OpenAI is good at deals

2025-10-0617:329840www.bloomberg.com

OpenAI/AMD, Antifraud Co., M&A scoops, World Cup tickets, Gary Gensler’s cell phone and Citadel Insecurities.

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Matt Levine, Columnist

OpenAI/AMD, Antifraud Co., M&A scoops, World Cup tickets, Gary Gensler’s cell phone and Citadel Insecurities.

The basic situation is that if OpenAI announces a big partnership with a public company, that company’s stock will go up. Today OpenAI announced a deal to buy tens of billions of dollars of chips from Advanced Micro Devices Inc., and AMD’s stock went up. As of noon today, AMD’s stock was at $213 per share, up about 29% from Friday’s close; it had added about $78 billion of market capitalization.

How do those negotiations go? Like, schematically:

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Comments

By ioblomov 2025-10-0617:38

https://archive.ph/K9W7F

By dsign 2025-10-0618:503 reply

Maybe it's not the LLMs nor the weights nor the data. But there are a great many things that can make a moat around a company: culture, talent, deals, investors, brand, press attention, willingness to boil the oceans. For the moment at least, OpenAI seems to have quite many of those.

By VirusNewbie 2025-10-0619:201 reply

I don't find it convincing that the tech isn't the moat. If the tech wasn't a moat, you'd see Microsoft spinning up its own competitor, you'd see Amazon, Apple, Meta, Oracle all have SoTA frontier models as well.

We don't see that, we see three established players in the frontier model space, and a lot of folks fighting in the second tier category.

By aleph_minus_one 2025-10-0619:241 reply

> If the tech wasn't a moat, you'd see Microsoft spinning up its own competitor, you'd see Amazon, Apple, Meta, Oracle all have SoTA frontier models as well.

Rather: these companies consider it to be a really bad business idea to spend lots of billions for building a new state-of-the-art model that will be obsolete half a year later.

By VirusNewbie 2025-10-0621:521 reply

Are you under the impression they aren't burning money trying to make their own foundational models?

By aleph_minus_one 2025-10-071:051 reply

> Are you under the impression they aren't burning money trying to make their own foundational models?

Indeed, I think they burn money with that, but not as much as they would if they were putting all of their eggs into one casket, as the "AI companies" like OpenAI and Anthropic do (or do much more).

There exist multiple (not mutually exclusive) explanations for that:

- Limititing the "money burn rate" on AI is a political compromise that was made at the companies between various decision makers

- The companies hope that at the end even a not state-of-the-art AI model might offer business opportunities

- Perhaps such a model might give you a better "bang per buck" rate (cost of training, cost of running)

- These companies want to get experience with AI, so they currently burn a lot of money of it, but will pivot when their AI models have been out-competed

- Such a pivot could be getting from "state-of-the-art models" to "models that are insanely cheaply to run, while still being powerful"

- Perhaps the decision makers of the respective companies believe in the (not implausible) scenario that AI could from a technical perspective continue improving a lot, but these models will get disproportionally expensive to run, i.e. in the upcoming future AI models won't improve so much anymore because no one will be able to pay for it. In such a case having a slightly worse model is much less of a disadvantage.

By VirusNewbie 2025-10-0719:25

    > but not as much as they would if they were putting all of their eggs into one casket, as the "AI companies" like OpenAI and Anthropic do (or do much more).

Microsoft invested over 15 billion in OpenAI.

You think they wouldn't have rather spent a fraction of that to have a SoTA model?

     Limititing the "money burn rate" on AI is a political compromise that was made at the companies between various decision makers

Meta has no one to compromise with as Zuck is the majority shareholder (voting wise), Apple has so much cash they don't know what to do with it (cars, VR, etc),

This argument doesn't hold up for these cash rich top companies.

    The companies hope that at the end even a not state-of-the-art AI model might offer business opportunities

I find it hard to believe that OpenAI, Anthropic, and Google all aren't optimizing for 'bang for buck' here.

By paulpauper 2025-10-0619:391 reply

What is interesting about the AI/LLM hype-cycle/bubble is how it can support so many entrants and players, like Cursor AI, Open AI, Cline, Gemini, Claude, Grok, CoPilot etc., and each carving a niche and a high valuation. THis is is in contrast to social networking, in which Facebook was the overwhelming dominant player, followed a distant second by LinkedIn. (Instagram was bought out.) Or Yahoo vs. Google. But now it's like a dozen companies, and each worth a lot and not as interchangeable, as seen with search engines or social networking. Facebook was the clear and dominant winner and superior platform, and there was little reason to use an alternative, except maybe LinkedIn for job searches.

By lbreakjai 2025-10-0620:12

They don't have a network effect, the cost of switching is almost null, and no model seem to have a clear and lasting edge.

It made sense to be on Facebook, because everyone was on Facebook. It made sense to use google, because for a long while they were head and shoulders above the rest.

By cft 2025-10-0619:261 reply

It looks like Ilya Sutskever wasn't as indispensable as he thought. SSI, Inc. is nowhere near the scale of OpenAI.

By mattnewton 2025-10-0620:10

was his goal ever to become the next OpenAI? I figured it was to get a bunch of money to do his own research with friends, and that seems to be working.

By paulpauper 2025-10-0619:26

Buy OTM AMD call options before the deal and then book profit to cover part of the purchases.

Or company announces plan to buy Bitcoin, but doesn't actually do so. Buys call options before the announcement. Sells call options after the stock surges and uses proceeds and inflated stock to issue secondary offering to buy the Bitcoin, and buys puts before the secondary offering, also funding the BTC purchase. Stock returns to original price. Net result is free BTC.

There are tons of financial tricks by taking advantage of materially important news and the ability to 'create money out of thin air' by exploiting price swings.

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