NVIDIA’s deal makes much more sense. Will use OpenAI revenue to buy shares in OpenAI and still profit if OpenAI goes bankrupt.
This is less a “vote of confidence” in AMD, because shit is free for OpenAI here. I too will buy all the AMD GPUs if you give me AMD stock of same or greater value. This deal structure actually makes AMD look terrible and unconfident in its product. But deal is not transparent enough.
It’s going to be a fucking bloodbath when it bursts.
Also, make sure to keep secret the actual milestones and share allocations being gifted to OpenAI.
MI450s are expected to be $40k/kw. 6gw would be $240B in revenue. AMD can make MI450 an openAI only product and overcharge them for it. MI451 for everyone else. If price is fixed, MI450 is not finalized, afaik, and so much lower specs than promised/theorized could be delivered, with again MI451, the original hoped design.
The amount of fuckery is too damn high, but future fuckery too damn exponentiallydamn high.
So basically they’re paying in exposure.
There’s a mildly amusing bit in there about disrespecting artists and not wanting to pay them money for their work that I’m not a good enough writer to execute (guess I should’ve asked chatgpt to do that for me and posted the result as my own original work do not steal instead of this nonsense ramble).
I see the vague shape of what you were going for, and had you executed it, I’m sure I would have snorted lightly in mirth.
The notion of having had the hypothetical potential to amuse even one person is payment enough for me.
If that’s ain’t gaming system then I don’t what is
Wise words, Bil.
You also have the circular investment. NVIDIA puts money into OpenAI. It uses that money to buy computing power from Oracle, who then fills its datacenters with hardware from NVIDIA. Everybody’s valuation rises.
Edit: valuation, not validation
Insert 2 economists eating shit joke
Go on…
Two economists are walking in a forest when they Come across a pile of shit.
The first economist says to the other “Ill pay you $100 to eat that pile of shit.” The second economist takes the $100 and eats the pile of shit.
They continue walking until they come across a second pile of shit. The second economist turns to the first and says “l pay you $100 to eat that pile of shit.” The first economist takes the $100 and eats a pile of shit.
Walking a little more, the first economist looks at the second and says, “You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. can’t help but feel like we both just ate shit for nothing.” “That’s not true”, responded the second economist. “We increased the GDP by $200!”
This works better with an accountant and an economist.
I knew this joke as two people selling a painting back and forth
Economists eating shit is funnier
AMD too?
So, assuming that Intel is also on the wrong side of history as usual (and that their cards are actually good for gaming, of which I’m not convinced) , you literally can’t buy a decent gaming GPU without paying into the AI nonsense?
Look, the recent CPU lineup had AI in it’s name, has dedicated cores in it. Because Windows wants to do AI things or whatever.
Nope sadly, AI needs GPUs and it makes up the bulk of sales of these chips now.
It would be suicide for any of the companies that could make these processors to not go after the biggest market. The result of a company not doing that would be watching all their competitors grow and advance their products whilst their company’s value drops and products stagnate, possibly to a point that recovery to competitiveness would be hard if not impossible.
When AMD’s biggest market was Litecoin (and derivatives like Dogecoin) mining and Nvidia’s hardware was pants at mining, they initially couldn’t increase production of the HD 7000 series quickly enough, so the initial glut of money went to scalpers. They responded by making huge volumes for the Rx 200 series, but shortly after it launched, Litecoin mining ASICs became available and GPU mining stopped being viable. That meant that:
- they’d spent lots of money manufacturing lots of GPUs.
- miners were selling used GPUs for a fraction of the retail cost while those cards were still the current generation.
- people didn’t want to buy a new card for several times the price of the same card but used for a few months.
- retailers had to drop prices to keep selling new cards.
- wholesale prices had to drop to keep retailers stocking new cards.
- AMD weren’t making any profit when they sold these cards.
- the RX 300 cards weren’t compelling compared to a massively discounted RX 200 card, so they didn’t sell in huge quantities or with good margins, either.
This wasn’t the only time ATi/AMD took a calculated risk and it backfired horribly, so with their history of bad luck, chasing the AI bubble in any way that involves risk instead of just selling things for money might be a bad idea.
