Comments
By fancyfredbot 2025-10-0618:528 reply 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.
It seems that these American companies have decided, with the government blessing, to form a cartel to split the imaginary money they assume will exist for AI technologies. This is an extremely disturbing notion that will only increase the combined power of these tech companies over our daily lives, but may also spell the doom of the economy in a not-so-distant future.
Fully anecdotal, but nearly every knowledge worker I know has Copilot or ChatGPT or some kind of corporate LLM subscription included in their job now. I don’t think the majority use it very well, but I know at least a handful who do.
Corporate America seems ready to spend real money on AI, at least for now. This money being spent today doesn’t come close to recouping the investment OpenAI et al have made, but the trickle’s begun. The money’s not all imaginary.
By alienthrowaway 2025-10-0622:381 reply 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 existence of paying customers adopting a technology does not assure the sustainability of the industry at any point in time.
By puppymaster 2025-10-0623:532 reply i dont see dotcom technologies replacing droves of workers and creating panics in /r/screenwriters, /r/3dmodelers etc. The displacement is real and we are not going back. Dotcom tech created fake problems so their 'advance technology solution' can be presented as solution. With AI wave, it's the opposite - business heads are actually thinking 'what other real problems can i solve with AI'. OpenAi and Claude don't even have to do any preaching. That's real value.
By btown 2025-10-072:36 Two things could simultaneously be true: (a) trillions of dollars in value will be created/replaced/subsumed by AI solutions, and (b) even with near-universal adoption among knowledge workers, the value captured by the vendors of advanced AI solutions may never rise high enough to justify the valuations we're seeing now.
OpenAI's bet is that its frontier models will be so far ahead of the current status quo that, if they are the only ones providing those frontier models, they will be able to name their price (to end users and advertisers alike) while increasing their share of spend in the space.
But even today, last-generation and open-source models form a meaningful portion of adopted solutions. Not every application in 2028 will need the AGI-approaching GPT-10 - especially if those applications can leverage a relatively small amount of code, perhaps even written by that GPT-10, that can in turn orchestrate (say) DeepSeek V5 running on compute that can be obtained for pennies on the dollar.
OpenAI could become a victim of its own success, and cause a house of cards to take down the global economy in the process. I personally hope this doesn't happen, but there is real risk here.
By alienthrowaway 2025-10-072:51 You missed my point entirely. There was real value created during the dotcom boom too: Amazon, eBay, PayPal, Google, etc did not 'create fake problems'. Amidst the pearls of real value, were dozens/hundreds of overvalued, dogshit companies which never get a ROI for their investors, and the even marginally useful companies went under when the market correction hit.
There will be the WebVans of the AI boom era, we just don't know their names yet. There also will be Ciscos and Suns that will never reach their high-water mark ever again, or become obsolete in a few years, and sold for less that what people expect.
By threecheese 2025-10-0622:053 reply 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.
By trenchpilgrim 2025-10-0622:33 That isn't true for our team. It's more like the cost of coffee/tea/energy drinks for our team.
By davidlstanton 2025-10-136:13 One of the following is true:
I really don’t know what a full complement of good tools mean! your team is very large your team is very cheap You spend an awful lot on Ai tooling!
We spend about £50 - £200 a head per month on AI tooling.
Assuming everyone was at the top of of that scale (most aren’t) it’s like ai for 50 employees = cost of 1 employee.
By Incipient 2025-10-0710:40 ...I kinda like GH Copilot. Only does something when I ask, and leaves me in my traditional IDE.
...i just wish the code it generated was decent.
By lmm 2025-10-071:17 > Corporate America seems ready to spend real money on AI, at least for now. This money being spent today doesn’t come close to recouping the investment OpenAI et al have made, but the trickle’s begun. The money’s not all imaginary.
It's still pretty funny money. Companies are buying those subscriptions to show their shareholders how trendy they are, not because they're useful to them. And the subscription price points are widely speculated to not even have positive gross margin, yet alone starting to recoup any investment. It's far from clear that there's any kind of viable business here.
I am personally paying $200/month for the ChatGPT pro version. It’s the best investment I’ve made in my career in a long time. It’s like having 2-3 direct reports. The alternatives provided by my companies are too slow and aren’t anywhere as good. If people start using it anywhere near how I’m using it, there will be profound changes to the workplace in the coming 3 years.
