"NVIDIA ( Nasdaq: NVDA) kicked off a historic wave of deals with OpenAI on September 22nd when the company announced it was investing up to $100 billion into OpenAI as part of a new partnership. In return, OpenAI committed to buying 10 gigawatts worth of NVIDIA chips. That deal kicked off a flurry of announcements. OpenAI later announced a deal with AMD ( Nasdaq: AMD) for 6 gigawatts worth of chips, a deal with Oracle ( Nasdaq: ORCL) for another 10 gigawatts, and an expanded partnership to buy custom chips from Broadcom ( Nasdaq: AVGO). In total, the announcements from OpenAI in recent weeks are estimated to lead to more than $1.5 trillion in new spending."
"NVIDIA's partnership with OpenAI has raised concerns that AI companies are pushing into 'vendor financing' arrangements that inflated the Dot-Com bust. Following NVIDIA's partnership announcement, AMD announced their own expanded partnership with OpenAI. That arrangement will see OpenAI buy worth around $90 billion to $100 billion worth of AMD's chips. In exchange, OpenAI is granted warrants that could see the company own around 10% of AMD's shares."
NVIDIA announced a potential $100 billion investment in OpenAI in exchange for OpenAI buying 10 gigawatts of NVIDIA chips. OpenAI subsequently committed to purchases from AMD (6 gigawatts), Oracle (10 gigawatts), and expanded orders from Broadcom, producing estimated industry spending above $1.5 trillion. The AMD arrangement includes warrants that could translate to roughly 10% ownership. These commitments have propelled returns across foundries, memory stocks, and semiconductor equipment. The scale and vendor-financing nature of the deals concentrate demand and raise systemic risk, prompting concerns about potential overheating or dependency in the AI hardware ecosystem.
Read at 24/7 Wall St.
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