarHarVeryFunny wrote:
| 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.
| cubefox wrote:
| Your way of spelling "through" makes a lot more sense.
| agentcoops wrote:
| 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 materially impact the latter's business --
| and especially if the client's support of said vendor will
| directly or indirectly benefit their competitors who might
| also use this vendor -- an equity stake is a way to offset
| risk with upside.
|
| You can see this play out in the history of OpenAI. NVIDIA
| supported them from an early stage and in exchange received
| OpenAI equity to offset the risk. Now from a position of
| relative strength, OpenAI has become concerned about vendor
| lock-in and so is rationally exploring AMD. Yet, because any
| such deal will materially impact AMD's stock price and there
| is risk both of losing time trying to train with new chips as
| well as of benefiting competitors if they work with AMD to
| improve their hardware offerings/APIs, it is reasonable to
| ask for equity upside. So, for the same reasons (increase in
| stock price and enterprise client who will help improve their
| product offering) only without risk, is it understandable why
| AMD would want to offer equity on such favorable terms.
|
| TLDR; My sense is that the sudden skepticism towards this
| relatively common enterprise deal structure seems to derive
| from the understandable interest in identifying signs of an
| AI bubble. Such a bubble may (and indeed almost certainly
| does) exist, but I don't think this is evidence thereof.
|
| ----
|
| EDIT: I'm just clarifying something I saw in a lot of
| responses. My only point is that it is important to try and
| empirically tease out what represents: (1) a circular deal in
| which vendors facing the limits of growth are subsidizing
| vulnerable clients; versus (2) a risk-hedging deal in which a
| non-market leading vendor offers upside to a market leading
| client.
|
| I believe the recent Oracle and NVIDIA deals are cases of (1)
| that provide evidence of an AI bubble, but that this AMD deal
| is most likely a case of (2) that provides no _further_
| evidence.
| bgwalter wrote:
| The skepticism is not sudden. Various kinds of circular
| deals were common in 1999/2000, shortly before the bubble
| burst, when telecom equipment makers subsidized their
| customers in order to prop up sales.
| agentcoops wrote:
| I understand that. I simply think there's some importance
| in at least trying to empirically tease out what
| represents: (1) a circular deal in which vendors facing
| the limits of growth are subsidizing vulnerable clients;
| versus (2) a risk-hedging deal in which a non-market
| leading vendor offers upside to a market leading client.
|
| Again, I'm in no way denying either that (1) exists or
| that there's almost certainly an AI bubble -- I just
| think this difference is material.
|
| For example, I would classify the recently proposed deal
| between NVIDIA and OpenAI as a case of (1), but this deal
| between AMD and OpenAI as (2). Namely, because I think
| it's clear that the chips act as well as recent
| advancements by Chinese manufacturers are threatening to
| NVIDIA's market-leading position and OpenAI investigating
| new vendors suggests they have suddenly become concerned
| with reducing cost of goods. Indeed, if both the leading
| Chinese firms and OpenAI were shown to be able to work
| with other vendors without sacrificing speed to market it
| would materially impact NVIDIA's stock price. AMD, on the
| other hand, is not trying to subsidize an existing
| client, but convince a market leader to take a risk.
|
| The NVIDIA deal, then, suggests to me that certain limits
| have been reached in the industry, while the AMD deal
| does not provide me with any _further_ evidence as to the
| existence of a bubble.
| stingraycharles wrote:
| I think the skepticism is mostly aimed towards OpenAI
| making commitments to spend copious amounts of money,
| rather than the options that AMD is offering which makes
| sense.
| mrandish wrote:
| 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.
| agentcoops wrote:
| Completely agreed. I note in a comment below that my only
| aim is to distinguish between deals that provide new
| evidence of a bubble and those that do not provide any
| further evidence towards that conclusion. I think the
| Oracle and especially the recent NVIDIA deals provide
| such evidence, while this AMD deal does not.
|
| As @stingraycharles notes above, the AMD stock went up a
| lot already and this "may finally enable AMD to get a
| foot in the door in the whole large scale AI market."
| gmerc wrote:
| It's called Channel Stuffing and was always at least a red
| flag.
