> 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.