>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.

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.

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.

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:

DD/MM/YYYY please

The universally accepted and internationally recommended date format is YYYY-MM-DD, also known as the ISO 8601 standard.

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.

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.

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.

It's circular money flows.

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.

These are options with a 99.995% discount (as of this writing) on AMD stock.

Financing made out of thin air. Hilarious

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.

[1]: https://www.marketwatch.com/investing/stock/amd

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-...

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.

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.

> 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.

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?

> 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.

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.

> 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.

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.

> 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:

    “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.”

"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.

[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.

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.

Market validation I guess.

> 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.

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?

My uneducated one word answer: CUDA.

Could quickly change if open alternatives were suddenly more popular or with stuff like ZLUDA

https://github.com/vosen/ZLUDA

if your castle had a moat like CUDA....

CUDA isn't even a moat for inference, only for training.

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.

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 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.

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 :)

> 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.

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?

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.

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

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.

> 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.

Theres a phrase for this. Financial engineering.

In other words they are stealing capital from the rest of the economy. Starving it.

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.

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.

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.

> 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.

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.

This is too top of the top to ignore. Everyone can see the scam now, it's a joke