Intels main focus with their GPUs has been AI workloads. I have an Arc A770 I don’t use because while it works great for LLMs and shit, it doesn’t run the games I want it for. 🙃
Is this really what happen?
Pretty much. OpenAI will “give” AMD 78bln for 10% of the stock and the chips openAI actually wants. This whole ordeal has been publicly paraded like OpenAI and AMD partnering up, which has already pumped up AMD stock price by 45%. Thus openAI will eventually get their 78bln (which they actually never had in the first place) back in AMD stock.
So who actually pays the 78bln? The simple answer is AMD stock holders, currently the ones who have bought the stock after the announcement and later the ones who bought it before it crashed. The more complex answer is that the stock market at this point is just a speculative mess where numbers are made up because the price isn’t dictated by what the company is currently capable of doing but rather what the company potentially could be doing in the future. Who knows who is actually paying for it because AMD stocks will get used elsewhere (for example as collateral in a loan) and the economic growth with absorb the costs. In short, we might as well imagine nobody paid for the chips.
In short, brace for another “once in a lifetime” economic crash.
The more complex answer is that the stock market at this point is just a speculative mess where numbers are made up because the price isn’t dictated by what the company is currently capable of doing but rather what the company potentially could be doing in thue future.
You seem to be under the impression it was ever anything else.
The more complex answer is that the stock market at this point is just a speculative mess where numbers are made up because the price isn’t dictated by what the company is currently capable of doing but rather what the company potentially could be doing in the future.
Drew Carey: Welcome to the stock market, where the points are made up and money loss really matters
This isn’t the way economic bubbles are typically structured. At all.
Typical economic bubbles are built on speculative investment leveraging debt until the whole thing reaches a point where the debt can’t realistically account for possible growth anymore. This would be OpenAI asking SoftBank for $78B to buy chips that have at most, a maximal 5 year life cycle, and then OpenAI not having cash on hand to pay down that $78B in 2 years.
Using this stock reacharound is actual money changing hands. Yes, stock dividends and sales are part of that, but it’s not debt. It’s certainly not sustainable, but it’s not something that will lead to bankruptcy for OpenAI or NVIDIA or AMD if they fail to turn profits. But the money is real at the time it’s moved around. Surprisingly, the LLM crowd has been fairly consistent in not running to highly leveraged debt for funding.
This is a pump and dump scheme if anything, and seems like a great way to find out later that people buying stock in AMD “invested” in shrinking their portfolio over the long term. IMO only a fool would buy stocks that funded this, but it’s a slow-mo bubble for those people, not the economy in general.
Money did exchange hands but it had to come from somewhere, OpenAI doesn’t have 78bln just lying around. Someone somewhere took debt so OpenAI could pay that price and OpenAI is planning on paying back that debt with AMD stock. That why I said the simple answer is that the people buying AMD stock are the ones paying for those chips. But these things don’t happen in an instance, they take time which is why I said the complex answer is that nobody really knows who is going to pay it back. As a simplistic example, while the “dump” of AMD stocks hasn’t happened someone can borrow money against the overpriced AMD stock. Now, if whoever gave the actual money to OpenAI comes asking for their 78bln back and OpenAI doesn’t have it they will dump the AMD stocks to pay it back and then the person who used AMD stocks as collateral will be asked “Your collateral is now useless, give me more collateral or pay me back” and that money will be found elsewhere until someone goes broke and the debt gets defaulted. Of course that won’t happen as long as nobody comes asking for the spent money.
In my eyes this deal is a speculative investment leveraging debt. OpenAI itself doesn’t have the debt but it is somewhere because the actual liquidated money had to come from somewhere. And there is speculative investment with the hopes of AMD stocks going up enough to offset that debt. The 78bln might not end up as debt for OpenAI, but it might end up as a different debt for the loans that used propped up AMD stock as collateral. IMO it doesn’t really matter where exactly the debt ends up because if the bubble pops AMD stocks are also going to take a hit and someone somewhere is going to end up paying for the debt that was caused by this 78bln deal.
The 78bln might not end up as debt for OpenAI
AFAIU, the GPUs are free for OpenAI. They will sell their free stock to pay AMD for GPUs. OpenAI is already on the hook for over $1T in other commitments, and debt will be very expensive for them.