| stingraycharles wrote:
| 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.
| NaomiLehman wrote:
| AMD cards are good for inference or new low-level stuff
| anyway and more cost-effective. it's a good deal for
| everyone.
| ptero wrote:
| 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.
| noir_lord wrote:
| > 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.
| RossBencina wrote:
| Zen is a success. But Zen is hardware, and AMD is
| (historically) a hardware company. Delivering software is
| hard, even if you're a software company. I wouldn't take
| it as given that a good (hardware) CEO, vision, and board
| support are sufficient to build the required software
| organisation, especially given their track record on this
| front to date. It is more likely that Modular is AMD's
| software savior. I won't speculate on how probable that
| is.
| HarHarVeryFunny wrote:
| AMD being able to benefit from AI, and this OpenAI
| relationship, is a bit different though. This is about
| using AMD hardware for training and presumably inference
| of LLMs. The users will be people consuming OpenAI APIs
| and services running on AMD hardware, not people
| themselves writing custom ML applications using AMD
| libraries.
|
| Maybe also worth noting that some of the worlds largest
| supercomputers (e.g. Oak Ridge "Frontier" exascale
| computer) are based on AMD AI processors - I've no idea
| what drivers/libraries are being used to program these,
| but presumably they are reliable. I doubt they are using
| CUDA compatibility libraries.
| colordrops wrote:
| Hopefully part of the contract is that OpenAI must make any
| software frameworks they build to utilize AMD GPUs open source.
| doctorpangloss wrote:
| > 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.
|
| Ha ha, OpenAI can afford this because your mom uses a grand
| total of 7 pieces of software owned by 5 companies, 4 are the
| largest public companies in the world, and the 5th one is
| OpenAI.
| acchow wrote:
| "Subsidizing" is one way to put it. But these are _options_ not
| shares. We will discover in a few years that it was actually
| AMD who is paying OpenAI to take GPUs.
| strangattractor wrote:
| Maybe they are using the $100 Billion NVidia investment to pay
| for this:)
|
| If this ship sinks they are all going down together.
| hristov wrote:
| 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?
| jasonwatkinspdx wrote:
| > They say that Open ai committed to buying six gigawatts of
| AMD chips. Anybody know how to convert that into money?
|
| MI350 spec sheet says it's 1000 watts typical. So we're
| talking about something on the scale of a couple million
| chips.
| mNovak wrote:
| I figure these GPUs are typically around 1kW (unclear if 6GW
| is including overhead like cooling, which might double(?) the
| power), so in the range of 3-6M GPUs.
|
| If these are somewhere in the range of $10-30k (who knows
| what current or future models are contemplated), that's
| $30-180B. So clearly the low end doesn't make sense for the
| 'rebate', but at the high end a ~17% discount doesn't seem
| unreasonable.
| coliveira wrote:
| This is money from nothing, right? They just found the tree of
| money.
| Mistletoe wrote:
| I feel like I'm reading headlines from 1929. Surely everyone
| knows how fake and pyramid all these deals are but no one seems
| to care, they all think they will find a chair when the music
| stops.
| andrewstuart wrote:
| It's quite a good strategy to counteract the prevailing sense
| that "No one ever got fired for buying Nvidia GPUs".
|
| AMD just doesn't know how to compete with Nvidia. The best it can
| do is charge 10% less and release GPUs about the same level of
| underwhelming performance as Nvidia.
|
| Maybe they wouldn't need to sell equity if they made better
| faster cheaper products than Nvidia.
|
| But Lisa Su can't bring herself to compete. Which is very strange
| because she brutally competed with and destroyed Intel.
| rvba wrote:
| At the end od the day it is not the CEO who invents / designs /
| builds the stuff.
|
| I mean, they could recognize that Nvdidia has better ecosystem
| and they could provide something similar (CEO's job is to set
| this), but saying "just make better chips" is kind of funny.
|
| I mean, I worked in companies where the CEO couldnt figure this
| out, but come on. It's AMD.