By osn9363739 2025-10-0710:442 reply I have a senior that talks like this. Does everything through AI now. Barely writes anything himself. Has 5x'd his productivity. Like having his own team. Thing is his work is awful. The people who review his PRs have to spend 5x the time looking at his work. He's been pushed off to another team thank god. Not saying there aren't advantages and uses for AI. but if what you are saying were true (like having 2-3 reports) and it was a great benefit, there would be way more examples out there I could look at.
By mmmBacon 2025-10-086:44 I run a team. So for me this is like having 2-3 extra people to just do some exploratory work and prototyping. Having actual people to do this is a luxury I don’t have and can’t justify currently.
I can’t just copy-paste what comes out. But I have to say I’m able to get substantially more done as it saves me a lot of grunt work. You do have to learn how to use it like any other tool. I have found that it’s helped me sharpen a lot of my own skills in multiple areas and improved my understanding of systems I’m working on. I am able to learn new things much faster because it has a real-time feedback mechanism.
I can’t speak to your direct report but I’d be concerned about falling behind as a leader if you aren’t using it in the course of your regular work.
And then people turn around and hand-wave that away by saying: But youre assuming that the development of LLMs stop and they wont be able to address that problem.
Like Okay, it sounds like a valid point. The issue is the hand waving and the fact it is not grounded in reality.
By osn9363739 2025-10-0723:13 The assumption that it will just keep getting better is a big one. Maybe they will. Maybe they wont. If they get better I'll stop complaining. Right now I just don't think they are at the level people claim.
By MonkeyClub 2025-10-0715:002 reply I took GP's comment to say that, even if LLMs get massively better in the next six months (which they will), the colleagues still have to wade through the slop during the review this week.
So while one person is getting a 5x increase in productivity, one or two get a corresponding 5x decrease.
By brandon272 2025-10-0717:41 Why would we expect LLMs to get “massively better” in the next 6 months instead of the incremental improvement we have seen to date?
LLMs didn't get massively better in the last 6 months, and most probably won't get this better in the next 6 months either.
By mmmBacon 2025-10-086:11 I disagree. Couldn’t do what I’m doing with GPT-4 but I can with 5.
By brandon272 2025-10-072:24 What are you doing with it?
By zerosizedweasle 2025-10-0623:56 But also under the assumption that the taxpayers will bail them out and foot the bill when things go wrong. Privatize the gains, socialize the losses. This is completely on the assumption that the US government would be able to do this, despite the bond market, inflation, debt that would constrain any response.
Does anyone here who lived through the dotcom bubble feel like we're in a similar situation with AI? I am excited about AI and recognize its potential. However, the increasing number of business deals like this one is raising my concerns that we may be heading toward a harsh bubble.
By tim333 2025-10-0711:21 It seems to be the general consensus. I'm not sure the investment up until now is that crazy but the proposed deals going forward making huge investments based on iffy financial engineering like this deal seem quite bubbly.
By coliveira 2025-10-082:11 Most definitely yes. We see all signs of companies receiving money at incredibly high valuation without any business plan. It is a ticking time bomb. We just don't know how long the madness will continue.
By UncleOxidant 2025-10-0718:00 Yeah, it feels like deja vu. The speed of this bubble inflating, though, is much faster. It's feeling very dangerous and the longer this goes on the more dangerous it gets. I saw something yesterday that said AI spending is propping up 40% of US GDP right now. That would mean that this bubble popping would probably have a bigger effect over a bigger part of the economy than the dotcom bust.
It feels like the dotcom bubble was recent to those of us who lived through it, but 25 years is about a generation. But a lot of the people in the markets now (and running companies) were kids back then and thus weren't really aware of what was going on.
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.
By wmf 2025-10-0620:04 It's probably closer to 5x (80% gross margin) than 20x.
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.
>> Nah, nothing in the current market is based on fundamentals.
Sure it is. Stock prices are based on supply and demand. Oh, did you mean company fundamentals? Hmm.
BTW that demand is all coming from 401k contributions. The powers that be are terrified of a downturn causing too many job losses tanking the whole thing.
By blitzar 2025-10-0620:15 > stock price, and AMD's will go down
stonks goes up
By JumpinJack_Cash 2025-10-0622:301 reply > > 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
By tim333 2025-10-0710:55 >On the face of it, the options seem to mean that lending OpenAI the money to buy the GPUs is perfectly safe.
I don't think lending money against stock options would be considered at all safe.
However the deal may work along the lines of:
Investors buy AMD shares, send the price up.
