OpenAI deals with AMD and Nvidia may lead to a ‘show me the money’ moment

AMD said that Openai has signed an agreement that can generate annual income for the chip manufacturer and ultimately give the Chatgpt creator 10% shares.

The agreement followed a similar agreement between Openai and market leader Nvidia at the end of last month. In this agreement, it is reported that Openai, a special asset that is still not profit, will deliver a stock shares to NVIDIA, which helps to create AI infrastructure.

Openai CEO, a CEO of Openai, who sits as an effective king constructor in global AI investment narratives through both Nvidia, AMD and the US government’s ties with the Stargate project, said that Openai plans to spend Trillions of dollars to build its data centers in a “too far away”.

Probably not wrong about the price tag. Combining 10 Gigawatt agreement with Nvidia and Six Gigawatt Pact on Monday, Openai now wants to distribute enough power or buy AI GPUs to illuminate 12 million houses in Texas.

Although it is safe to say that the estimation of Altman is quite close, no one is sure of what the cost of such information processing will be. However, Openai will not do it alone with a existing income of $ 4.3 billion and a loss of $ 2.5 billion.

And this is what may be worried about the financing feedback cycle secured by Openai by some investors.

Oracle, one of NVIDIA’s largest chip customers, signed a $ 300 billion contract to provide information processing power to Openai, which undertakes to purchase an undefined amount of NVIDIA chips.

This is billions of dollars flowing from Openai to Oracle, then returning to Nvidia, then returning to Openai.

In the meantime, the AMD agreement gives Openai warrants for the right to purchase AMD’s 160 million stakes with higher values ​​based on the contract milestones. The warrants will cost a penny and will be a vest in various languages, the first is expected in the second half of the next year.

“Openai is earning more income and starts to share the opposite,” AMD CEO Lisa Su said on Monday.

When the legendary risk protection fund investor Paul Tudor Jones asked CNBC the wider nature of AI infrastructure financing on Monday, he said, “Circularity makes me annoyed.”

Openai is not close to the point of financing his ambitions with income.

Earlier this year, Tech News website Bilgi said Openai estimated $ 125 billion in 2029 in 2029. This will be around 100% one -year growth rate from existing levels.

Only before that Openai will have to touch the capital markets. Goldman Sachs analysts see that they borrow and/or raise only around 75 billion dollars of self -sales next year. And while noting that Oracle’s last $ 18 billion bond sales are successful, the new agreements are likely to have a sharper eye than investors.

“When the equity investment comes from a supplier, we believe that the additional examination is guaranteed considering the ‘circular’ nature of income.” He said.

Investors do not seem to worry when it comes to AMD. The stocks were 26% higher in the session and added about $ 75 billion to the general market value. AMD said the agreement could produce $ 100 billion in the next four years in the next four years.

The final value for Openai can be a little more complex.

Write to Martin Baccardax at martin.baccardax@barrons.com