OpenAI's Strategic Partnership with AMD

Jaden came in this morning fired up wanting to talk about AMD and OpenAI. The first words out of Jaden's mouth, he's like, so a little behind the scenes here. Jaden and I always sort of like obviously plan on what we're going to talk about. But one of the fun things is that we don't tend to give each other our points of view, right? Because we want to sort of like that to happen all organically. But Jaden couldn't resist. He's like, I have so many theories around this, conspiracy theories. Let's do this, right? So like I've never seen him just fired up. So AMD, as you know, is this massive companies and OpenAI, it seemed to be teaming up. This involves NVIDIA. This is like very real housewives of Silicon Valley thing here. So, Jaden, what are we seeing? Why are you so fired up? Okay, this is crazy. So, and I basically think this is a different deal than OpenAI has done with NVIDIA. And I think this is the path forward for OpenAI to secure unlimited money to power their data center ambitions and their chip ambitions and all of this. So this deal that OpenAI did with AMD is really interesting. A little backstory on AMD. It sort of struggled because NVIDIA seemed to really, you know, take the market dominance for quite a long time. AMD struggled. They got a big finance injection. They did this whole private public. They did like capitulated. They did a lot of stuff. Anyways, AMD seems like they're back, right? We're so back, AMD. That's their slogan right now. And this deal here, I think, is really one of those big moments for them where they've made a big deal with OpenAI. It is a five-year agreement. And it was not only is it going to, you know, OpenAI is going to be buying from them, but open AI is going to get 10% of the company if the company hits certain stock milestones. So basically, when the eyes like we're going to be a huge like there and it's not even like no money has changed hands. And this is that's kind of like what they did with NVIDIA and like Oracle and stuff where they do these like these like letters of intent, these LOIs to like purchase. And then the stock price of the company goes up because they're like 100 billion dollar letter of intent to purchase like compute from you. And all of a sudden the stock of the company explodes. I think opening, I saw like basically what happened with Oracle. They made Larry Ellison, the CEO of Oracle, the richest man in the world after their announcement because the stock went up so much. And they're like, we can like very directly boost your stock price with these LOIs. They're like, okay, how about they go to AMD who's been sort of struggling and not like, you know, it's not the, the, the bell of the ball or whatever, because Nvidia has taken the market dominance. So like, we're going to make a chip deal with you, um, in a compute chip, whatever deal with you. you are going to give us 10% of your company. And AMD is like, sure, because their company is going to grow way more. What's interesting, though, is the 10% is like milestones on the stock price, right? I think when they made the announcement, the stock price was somewhere around $120. And like, if we can get you guys to $600 a share, then we're getting 10% of that, which is like insane. And basically an infinite money loop because they get 10% of the company. Now they have all this equity, which they don't even have to sell the shares to go buy stuff. If anyone knows how this this works that isn't that 10 of amd is an asset that now opening i can take out loans against so it's like it's just insane it is it is so freaking crazy to me that we are at the point where they're like we will sign a deal with you uh worth you know billions or hundreds of billions at all i think this deal like this one in particular is worth tens of billions so like we sign a deal worth tens of billions of dollars your stock price is going to go up even more than that and then uh we getting we getting a cut of that crazy it it is crazy and it i mean that the thing like okay so i i a lot of times like jaden will throw out a conspiracy theory and i love just hammering him on this i mean i don't see how this is wrong anything that jaden's saying i think this is all just literally what's happening i'm not even sure it's a conspiracy theory but but one of the things that, Jayden, I want to kind of think about is when you think about the huge players in the AI space, I mean, is NVIDIA at the top? You know what I mean? I know it's sort of like apples and oranges a little bit with OpenAI and Google, Microsoft, Anthropic, et cetera, et cetera. But with NVIDIA, their dominance has been just, it's hard to even sort of like calculate in your mind, right? Because I mean, I just saw a statistic where NVIDIA is worth the same amount as every pharma company or something like that combined. It's just like, it's insane how big they are. So I'm just