OpenAI uses it's option to buy shares for 1c, sell the to the investors for far more, use the profit to buy AMD GPUs.
So it potentially works very well for OpenAI, ok for AMD and questionably for the investors funding it buy buying AMD shares.
It's fundamentally a leap of faith that AI will work out. The entirety of OAI is exactly that - a triple bet the farm on AI.
Whether this works out or not no longer depends on the specifics of the deals. This either works big picture or it's all a smoking crater
By baobabKoodaa 2025-10-077:392 reply Sounds like you are talking about AGI or superintelligence or something? Because productive AI tools are already here and have been for a few years. AI has already "worked out". Nothing speculative about that.
> AI has already "worked out".
Not commercially to an extent that supports the massive infra buildout
A couple of neat productivity tricks don’t pay for a 500 billion stargate rollout
By baobabKoodaa 2025-10-083:26 > A couple of neat productivity tricks
This level of denialism if insane.
What exactly do you want?
What level of proof would be enough for you to admit that AI has worked out?
Lets assume AI has worked out. Can you point me to the effect on earnings of the customers of said AI tools who have publicly disclosed the affect on earnings because of said tools?
Thanks.
By baobabKoodaa 2025-10-083:251 reply You're sarcastic while there are plenty of examples of the exact thing you ask. But sure. Here's one example: https://x.com/levelsio
Errm thats nothing of the kind I requested.
So I continue to sit here laughing. Keep coming back with weak evidence though.
By baobabKoodaa 2025-10-098:13 This is literally the exact thing you requested, which was:
> Can you point me to the effect on earnings of the customers of said AI tools
Just looking at the overview of Levels' ventures listed in the Bio:
http://PhotoAI.com $141K/m
http://InteriorAI.com $29K/m
http://RemoteOK.com $34K/m
http://Nomads.com $14K/m
http://levelsio.com $14K/m
http://pieter.com $6K/m
You can see that his old ventures (which he has built over many many years) are bringing in less money than his new ventures (built over fewer years). How is this not "effect on earnings of the customers of said AI tools"? Levels is a customer of AI tools. His earnings have gone way up as a result of AI tools.
By larodi 2025-10-077:33 Oh will they?
Wonder what they been doing so far, really, as it is only tinygrad that been voraciously pushing for these drivers in recent years, not even AMD themselves. Besides, given ClosedAI's the wonderful record of releasing stuff to the public, even if this happens, may benefit only inside tech, not the general audience.
By didntknowyou 2025-10-0623:191 reply it kinda worked in a way. AMD offered OpenAI 160 million stock options.
With AMD's stock jump today it's net worth increased about $35billion, close enough in value to those stocks option they gave away (if it was redeemed instantly).
It's too much of a coincidence so I'm guessing market makers and institutional shareholders priced it in their trading today.
By PessimalDecimal 2025-10-070:261 reply If a company gave away some portion of is assets, shouldn't its market cap go _down_ by that amount not up? That's how stocks trade ex dividend e.g.
By geerlingguy 2025-10-071:551 reply You assume the market is in any way rational...
By nake89 2025-10-076:59 Reminds me of "Markets can remain irrational longer than you can remain solvent"
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.
By HarHarVeryFunny 2025-10-0615:474 reply 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.
By stingraycharles 2025-10-0616:481 reply 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.
By NaomiLehman 2025-10-0617:341 reply AMD cards are good for inference or new low-level stuff anyway and more cost-effective. it's a good deal for everyone.
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.
> 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.
By RossBencina 2025-10-0621:18 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.
I'm in no position to judge the current CEO, but the Zen credit goes to
- Rory Read, under whom the program started
- Jim Keller who ran the program
- the engineers and managers who put the sweat in
- and, one must never forget, a rotating cast of executives and board members at Intel
By stevefan1999 2025-10-092:061 reply Actually, Mike Clark is the 'father of Zen': https://www.youtube.com/watch?v=3vyNzgOP5yw. When Jim came along, Zen design was mostly finished already.
Another honorable mention would be Suzanne Plummer
By the-grump 2025-10-2017:45 Thank you for the correction!
By HarHarVeryFunny 2025-10-0619:40 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.
By throwaway2037 2025-10-0623:593 reply Can someone with banking / deal-making experience explain to me how this warrant works? My point: If OpenAI exercises the warrant and buys 10% of AMD for 1 penny per share, where does AMD get the shares? Or will they do a secondary offering and dilute existing shares? Or do they take from treasury holdings (of shares)? Or does AMD coordinate a buyback of shares, then deliver to OpenAI?