| findthewords wrote:
| I think it's quite obvious why Lisa Su isn't motivated to
| financially crush her first cousin once removed. AMD is doing
| quite well in the CPU space and as such isn't even forced to
| compete in the GPU space. AMD could take market share from
| Nvidia, but they don't have to, because there is no one else
| who would take it either.
| andrewstuart wrote:
| So the "we're so successful, we don't need any more business,
| so we're just cruising", strategy eh?
|
| Doesn't resonate for me as how most American companies do
| business.
| thejohnconway wrote:
| > But Lisa Su can't bring herself to compete. Which is very
| strange because she brutally competed with and destroyed Intel.
|
| Maybe making cutting-edge GPUs is actually quite an engineering
| challenge, and not entirely down to the competitive will of the
| CEO?
| andrewstuart wrote:
| AMD already make GPUs that are competitive with Nvidia at
| every tier except the very top end.
|
| It's the positioning and pricing that isn't competitive.
| Der_Einzige wrote:
| And software
| Scene_Cast2 wrote:
| Are they competitive per Watt and per mm2 of die?
| jpadkins wrote:
| You think Nvidia's advantage on LLM is hardware? It's the
| software ecosystem around the GPU (that Nvidia took a
| decade+ to build) that is the advantage.
| archerx wrote:
| >AMD just doesn't know how to compete with Nvidia.
|
| They know exactly how to compete with Nvidia but choose not
| too.
|
| >But Lisa Su can't bring herself to compete.
|
| Because she is colluding with her cousin Jensen.
| andrewstuart wrote:
| "He's my cuz so I'll let him win the biggest business battle
| there is."
|
| I dunno, doesn't have the ring if credibility to it.
| manquer wrote:
| Don't know how it is with them, but can totally see it in
| an Asian family lol, especially with the added male/female
| dimension .
| tbrownaw wrote:
| > _and release GPUs about the same level of underwhelming
| performance as Nvidia._
|
| What's the standard that they're underwhelming relative to? I
| thought Nvidia was the current big fish there.
| f4uCL9dNSnQm wrote:
| NVidia is terrible value for consumers when comparing their
| own offering from previous years. The graph from
| https://gamersnexus.net/gpus/great-nvidia-switcheroo-gpu-
| shr... shows how low/mid segments become weaker and weaker
| with each generation.
|
| Meanwhile AMD doesn't try to disturb the market, they keep
| their pricing at "price of similar NVidia card - $50". They
| aren't going to gain market share that way.
| mv4 wrote:
| Unlike Intel, Nvidia is family.
| JCM9 wrote:
| The terms of some of these deals now are so completely bonkers it
| would be funny if it wasn't so scary.
|
| If someone was writing the script to "The Big Short 2" about the
| AI bubble they might struggle to come up with some of these
| things with a straight face.
|
| Finance folks are salivating at the once in a generation
| opportunities ahead when this whole thing crumbles. CNBC seems to
| have at least one segment a day on "What's your AI bubble burst
| play?"
| progx wrote:
| Moneyprinter goes Brrrr
| lsaferite wrote:
| Those vesting milestones must be steep for them to offer 10% of
| the company at $0.01/share ($1.6M).
| thiago_fm wrote:
| 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 starts to
| reject more US software, when so much of those Big Tech revenues
| are made abroad. The recent geopolitics plays being a key factor.
|
| This looks really bad.
| dboreham wrote:
| > US' FTC will need to place limits on those circular deals
|
| So...after the next election and a bunch of significant US
| governance reforms.
| itsnowandnever wrote:
| robber barons gonna robber baron.
| SecretDreams wrote:
| This industry is the most intense game of musical chairs I've
| seen in a long time.
| Jlagreen wrote:
| And you have that right.
|
| And now imagine what will happen when OpenAI makes deals with
| Nvidia and AMD. Do you think Hyperscalers will just watch?
|
| I expect Musk to make a $1 trillion deal soon. I guess, that's
| why he wants to get the $1 trillion from Tesla.
|
| And do you think Meta, Amazon, Microsoft and Google will stand
| by while Altman and Musk are buying future supply from Nvidia
| and AMD?
