"NVIDIA ( Nasdaq: NVDA) recently agreed to a partnership with OpenAI that could see the company invest up to $100 billion into the company in exchange for 10 gigawatts worth of chip purchases. Shortly after, AMD ( Nasdaq: AMD) announced its own deal with OpenAI that could see the company sell 6 gigawatts worth of chips (valued at $90 billion to $100 billion) to the fast-growing ChatGPT creator."
"AMD's deal with OpenAI is costly since it dilutes existing shareholders. OpenAI is provided with warrants to purchase up to around 10% of AMD's shares as part of the deal. However, the deal gives AMD the equivalent of an 'anchor tenant' for its ambitions to be a complete system builder that can compete more effectively with NVIDIA's leading systems like NVL 72."
NVIDIA agreed to a partnership with OpenAI involving up to $100 billion and 10 gigawatts of chip purchases. AMD announced a separate deal to sell about 6 gigawatts of chips valued between $90 billion and $100 billion. AMD shares rose roughly 42% after the announcement while NVIDIA shares slipped slightly. Media criticism framed the deals as a form of circular 'vendor financing' reminiscent of the Dot-Com bubble. NVIDIA's chips are being used in OpenAI's self-build project, providing hyperscaler-scale collaboration. AMD's agreement includes warrants allowing OpenAI to buy around 10% of AMD shares, diluting existing shareholders but securing an anchor customer for system ambitions.
Read at 24/7 Wall St.
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