By tim333 2025-10-0711:25 They issue new shares. Or effectively already have by issuing the warrants.
By TacticalCoder 2025-10-070:45 [dead]
By agentcoops 2025-10-0616:294 reply 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.
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.
By agentcoops 2025-10-0617:16 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."
By stingraycharles 2025-10-0616:52 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.
By gmerc 2025-10-0617:05 It's called Channel Stuffing and was always at least a red flag.
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.
By agentcoops 2025-10-0617:12 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.
By cubefox 2025-10-0616:05 [flagged]
By yousif_123123 2025-10-0613:184 reply I think at least part of the 10% is if AMD stock reaches 600.
Not that I disagree that this looks weird. Why was that needed to be offered? Couldn't they just buy the AMD chips if they're good enough? Or Nvidia is it's better?
I also don't get why there commiting so much to the future, are they sure of the quality of the products and their demand that much?
>Couldn't they just buy the AMD chips if they're good enough?
OpenAI would presumably need to raise money to buy the AMD chips.
The "genius" of this deal is that AMD is "giving away" 10% of the company (at $0.01/share) to OpenAI. Then OpenAI will presumably turn around and sell those shares (or borrow against them) to raise enough money to purchase the AMD GPUs.
> 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.
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.
By Keyframe 2025-10-0620:16 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?
The rest of the world trying to decipher this post because of the date format :headscratch:
By AlanYx 2025-10-0616:09 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.
By DebtDeflation 2025-10-0614:071 reply 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.
By lotsofpulp 2025-10-0615:012 reply 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.
By formerly_proven 2025-10-0619:12 These are options with a 99.995% discount (as of this writing) on AMD stock.
By zerosizedweasle 2025-10-0616:561 reply It's circular money flows.
By johnnyanmac 2025-10-0619:07 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.
By Pet_Ant 2025-10-0614:23 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.
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.
When the stock goes from $150 to $600 that's not called dilution. Nobody cares about the number of shares in that situation.
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.
What Musk suit are you talking about?
The rest of your comment doesn't make sense.
His 56 billion pay package [1]. In order for him to receive it the stock would need to increase 13x [2] (the AMD stock increase from 150 to 600 is only 4x). Despite succeeding at doing that, he and Tesla were sued over the pay package.
If OpenAI fails then its going to have to liquidate the company. Selling 160M shares of AMD is going to tank it's price.
[1]: https://en.wikipedia.org/wiki/List_of_lawsuits_involving_Tes...
[2]: https://ir.tesla.com/press-release/tesla-announces-new-long-...
It's not really a similar situation. His pay package was invalidated because of how much control Elon had over the board and the shareholders not being fully informed of the likelihood that the necessary goals would be hit.
Whatever the merits of the lawsuit, it wasn't about the pay package being too diluting.
If OpenAI fails, it will be acquired and/or the shares will be sold in bulk. They're not going to log in to etrade and sell 160m shares on the open market.
By lesuorac 2025-10-071:44 > 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.
By wmf 2025-10-0620:01 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.
By zerosizedweasle 2025-10-0616:45 It's a joke that it is so obvious what they are doing.
> 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.
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?
By delusional 2025-10-0615:161 reply > What is AMD getting that's worth giving OpenAI $100B?
The other $300B
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.
By delusional 2025-10-0618:041 reply 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.
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.
By delusional 2025-10-0620:30 > 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:
"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.“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.”[1]: https://www.amd.com/en/newsroom/press-releases/2025-10-6-amd...
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.
By Jlagreen 2025-10-0712:38 AMD was desperate enough to sell 10% of their company to get 1 customer.
The issue here is now, that every large customer of AMD will now probably ask for equity. AMD has put itself into a pit hole with that deal.
If I were Hyperscaler CEO, I would basically ask for the a similiar deal as OpenAI or no business. Sorry Lisa Su but as a CEO giving equity to a customer is an absolute red flag because it starts a negative spirale you can't stop.
It seems that no matter the discount, OpenAI wasn't ready to make deal without equity. This tells you exactly how AMD is seen in the AI world.
OpenAI will take the compute for free and help AMD to rise stock value but it won't help AMD one bit because if AMD remains in the current position then OpenAI and Hyperscalers can get great deals with equity from AMD. The incentive isn't now to improve AMD to be competitive but to squeeze everything out of a company being desperate enough to give equity to customers.