|
| I love that. As an investor in Nvidia, I hope that these future
| promises will push the stock 4-5x quickly in Cisco fashion
| because then I can sell and retire in my 40s with a huge pile
| of money watching the bubble explosion on some beach on an
| island :)
| SecretDreams wrote:
| Trading any of this, the only question that you need to
| answer is:
|
| What is more painful to you, missing some gains on the way up
| or holding positions that have flipped from positive to
| negative very rapidly?
|
| Markets like this, the moves will be violent in both
| directions, not just on the way up.
| Jlagreen wrote:
| My cost base of Nvidia is $1 so for me to lose is that
| Nvidia gets back to way before COVID valuation.
|
| Nvidia is more worth than $1 per share on gaming alone.
| SecretDreams wrote:
| Totally fair. If you've got a great cost basis, you can
| stress less. The question then becomes what feels worse:
|
| Watching a position you sold double or watching a
| position you're holding get cut in half?
| dehrmann wrote:
| This looks like the house money effect. It's sort of a
| corollary to the sunk cost fallacy.
| zerosizedweasle wrote:
| This is all assuming that the government will be able to
| bail them out of trouble. But the bond market / interests
| rates / inflation and government debt mean they could so
| serious damage to the country if they tried.
| Mistletoe wrote:
| The fact you are even writing this usually means you should
| sell immediately.
| alwahi wrote:
| 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.
| rsynnott wrote:
| Alternatively, they're just doing a clips episode based on
| 2000.
| SecretDreams wrote:
| Definitely some deja vu
| nextworddev wrote:
| Just enjoy it if you can't avoid it
| SecretDreams wrote:
| That's how those Titanic violinists probably felt!
| OtherShrezzing wrote:
| 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.
| jcranmer wrote:
| Don't forget that OpenAI also has a similarly-massive deal with
| Oracle and another one with Nvidia. And its own Stargate
| initiative. And probably a couple more massive contracts with
| neoclouds to use more stuff.
|
| Like best possible scenario is OpenAI merely optioning from
| literally everybody because they don't think they have a shot
| at getting any capacity otherwise. There is just no possible
| way that they can actually afford all of the buildouts. For
| that matter, there's not even any possible way for all of these
| buildouts to actually be completed.
| alwahi wrote:
| if you buy all the chips, no one else can build agi. sama
| probably
| TheAlchemist wrote:
| "Feels like we're living through a Michael Lewis book."
|
| We definitely are ! The BIG question is - what chapter are we
| in ?
| cs702 wrote:
| OpenAI now has an option to buy 10% of AMD for $0.01 per share,
| subject to certain milestones.
|
| Basically, AMD is giving up equity to buy its way into the AI
| market.
|
| It's _fantastic news_ , because OpenAI and AMD will now work
| together to develop _decent_ software libraries for AI on AMD
| chips.
|
| We all want an alternative to Nvidia and cuda. This partnership
| could deliver it in the not too distant future.
| giancarlostoro wrote:
| My understanding from the more hardware savvy friends I have is
| that AMD is better for inference (so when you run a model) vs
| for training Nvidia is still king. Would be interesting if
| OpenAI does in fact take AMD's offer and how they use it (if
| they even share openly).
| alexeldeib wrote:
| Larger memory, weaker comms. You can optimize for this by
| doing things like increasing batch size/data parallelism vs
| sharding schemes with more comms.
|
| At scale training won't be able to avoid comms entirely,
| while many models can fit in a single MI300 for serving.
| cs702 wrote:
| Today, yes, it's true that AMD hardware can be competitive
| mainly for inference.
|
| The story here is about _the future_. Over time, OpenAI would
| benefit if AMD hardware becomes competitive for training too.
|
| Nvidia currently gets to charge whatever the market can bear
| on its dominant training hardware.
|
| If AMD hardware becomes a real alternative for training,
| Nvidia will be forced to compete on price.
| giancarlostoro wrote:
| The reason I think its worth noting is that Inference is
| definitely what I imagine an insane amount of their
| computer is / will be spent on. I could see a very optimal
| setup where training is all Nvidia, but inference becomes
| reliant on AMD.
