Those GPU's will finally push pixels again :)
Just like we knew self-driving AIs are not reliable.
The magical thinking was assuming they would just get better.
> Those GPU's will finally push pixels again :)
Have they ever? I wonder if, say, an H100 even supports graphics APIs.
Funnily enough, H100s are already old hardware, and soon will all get fully depreciated.
Billions and billions of depreciated assets!
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).
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…”
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.
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
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.
This is money printing, just in the private sector. We know what happens when governments do it, and it's not good.
It could be bad sure but it’s not money printing
If I finance a car backed by hopes and dreams, I'd be driving real good.
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?
> 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.
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.
But the stock is up 30% on the news. So lose 10%, but gain 30%, so net 20% beneficial to equity holders?
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.
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.
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.
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?
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.
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.
Also, this would battle test AMD's platform and provide enhancements so it's also a beta-testing service.
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.
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.
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
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.
For inference that’s hardly relevant, though?
For training its not exactly insurmountable either.
Not convinced that’s true anymore in current climate. Bigger numbers announcements and AI Pixie dust works too apparently lol
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.
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.
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.
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.
Doesn’t resonate for me as how most American companies do business.
Maybe making cutting-edge GPUs is actually quite an engineering challenge, and not entirely down to the competitive will of the CEO?
It’s the positioning and pricing that isn’t competitive.
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.
I dunno, doesn’t have the ring if credibility to it.
What's the standard that they're underwhelming relative to? I thought Nvidia was the current big fish there.
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.
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?”
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.
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 :)
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.
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.
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.
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.
At scale training won’t be able to avoid comms entirely, while many models can fit in a single MI300 for serving.
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.
The fat margins is in training, in NVidia hardware.
> "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.
If there is a bubble, 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?
https://ir.amd.com/news-events/press-releases/detail/1260/am...
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.
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
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://www.reuters.com/technology/openai-hits-500-billion-v...
It was inevitable, this basically marks the end of affordable gaming GPUs, upgrade while you still can
robotswantdata•2h ago