And AMD will feel this. Nvidia will remain dominant because of ecosystem and supply. AMD can't easily replace Nvidia in supply chain and Nvidia is already strongly entrenched in many AI compute operations. And on the other side Hyperscalers are focused on their own chips (even OpenAI LOL) so they will tell AMD "Give us equity or no deal". This deal might be really the worst AMD deal yet because AMD is telling the world "here, you can get free AI compute from us financed by our equity". And while it might push AMD share price the very share price will drop 80-90% like any other one in case of an AI bubble pop.
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.
By chasd00 2025-10-0621:29 > 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.
By wmf 2025-10-0618:04 Market validation I guess.
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?
By preisschild 2025-10-0616:15 Could quickly change if open alternatives were suddenly more popular or with stuff like ZLUDA
By jakogut 2025-10-0620:15 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.
By CuriouslyC 2025-10-0617:09 CUDA isn't even a moat for inference, only for training.
By resters 2025-10-0619:07 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 :)
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.
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?
By blihp 2025-10-072:20 By the time that could feasibly come to fruition, I suspect the AI bubble will have long since popped. Despite making decent GPUs for graphics, AMD can't seem to get its act together on the GPU compute front.
By lacker 2025-10-0615:38 > 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.
> 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.
By programjames 2025-10-0616:392 reply 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.
By N70Phone 2025-10-0618:57 > 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.
By CuriouslyC 2025-10-0617:12 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.
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.
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?
By CuriouslyC 2025-10-0617:15 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.
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.
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
By CyanLite2 2025-10-1217:22 I’m saying it is highly likely that the next leap in AI technology will require massive amounts of compute. On the order of tens of billions per year. I’m also saying that there are a small number of companies that would have access to that level of compute (or financial capital).
In other words, it’s is MORE likely that an OpenAI/Google/Microsoft/Grok/Anthropic gets us closer to AGI than a startup we haven’t heard of yet. Simply because BigTech has cornered the market and has a de facto monopoly on compute itself. Even if you had raised $10 billion in VC funding, you literally can not buy GPUs because there is not enough manufacturing capacity in the world to fill your order. Thus, investors know this and capital is flowing to BigTech, rather than VC funds. Which creates the cycle of BigTech getting bigger, and squeezing out VC money for startups.
By nemomarx 2025-10-0615:35 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.
By N70Phone 2025-10-0616:16 > 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.
By chasd00 2025-10-0621:00 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.
By CuriouslyC 2025-10-0617:17 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.
By zerosizedweasle 2025-10-0617:03 In other words they are stealing capital from the rest of the economy. Starving it.
By zerosizedweasle 2025-10-0616:43 This is too top of the top to ignore. Everyone can see the scam now, it's a joke
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
> 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
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.
> 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
By xwolfi 2025-10-082:49 Sentiments about what ?
What is "actual future" ? Obviously we can only have feelings for it, not knowledge, right ?
By barchar 2025-10-0622:43 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.
By Ekaros 2025-10-0616:56 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...
> 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.
> that the software is the moat, not the hardware design.
For inference that’s hardly relevant, though?
For training its not exactly insurmountable either.
By Jlagreen 2025-10-0712:51 On huge GPU clusters running inferencing the utilization of GPUs is key.
Imagine you have 1 million GPUs and you have 99% utilization of theoretical performance in the system with inferencing. That would mean 10k of GPUs are basically idle and draw power. You could now try to identify which ones are idle but you won't find them because utilization is a dynamic process so while all GPUs are under load not all are running 100% performance beause of interconnects and networking not providing data fast enough so your whole network becomes a bottleneck.
So what you need is a very smart routing process of computation requirements on the whole cluster. This is pure SW issue and not HW issue. This is the SW Nvidia has been working on for years and where AMD is years behing.
This is also why Jensen is absolutely right to say that competitors can offer their chips for free because Nvidia's key in TCO performance is the idea of one giant GPU so SW and networking allowing for highest utilization of a data center. You can't build a GPU the size of 1 million GPUs so you have to think of the utilization problem of a network of GPUs.
In the real world utilization rates are way below 100% so every % better of utilization is way more worth than the price of single GPUs. The idea here is that the company providing 2-3x higher utilization can easily ask for like 5x higher pricing per chip and will still deliver a better TCO.
GPUs are also used to speed up inference (the math is virtually the same). You think your ChatGPT queries are running on x86 servers?
By ralfn 2025-10-0618:51 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.