wondering market cap is over four trillion and AMD's is around three hundred and eighty two billion. So like the pretty it's it's not close. And when you think about somebody that's three hundred billion dollars, you're like, oh, my gosh, that's huge. It's it's dwarfed by this. So, Jaden, I guess the thing that I'm trying to think about is NVIDIA with their dominance, it's gotten weird. Right. Geopolitically, it's gotten weird. You know, like the U.S. government has sort of gotten involved with this. It has, you know, there's implications with, you know, what they're allowed to sell to China, everything else. It's just, you know, say what you will, and I'm a capitalist, but like it is not great to have one company with this much power, especially when you're talking about what they're talking about, which is essentially the future of technology. So I am wondering all the, you know, everything else aside, this has to be good in a way, right? To have like to have AMD in a stronger position just has to be good, right? In some sort of like empirical sense. A hundred percent. And I'm going to break down what this deal is, but I think you're, I mean, yes, obviously for capitalism, it's best to have multiple companies because you want all that competition, which is great for the consumer. I think OpenAI also realizes that they're like, well, OpenAI maybe has also milked NVIDIA dry. Like they just did a hundred billion dollar, you know, investment from NVIDIA, which obviously they're going to turn around and spend on more NVIDIA chips. I love this podcast, man. I love OpenAI milk at AMD dry. Stay tuned up next. Well, it's so true. I don't hear this from any commentators who are like, wow, a big deal. That's amazing. I'm like, you guys, please, let's all talk about what's actually happening here. It's a big deal. It's awesome. It's great. Whatever. But like, so, okay, here's the actual deal, though, just for those that are curious, because I want to make sure I didn't misquote it at the beginning. AMD is they have this multibillion dollar partnership. It is to create AI data centers and the AI data centers are going to run on AMD processors. So AMD makes the processors. It's kind of tricky because there's like the actual product and then there's the data center. It's not like AMD is a data center company per se, like really, they're a processor company. But then they need a data center to put the processors in. So then, like, who owns the data centers? Like, OpenAI is building tons of data centers, but it's going to have AMD or NVIDIA chips in there. Anyways, so that's the distinction I feel like I wasn't clear on at the beginning of the episode. So AMD has the processors, and that is a direct challenge to NVIDIA. So they're directly competing there. Under the terms of this particular deal, OpenAI said that they are going to purchase 6 gigawatts worth of AMD chips. And I believe that that is worth I trying to remember how many homes 6 gigawatts I think one gigawatt can do like a million homes or something like that Yeah I was just working with a power company I think it was something like 38 because they do like anyway yeah sorry go on Yeah. Irrelevant. Yeah, it's a lot. So like a lot of homes, like millions of homes are included in this deal. What's interesting is OpenAI is going to get their first tranche of equity from AMD after the first gigawatt comes online. So it's like as more and more gigawatts are unlocked, data centers are not only built but stocked with AMD processors, then they're going to start getting equity in the company. And this is all with AMD's new chip. So they have their MI450 chip that's happening next year. And they're going to buy those directly through either their cloud computing partners or Direct. So it's like they'll get them one way or another. But yeah, absolutely massive deal. And like just the scale of it is huge. Six gigawatts is massive. I think that they signed a 10 gigawatt deal with perhaps. I'll look up the other companies so I don't misquote that. But yeah, they just signed a 10 gigawatt deal. So this isn't their biggest deal that OpenAI has done. And also Sam Altman has said publicly that this one isn't the last. They're doing more. They're already doing, I think, 10 gigawatts might have been for the Stargate project. So they got 10 gigawatts for Stargate. They got a deal going on with NVIDIA. Now they're doing AMD. And Sam Altman says that they're going to have more coming in the pipe. So it's pretty staggering the scale of how many data centers and chips he is lining up and how he's acquiring all of that. You know, it's actually, and I don't know if this is the time to do it, Jayden, but it actually every once in a while makes me just take a breath and look at this. Because the work that I was doing, the research I was doing around this whole thing before was just trying to get a sense of the scale. Because we're talking