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>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 t
by AlanYx 1y ago
>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 1y agoFinancing made out of thin air. Hilarious
- lesuorac 1y agoNot 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 1y agoWhen the stock goes from $150 to $600 that's not called dilution. Nobody cares about the number of shares in that situation.
- lesuorac 1y agoThe 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 https://www.marketwatch.com/investing/stock/amd
- gowld 1y agoWhat Musk suit are you talking about? The rest of your comment doesn't make sense.
- lesuorac 1y agoHis 56 billion pay package [1]. In order for him to receive it the stock would need to increase 13x [2] (the AMD stock increase from 150 to 600 is only 4x). Despite succeeding at doing that, he and Tesla were sued over the pay package. If OpenAI fails then its going to have to liquidate the company. Selling 160M shares of AMD is going to tank it's price. [1]: https://en.wikipedia.org/wiki/List_of_lawsuits_involving_Tesla,_Inc.#Litigation_relating_to_2018_CEO_performance_award https://en.wikipedia.org/wiki/List_of_lawsuits_involving_Tes... [2]: https://ir.tesla.com/press-release/tesla-announces-new-long-term-performance-award-elon-musk https://ir.tesla.com/press-release/tesla-announces-new-long-...
- wmf 1y agoI 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.
- tyre 1y agoIt's not really a similar situation. His pay package was invalidated because of how much control Elon had over the board and the shareholders not being fully informed of the likelihood that the necessary goals would be hit. Whatever the merits of the lawsuit, it wasn't about the pay package being too diluting. If OpenAI fails, it will be acquired and/or the shares will be sold in bulk. They're not going to log in to etrade and sell 160m shares on the open market.
- lesuorac 1y ago> Whatever the merits of the lawsuit, it wasn't about the pay package being too diluting. But this is exactly the point. If somebody is going to sue Elon when he 13x the share price then of course somebody is willing to sue AMD if they 4x it. Elon's pay package was voted on by shareholders. AMD's deal with OpenAI had none of that so if anything it's more ripe for a lawsuit.
- zerosizedweasle 1y agoIt's a joke that it is so obvious what they are doing.
- DebtDeflation 1y agoIt'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 1y agoThat “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 1y agoIt's circular money flows.
- johnnyanmac 1y agoTwo 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 1y agoThese are options with a 99.995% discount (as of this writing) on AMD stock.
- Pet_Ant 1y agoIt 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 1y ago> 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 1y agoYes, 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 1y agoThey 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.