"After AMD and OpenAI announced an expanded partnership on Monday, the chatter immediately turned to the unusual way OpenAI would pay for its AMD purchases. It will use AMD's own stock to do so. To recap: OpenAI has agreed to help AMD refine its line of Nvidia competitor chips, the Instinct GPUs, as well as to purchase and deploy 6 gigawatts of compute capacity from AMD over multiple years. AMD said this deal is worth billions in revenue."
"But OpenAI isn't paying for this out of its own revenues. Instead AMD has granted OpenAI a boatload of stock warrants - up to 160 million AMD shares - which will vest in tranches as certain milestones are achieved. Those milestones include specific increases in the stock price, with the last tranche dependent on AMD shares soaring to $600 million apiece, AMD disclosed. They were trading at about $165 before the news hit and soared to $214 by market close Monday after the announcement."
OpenAI agreed to help AMD refine Instinct GPUs and to purchase and deploy six gigawatts of compute capacity over multiple years in a deal AMD said is worth billions. AMD granted OpenAI up to 160 million stock warrants that vest in tranches tied to milestones, including stock-price increases and a final tranche contingent on about a $1 trillion market cap. AMD shares rose from roughly $165 to $214 after the announcement. If OpenAI meets conditions and holds the shares, the stake could be worth about $100 billion. Analysts expect OpenAI will likely sell shares over time to pay for GPUs, effectively financing the purchases, while validation of AMD GPUs on OpenAI workloads could accelerate adoption.
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