Your collateral is now useless, give me more collateral or pay me back
I’m no economist, but I’m pretty sure that’s not how loan contracts work. The lender is taking a risk and is agreeing to accept the offered collateral as insurance against the debt. They can’t just decide they don’t like the collateral any more and unilaterally change the terms.
That’d be like if you took out a mortgage to buy a $300K house for a $250K sale price, and then a flood comes through and damages the property to the point that it’s only worth $200K, and the bank came knocking and said “pay it back or at least fork over another $100K so we feel comfy again.”
I’ll admit, useless was a bit hyperbolic statement. But with stocks there is a concept called margin call which in layman terms means that if the value of your stocks (relative to the amount of what you loaned) drops too low the lender will ask you to either pay off a portion of the loan (to bring the existing loan in line with the new evaluation of the stock) or add additional collateral (to raise the total value of the collateral to be in line with the remaining loan). If neither of those things are done the lender will sell your stocks at whatever price they can get to pay off the loan (either fully or partially).
Mortgages don’t have margin calls. If the houses loses value it just loses value and the bank doesn’t care as long as you keep paying the payments.
Right, loans and stock market shenanigans are different animals. I assumed you were talking about the former given the context of “how did OpenAI find the money to pay AMD $78bn”.
In retrospect, I suppose options could have played a factor… but then again this level of ratfuckery is well beyond my understanding, so you could tell me Santa gave them the money and it’d make just as much sense.
Someone somewhere took debt
the simple answer is that the people buying AMD stock are the ones paying for those chips
In my eyes this deal is a speculative investment leveraging debt.
But so you have to pick one. Unless you’re suggesting that all the day traders and retirement funds and investment funds are buying or already holding AMD bought it all with credit cards. Which is not the case, which is why this isn’t debt.
Ask yourself - If it’s debt, then who is the creditor? Who holds the loan paperwork? What rate did they get? What’s the collateral? None of those things are true here.
Stock value isn’t real any more than the value of gold or silver or bitcoin, but it’s all relative to the value of the stock when sold. But it being sold is the point. The stocks are worth money. Real actual money. If the market hits a correction - as other more bubble-like parts of the AI industry and the current general economic shitpile are likely to afford us all in the next few years - then OpenAI and NVIDIA and AMD won’t be carved up and sold for parts after a bankruptcy by a bank because they’re still able to sell the stocks to fund payroll. As long as no one sells off a ton of stock quickly and the stock value doesn’t collapse, then it’s simply a risky circular a bet on themselves.
Don’t get me wrong, I think this is an innovation in stupidity and shortsightedness. But call it what it is, which is not debt.
Someone somewhere took debt
Where would OpenAI get 78bln to pay AMD? It’s very unlikely that money would come from their existing revenue streams, so it most likely would come from either external investors or a loan. Loan obviously comes with debt so let’s say it came from an external investors? But where did they get that kind of money? Investors rarely have billions just sitting in the bank so they had to liquidize somehow. Maybe they sold some of their non-liquid assets, but most likely they took loans against their assets (because loaning is cheaper than selling) which means we’re back to there being debt somewhere.
the simple answer is that the people buying AMD stock are the ones paying for those chips
That is the simple answer because people would buy the stock, stock price would go up, OpenAI 10% would end up being worth 78bln, OpenAI dumps the stock and that money goes back to whoever financed the 78bln. Debt would get paid off and no additional debt would exist (except for people who bought the stock without having the money to buy the stock). But that’s a simplistic way of viewing this whole ordeal.
In my eyes this deal is a speculative investment leveraging debt.
I don’t see an issue here. In my eyes there is debt created to accumulate 78bln and the speculative part is using AMD stock to cover the debt. If the pump and dump fails would there not be debt?
I guess we’ll find out when the Big Short 2 comes out.
The Bigger Shorter
2 Big, 2 Short
WE HAVE ALL THE CHIPS
table collapses
deleted by creator
Is that perfectly acceptable or does that count as some sort of insider trading?
Infuriatingly, it’s yes to both, when you define “perfectly acceptable” from the viewpoint of the kakistocracy now in charge of preventing and punishing such things.
If it looks like inflating the bubble, walks like bubble and quack like bubble…