| thiago_fm wrote:
| For inference there are many solutions like groq. The margins
| there will be small.
|
| The fat margins is in training, in NVidia hardware.
| aurareturn wrote:
| Inference margins will be small(er) but it will be much
| bigger in market size than training.
|
| That said, I'd much rather be leading in training than
| inference, of course. Nvidia still leads in inference, by
| the way.
| neya wrote:
| > OpenAI
|
| > "If they even share openly"
|
| That fact that this even needs to be pointed out but is
| normalized in the AI industry. Sadly, in the history of Open
| AI, they've been anything but open.
| tanh wrote:
| OpenAI are also using the market to fund some of their rollout
| instead of going public/giving up equity.
| lelanthran wrote:
| It's only fantastic news if there is no bubble.
|
| If there is a bubble, AMD just gave away $160m for nothing in
| return.
| tanh wrote:
| I think OpenAI will try and continue this elsewhere, which
| would be pretty worrying. It lets them not give up any
| equity, just use their name to pump stocks and earn capital.
| rhetocj23 wrote:
| That's exactly it. Their only competitive weapon is brand
| name right now and they are using that for all its worth
| dist-epoch wrote:
| Nothing in return? AMD stock is up 30% today on this news.
| SecretDreams wrote:
| > AMD just gave away $160m for nothing in return.
|
| Where'd you get this number? The equity is worth closer to
| 34bil if fully realized?
| hmm37 wrote:
| No... because the warrants can only be exercised if the share
| price is at certain points. If AMD goes down, the warrants
| can't be exercised at all. E.g. we know at least one share
| price points is when AMD shares are worth $600/share.
| Havoc wrote:
| The option to buy shares seems pretty well locked down with
| multiple vesting conditions So pretty unlikely that this ends
| up in a "for nothing" space
|
| https://ir.amd.com/news-events/press-
| releases/detail/1260/am...
| rs186 wrote:
| > It's fantastic news, because OpenAI and AMD will now work
| together to develop decent software libraries for AI on AMD
| chips.
|
| Too fast to jump to conclusion. I'd say they will work together
| to develop software specifically designed for OpenAI products.
| It is a giant question mark whether we'll get libraries for
| general purpose computing out of this.
| cs702 wrote:
| 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?
| rs186 wrote:
| 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.
| cs702 wrote:
| 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.
| tanh wrote:
| 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.
| rhetocj23 wrote:
| Yes it's a wealth transfer from existing amd shareholders
| jcranmer wrote:
| 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.
| tanh wrote:
| Just the 1st tranche of shares would be like $6 billion at
| $220 so if they borrow against that they can fund it. If the
| hype continues they keep it going
| AlanYx wrote:
| Not all of the $100 billion are purchases by OpenAI ("AMD
| expects to receive more than $100 billion in new revenue over
| four years from OpenAI _and other customers_ ").
|
| For some reason the OpenAI portion of this deal is quoted in
| gigawatts rather than number of MI450s purchased, which makes
| it hard to tell how much of that $100 billion is from OpenAI.
| It's probably around $80 billion.
| jpadkins wrote:
| 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.
| alberth wrote:
| The 10% option is interesting.
|
| As a comparison of stocks over the last 5-years:
| 1-Year 5-Year Market Cap (Today) ------
| ------ --------- AMD 20% 150% $0.35T
| NVIDIA 50% 1,250% $4.5T
|
| Today, AMD is up ~30% (which wipes the past year stock slump).
|
| So a healthy portion of AMD overall 5-years gain are just from
| this announcement today.
|
| And OpenAI ($0.50T) is currently valued more than AMD ($0.35T)
| itself.
|
| https://finance.yahoo.com/quote/NVDA/
|
| https://finance.yahoo.com/quote/AMD/
| Havoc wrote:
| Finally. AMD had recently been pretty stagnant which made
| little sense given their dominance on CPU and vaguely
| competitive GPUs (cuda notwithstanding)
| koakuma-chan wrote:
| How is OpenAI valued? It's not publicly traded.
| alberth wrote:
| Sale of shares on secondary market at that valuation.
