"Comment AMD has issued OpenAI a warrant for roughly 10 percent of its stock. In exchange, the AI model giant will work with its partners (such as Oracle) to deploy up to 6 gigawatts' worth of AMD GPUs. But while Wall Street rejoices and AMD's share price rallies, OpenAI faces a very real problem. To make good on either the AMD deal or a similar one with Nvidia, it will need to expand its Stargate datacenter initiative massively."
"Nvidia's agreement to pony up to $100 billion for 10 gigawatts with OpenAI is really just the GPU giant scratching its own back. Nvidia sells GPUs and networking kit at a sizable margin to the likes of Oracle, who in turn rent them to OpenAI at a profit. And because those payouts are tied to specific capacity milestones, Nvidia and its datacenter and cloud partners are guaranteed a return on every dollar invested in OpenAI."
"AMD's tie-up with OpenAI is similar in many respects, but House of Zen lacks Nvidia's war chest. So instead, CEO Lisa Su is essentially making a trade. AMD has granted OpenAI a warrant to purchase up to 160 million shares of common stock at just a penny apiece in exchange for driving up AMD Instinct's share of the GPU market."
OpenAI agreed to capacity-for-equity arrangements with AMD and Nvidia that link GPU capacity milestones to stock warrants or payments. Nvidia committed up to $100 billion for 10 gigawatts through partners, ensuring GPU and networking vendors profit from capacity rentals. AMD granted a warrant for up to 160 million shares in exchange for helping drive AMD Instinct GPU adoption and deploying up to 6 gigawatts. OpenAI must rapidly scale its Stargate datacenter initiative to meet capacity commitments. Chipmakers and their cloud partners secure milestone-tied returns, while OpenAI faces financing pressure and delayed profitability expectations through 2029.
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