Chips and giggles
OpenAI’s lavish chip deal with AMD had markets buzzing, and gave AI bubble watchers some fresh fodder for their future case studies.
For the bubble watchers, OpenAI’s fresh deal with chipmaker AMD is certainly raising eyebrows and shoring up a few theses.
Here’s the short version: OpenAI has promised to buy tens of billions of dollars’ worth of AMD chips. In return, AMD granted it the right to buy up to 10% of its stock dirt cheap if certain targets are met. In other words, OpenAI agreed to spend a fortune on AMD hardware, AMD’s share price promptly surged about 20%, and OpenAI walked away with an option on a big slice of that gain.
It followed similar incentives in deals between the hot AI market leader and suppliers like Nvidia and Oracle. It smells suspiciously like value creation through announcement rather than execution, a bunch of guys handing the same $20 note around the circle.
That charge could be levelled at a startling number of tech startups, some of which maintained their reality distortion fields right up until they became boring and profitable. And it’s not an entirely alien way of doing business when large-scale infrastructure is on the table.