|
| https://www.reuters.com/technology/openai-
| hits-500-billion-v...
| SecretDreams wrote:
| It's valued from secondary markets based on how much it can
| raise from private investments. These get reported out
| eventually which juices the hype further in a bit of a
| vicious cycle. this cycle also has quite the incestuous
| component too with how every major company seems to have
| their hands in each other's pants.
| WhereIsTheTruth wrote:
| https://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
| Ekaros wrote:
| Whatever some analyst say about medium term future of stock
| markets. I can't see this ending in any other way than very ugly.
| Or USD to become meaningless...
| vicentwu wrote:
| wow....
| cameldrv wrote:
| IMO underappreciated is that a big bump in the AMD stock price
| helps AMD a lot because it will help it attract talent. NVIDIA
| has a lot of very talented people with high standards and that's
| a huge part of their success.
| seydor wrote:
| openAI is becoming the single point of failure of this bubble .
|
| Who DOESN't have a deal with them
| the_duke wrote:
| That's by design of course.
|
| Rising tide lifts all boats.
| malthaus wrote:
| if only they could also anticipate what will happen once the
| tide is falling
| latchkey wrote:
| Two years ago, I built my entire business exclusively on AMD on
| the bet that one day they would wake up to AI and dive head on
| into it. They were totally behind on NVIDIA and my feeling was
| that Lisa Su would not be able to ignore what was coming. This
| news far exceeds my expectations for how quickly things are
| changing. Feeling pretty good now.
| razoorka wrote:
| 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. No audited revenue stream, no proven business model - just a
| loop of hype, compute contracts, and self-referenced worth.
|
| At some point, someone's going to ask what exactly is being
| _sold_ here besides narrative.
| bwfan123 wrote:
| 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"
| razoorka wrote:
| 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.
| amacbride wrote:
| I do hope that this leads to improvement in the HIP/ROCm software
| ecosystem.
|
| It's definitely lacking in stability and polish compared to what
| NVIDIA has built. (Ask me why I'm on my third rebuild of LAMMPS
| this morning...)
| buyucu wrote:
| HIP/ROCm is waaay better than it was a few years ago. It took a
| very long time, but AMD finally learned the importance of
| software.
| ctas wrote:
| Are consumer cards also benefiting from the improvements or
| only datacenters?
| melodyogonna wrote:
| And in situations like this the technology being built by Modular
| becomes incredibly important.
| resters wrote:
| This is very smart. AMD has left this market untapped for a long
| time but will close the gap with nvidia rapidly.
| buyucu wrote:
| It's a no-brainer, no? Nobody wants to pay the Nvidia tax.
| zerosizedweasle wrote:
| It's a joke, they're not even trying to disguise the circular
| money flows anymore.
| rozap wrote:
| Similar infinite money glitch to the dot com boom.
| dboreham wrote:
| Modulo the obvious financial chicanery, this does confirm to the
| market that Nvidia doesn't have a moat. So probably positive for
| AMD in the long term even when the deal itself goes sideways.
| nickysielicki wrote:
| I wonder what they intend to use for networking, it's not really
| clear from this.
| triceratops wrote:
| AMD is giving OpenAI chips _and_ 10% of the company? Nice work if
| you can get it.
| gowld wrote:
| AMD gives OpenAI $30B worth (todaty's value) of AMD stock.
|
| Cash-poor OpenAI pledges/promises about ~$100B in purchases.
|
| AMD makes back the money on (a) 30% volume discount is normal?
| (b) stock pop from AI hype (AMD popped up ~$100B market cap on
| the news.) ?
| fancyfredbot wrote:
| 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 GPUs from AMD. GPUs worth $100bn, and
| somewhere to put them. OpenAI can't afford that - not even close.
|
| So they need to raise financing. On the face of it, the options
| seem to mean that lending OpenAI the money to buy the GPUs is
| perfectly safe. You take the stock options as collateral. You
| lend the money, OpenAI buy the GPUs, the AMD stock goes up, the
| option conditions are met, and even if OpenAI didn't pay you back
| the options will let you recover your investment.
