Wall Street explains how you will pay private AMD shares for billions of Openai in buying chips

After AMD and Openai announced Expanding the partnership on Mondaythe Gossip It immediately turned into the unusual way that Openai will pay the price of its purchases from AMD. You will use the AMD reserves to do this.

To summarize: Openai agreed to help AMD improve its line of NVIDIA competitors, Instinct graphics processing units, as well as buying and publishing 6 GB of AMD computing capacity for several years. Amd said this deal is worth billions of dollars.

But Openai does not pay for this from its own revenues. Instead, AMD Openai gave a large range of stock guarantees – up to 160 million AMDs – which will be granted on slices with certain features. These landmarks include specific increases in the share price, with the last segment that depends on AMD shares increased to $ 600 million per piece. AMD revealed. It was trading at about $ 165 before the news appeared and rose to 214 dollars when the market was closed on Monday after the announcement.

If the stock price reaches its specified levels, Openai achieves all its required contributions, and Openai kept all AMD shares, none of them sells along the way, Openai may make enough AMD shares to pay the price of many graphics processing units. The share value can reach about $ 100 billion.

“We note that the last sixth segment requires a market ceiling of approximately a trillion dollars – and therefore, if Oai keeps a stock until the end of the deal, its share will reach about 100 billion dollars.”

But Arcore believes that the most likely scenario is that Openai sells its AMD shares all the way to pay the AMD bill. Therefore, this is basically a AMD plan to finance this customer’s purchases.

However, Arcore says, checking the ability of AMD artificial intelligence processing units to deal with Openai’s work burdens, and dealing with any other work burdens of artificial intelligence, is of sufficient value for AMD to do this financing maneuver. He writes: “AMD highlighted the continuous customer dialogues outside the Openai and expected this agreement to ultimately speed up the AMD accreditation momentum.” In particular, Openai’s approval seal gives it the right to sell its graphics processing units to many cloud services providers that already provide them with central processing units.

Therefore, in the long run, people who will really pay for the purchase of the giant Openai for several years for the AMD graphics processing units will be retailers and intuitive investors if they already bid on the share price.

In many ways, NVIDIA also funds Openai from NVIDIA products with its own private investments. Announced. The difference, of course, is that the multiple NVIDIA investments in Openai gave NVIDIA a stake in the provider of artificial intelligence fast growing, not the other way around.

But what is the option that AMD had? Through the financial engineering of a deal that costs little Openai, it gets a large foothold – up to 30 % of the market share, according to USB estimates – in one of The largest construction operations One of the next generation that the world has ever seen.

While Arcore admits that the AMD deal is “less attractive” than the NVIDIA deal, “We see this as the main verification of its (AMD) road map that can flow to other customers.”