By wqaatwt 2025-10-0915:46 > You think your ChatGPT queries are running on x86 servers
What makes you think? Or are all non Nvidia GPUs x86?
By acchow 2025-10-0617:37 "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.
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?
By mNovak 2025-10-0619:58 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.
By jasonwatkinspdx 2025-10-0619:55 > 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.
By doctorpangloss 2025-10-0616:05 > 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.
By colordrops 2025-10-0615:52 Hopefully part of the contract is that OpenAI must make any software frameworks they build to utilize AMD GPUs open source.
By strangattractor 2025-10-0617:42 Maybe they are using the $100 Billion NVidia investment to pay for this:)
If this ship sinks they are all going down together.
By giancarlostoro 2025-10-0613:161 reply 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.
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
By giancarlostoro 2025-10-0616:37 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.
By dist-epoch 2025-10-0613:533 reply > 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.
By nerdix 2025-10-0614:19 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.
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.
By iszomer 2025-10-0823:41 Yes. We don't have a sku with OpenAI but we may soon have one and they will be competing with others already in the pipeline. Recall the recent AMD acquisition of ZT Systems' engineering wing and now manufacturing by Sanmina.
By boringg 2025-10-0613:55 Its called hedging your risk: making sure Nvidia isn't the only game in town.
This is money from nothing, right? They just found the tree of money.
By doodlebugging 2025-10-070:37 To paraphrase Dire Straits - The money from nothing and the chips for free.
By dagaci 2025-10-0613:32 Lol and I had to pay >$60 a share for my little bundle of AMD!
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.
> 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.
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?
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.
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.
By Jlagreen 2025-10-0712:57 All Tech companies including OpenAI have initiatives for their own chips. Nobody talks about Intel.
Tech companies have the following options:
1. Buy Nvdia high performance stack with stable and fast support and deploy your SW developers to quickly get started
2. Buy AMD whatever stack and deploy your SW developers to make a lot of ground work
3. Develop and deploy your own chips and use your SW developers to make your SW from scratch but exactly as you need it
The only reason they might go with No. 2 is if AMD gives them the HW more or less for free but maybe even then will mix 2 + 3 if they don't want 1. And AMD deal is showing exactly this, AMD has to give free quity to get a customer for their HW.
What people don't get, who in their right mind would switch from one vendor lock-in to another with the difference on investing SW development into the 2nd???? The resources spend on AMD will bind customers to AMD. It doesn't matter if RoCm is open source as long as it runs only on AMD. If RoCm would run on any AI chip (including Nvidia) then we would have a case of an interesting switch but then the question comes up, why buy AMD if RoCm doesn't require it?
By giancarlostoro 2025-10-0613:314 reply 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).
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.
By giancarlostoro 2025-10-0616:34 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.
By alexeldeib 2025-10-0613:36 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.
By neya 2025-10-0614:30 > 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.
For inference there are many solutions like groq. The margins there will be small.
The fat margins is in training, in NVidia hardware.
By aurareturn 2025-10-0616:38 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.
By tanh 2025-10-0613:38 OpenAI are also using the market to fund some of their rollout instead of going public/giving up equity.
By lelanthran 2025-10-0613:435 reply It's only fantastic news if there is no bubble.
If there is a bubble, AMD just gave away $160m for nothing in return.
By Havoc 2025-10-0614:25 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...
By SecretDreams 2025-10-0614:231 reply > 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?
By lelanthran 2025-10-078:37 My
> If there is a bubble,
and your
> if fully realized
Can both be correct at the same time.
IF this is a bubble, then, yes, AMD gave away a lot of money.
OTOH, IF things turn out exactly perfectly, then AMD just got a discount on a 34b purchase.
By hmm37 2025-10-0614:25 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.
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.
By rhetocj23 2025-10-0613:47 That’s exactly it. Their only competitive weapon is brand name right now and they are using that for all its worth
By dist-epoch 2025-10-0613:551 reply Nothing in return? AMD stock is up 30% today on this news.
By lelanthran 2025-10-078:381 reply > Nothing in return? AMD stock is up 30% today on this news.
Companies don't actually get any money when their stock goes up. Maybe AMD owns a lot of their own stock and can sell it off to see a gain, but the stock simply rising doesn't contribute anything to AMD.
By xwolfi 2025-10-082:54 Who is AMD ? A collection of shareholders, all 30% richer ? A collection of employees, all with stock vesting 30% richer ? A bank account in a corporate bank, that indeed changed not at all ?