|
| However, this loan is far less safe than it first appears. The
| problem is that although lending the money allows openAI to buy
| GPUs, this doesn't necessarily cause AMD stock to rise. Infact if
| OpenAI don't find a profitable use for them then both their stock
| price, and AMD's will go down. And you'll be left with worthless
| collateral and a big loan to a company which can't afford to pay
| it back. So they haven't actually magically created financing at
| all. They just created the illusion of it. It's very clever. But
| it's fake. The real announcement will be when or if someone lends
| OpenAI cash.
| lumost wrote:
| This depends significantly on the real cost of the gpu. The
| cost of enterprise ai GPUs is likely 2 orders of magnitude
| lower than the current list price. These deals avoid the need
| to markdown the price of the hardware to gain volume.
|
| If I understand the math correctly. Amd could offer the GPUs at
| around a 20x discount to OpenAI on a deal worth 10-20 billion
| and be profitable on both amortized R&D and Cost of Goods sold.
| wmf wrote:
| It's probably closer to 5x (80% gross margin) than 20x.
| wmf wrote:
| _if OpenAI don 't find a profitable use for them then both
| their stock price, and AMD's will go down._
|
| Nah, nothing in the current market is based on fundamentals.
| blitzar wrote:
| > stock price, and AMD's will go down
|
| stonks goes up
| coliveira wrote:
| 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.
| joenot443 wrote:
| 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 trickle's begun. The money's not all imaginary.
| threecheese wrote:
| I was told that - with the full complement of good tools
| for a scrum team- the cost approaches a 6th member of the
| team. The crap from MS/GH plus a decent agent like
| Claude/Bedrock. You can squeeze decent behavior from vscode
| agent if you know what you are doing, but anyone who knows
| what they are doing wishes they had something better.
| trenchpilgrim wrote:
| That isn't true for our team. It's more like the cost of
| coffee/tea/energy drinks for our team.
| alienthrowaway wrote:
| Back in the dotcom boom years, Internet adoption growth was
| real - with a lot of people and businesses paying real
| money to get online. And yet, the dotcom bust happened. The
| fact that paying customers are adopting a technology in no
| way implies that the current state of the industry is
| sustainable.
| JumpinJack_Cash wrote:
| > > 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 GPUs and AMD will benefit from it.
|
| And honestly the anti Christ is right. Vibe coding is already
| bigger than self driving cars, the metaverse and all that stuff
| that emerged during covid
| lumost wrote:
| This seems to be OpenAI's path to victory in the AI race. Buy up
| the supply chain of compute to the extent that no other
| competitor could possibly have access to the same compute. If
| they are able to shut out Google/X.AI from the market, there
| really aren't any viable firms to keep financing next generation
| models on a pure compute scaling basis. I'm leaving out Anthropic
| as they don't appear to be as compute focused as X/OpenAI/Google.
| It's unclear if compute is the sole determiner of AI leadership
| in the long term or just a contributor.
| Argonaut998 wrote:
| When I was around 10 years old I remember us asking the teacher
| why not just print money to solve the worlds problems and the
| teacher scoffing. It took me another 15 years to realise that's
| basically what central banks do, especially these last five
| years. BTC is at $125k, gold at $4000, and every other week we
| are inundated with some multi-hundred billion dollar deals
| somewhere or other. All this talk about multi GW data centers
| where one will notice the consumer is no where to be found, just
| like an extension lead plugged into itself.
|
| Are we supposed to pretend that this is normal? Does anyone not
| feel like this push for AI is a last ditch effort to save the
| global stock market, that it MUST work out?
| semiquaver wrote:
| Highly relevant money stuff from today:
| https://www.bloomberg.com/opinion/newsletters/2025-10-06/ope...
|
| In a very real sense, OpenAI caused a 25% increase in AMD's value
| by announcing the deal, and was allowed to capture about half of
| that out-of-nowhere value for itself by these options.
| pier25 wrote:
| OpenAI has signed a deal with AMD that they will buy $100B worth
| of gpus.
|
| On top of the gpus... AMD has offered cheap equity to sweeten the
| deal and help them get financing to pay for the gpus.
|
| Am I getting this right?
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