For an interesting interpretation of the recent AMD-OpenAI deal, see Matt Levine's column from a few days ago:
> OpenAI: We would like six gigawatts worth of your chips to do inference.
> AMD: Terrific. That will be $78 billion. How would you like to pay?
> OpenAI: Well, we were thinking that we would announce the deal, and that would add $78 billion to the value of your company, which should cover it.
> AMD: …
> OpenAI: …
> AMD: No I’m pretty sure you have to pay for the chips.
> OpenAI: Why?
> AMD: I dunno, just seems wrong not to.
> OpenAI: Okay. Why don’t we pay you cash for the value of the chips, and you give us back stock, and when we announce the deal the stock will go up and we’ll get our $78 billion back.
> AMD: Yeah I guess that works though I feel like we should get some of the value?
> OpenAI: Okay you can have half. You give us stock worth like $35 billion and you keep the rest.
https://www.bloomberg.com/opinion/newsletters/2025-10-06/ope...
Discussed yesterday:
OpenAI is good at deals - https://news.ycombinator.com/item?id=45493815 (40 comments)
Levine is fantastic on all sorts of bizarre financial dealings. Money Stuff is such a good daily read even though I don't work in a financial job
I would be convinced that he's some sort of super well calibrated financial article AI engine (due to consistency of output and breadth of coverage), except that I've been reading his column long before LLMs were on the scene.
Oh this just seems like the typical financial dealings that City of London invented to obfuscating ownership of holdings half millennium ago. Some would event argue this obfuscation what transferred power from the military to bankers. And it is how we end up in this transnational corporation where the public really have no idea who is owning what and who is actually running the show here.
Now we are just transferring the power from bankers -> tech/AI.
There's no way someone would be stupid enough to part with $x worth of product and $ 0.5 x worth of stock in exchange for $x, is there? Honestly, it's stupid to even make such an offer. What prevents AMD from turning it around on them?
> AMD: Oh, since you put it like that, why don't you pay us $x for the chips and give us $ 0.5 x worth of stock? When your market cap rises by $ 0.5 x you'll get the money for those stocks. And hell, it might even rise further, giving you back some of the money for those chips. You're really robbing me blind with this deal, you'd be a fool not to take it!
>What prevents AMD from turning it around on them?
Matt's telling is a little facetious, so the exact negotiation probably didn't go like that. More importantly, OpenAI has better options. If they want to pay AMD cash for chips, they could do that without also giving up their equity. The same can't be said for AMD. They're the second choice when it comes to GPUs, and they're desperate for market share, so they're willing to cut deals like this. Without this deal OpenAI probably would have bought Nvidia chips with cash.
> NVIDIA intends to invest up to $100 billion in OpenAI progressively as each gigawatt is deployed.
AMD might do it just to try and be (stay) relevant in the market. Prior to this, discussions about AMD were slim to none, "just another inference card manufacturer". Now they're shining in the spotlight. Mission accomplished.
If you really think about it though, inference is the end goal for most AI models. So I don't see "inference only" being necessarily bad, especially if you get more bang for your buck.
Because OpenAI has the hype and delivers the pop, not AMD. An AMD investment in OpenAI would probably have had a similar effect on AMD, not an equivalent one on OpenAI. (Either way it's Ooh AMD is getting seriously into AI, awesome, suddenly it seems worth 100x whatever it was before!)
Replace AMD & OpenAI with some crypto company and Trump, hypothetically the latter doesn't really obviously get any significant benefit from the former's endorsement.
Does he explain why the valuation of the company would go up by $78 billion on the public news that AMD agreed to give $78 billion of goods to OpenAI for free?
It validates that MI450 works. Jensen was saying other GPUs are so bad that companies wouldn't even take them for free and then OpenAI said no, we actually will take AMD GPUs for free. They're not that bad.
It's very bad
This reminds me of the AOL Time Warner merger. "Back in the day", America Online (AOL) had a valuation large enough to pull it off:
After less than a decade, once ISP's became a thing, the AOL part of the new company shriveled into nothing and was spun off. It still exists, in name if not anything recognizable to what it once was.0 - https://en.wikipedia.org/wiki/AOL#2000%E2%80%932008:_As_AOL_...
It’s just AMD levering up on its on stock. Similar to MSTR. AMD is taking a loan against its own shares to build gpu’s hoping to rent them out via OpenAI in the future. No point in betting against it, because it can’t get margin called until OpenAI goes bankrupt. Which isn’t happening until OpenAI is worth $10 trillion first.
From the OpenAI side, it’s an amazing deal. $35B profit in one day… at a pe of 30, it’s already worth a trillion if it can repeat similar deals every year.
MSTR can't print more of what they are levering against.