about, you know, gigawatts and things like this. We're talking about literally millions and millions of houses. The scale of AI, and I know this is going to sound unbelievably obvious here, guys, and I'm not trying to do that, but the scale of this is astronomical. I mean, when we're talking about like what NVIDIA is doing, what AMD is doing coming into, you know, and partnering with OpenAI, the amount of money OpenAI is spending. We are essentially two and a half years into this, guys. Life is long. I mean, we are two and a half years in. When you think about two and a half years after, you know, the release of the iPhone or whatever, that was only like mid-2009, okay? Like when you think about like, you know, after like the bubble, all that kind of stuff. All this means is that this is just speeding up. It's lowering costs. We can talk about whether intelligence is a commodity, whether chips are going to be a commodity, or if somebody has some kind of moat around that. I don't know exactly how they do other than just Rockefeller style squeezing the market and squeezing the governments and all that kind of stuff. But when we think about what the implications are for us, if we are slow on starting to adopt AI, you are in the wrong field, my friends, because what this means is that this is only going to get easier and cheaper for enterprise to turn all this into actual, like, how do you start replacing human labor, human capital? I'm not trying to sort of like sound like a doomer, but we have to sort of see where this is going. And it's not going to something where it's like, oh, they're going to sort of like have, you know, when we talk about giant data centers and compute and all that sort of stuff. We have to understand that this is coming for human labor. And we have to understand what this, you know, the implications for your job and everything else. Anyway, I just, Jane, I always just like to take a breath here and say like these numbers start to sound like silly money kind of thing. But this has actual implications for how we work. Yeah, 100%. Like the numbers seem almost impossible and crazy. And we hear them so much. I feel like we desensitized to them but they all represent I think like the one thing that is very clear is every time we quote these numbers they represent disruption like things are changing And that doesn't mean disruptive. It doesn't have to be disruptive to your job or your career. I like I think one interesting thing that I said recently on a podcast interview, I was talking with someone and we're talking about Lovable, which is a company we'll probably do a whole episode. I'll talk about it in the next show. But it's a company I love that is great for helping you design and code websites. Very cool tool. And I think at the beginning of the episode, my like posture was like, I don't hire a designer anymore because like lovable does the designs and the code for things that I'm like designing. But then at the end of the, at the end of the episode, I realized like, I don't hire a designer, but that just means that I am the designer because I'm still sitting there on lovable designing something. And I'm like, I probably should just hire it. It like occurred to me. I'm like, I should hire a designer to be using my lovable account like what am i what am i doing like i would speed it up and i'll get more of my life backs um i had an aha moment and i think maybe a lot of people have that same reaction where they're like oh my gosh like i don't need to hire these people or these people in my organization i don't even need them because like i can do it now with ai tools and it's like yeah but imagine if your designer had lovable they would be right like probably five times better and faster than you you know what i love this point because it's i do the same thing this is maybe a little bit of my aha moment on the air here, which is like, keep saying on the air as again, as if we're like on AM radio on your, on your, on your radio dial, right? Like, but this is the idea here is that when you're talking about now I can do this, now anybody can do this. Yes. That's one way of thinking about it. The other way of thinking about it is like, you have to push yourself up the value chain. And so now you need other people to do this and they can do more. But I, you know, I talk to companies about this kind of stuff all the time, which is replacing your people is lunacy unless it's, you know, I get call centers and things like this. If you have 40 graphic designers, maybe you only need like, you know, 12 or something like that now. But the point is that you still need people because they understand what quality looks like. And you have to have somebody judging quality. One little thing I'll tidbit, I work with law firms a lot and I get this question like, well, but, you know, we don't use AI because, you know, the people, our junior people are giving us like wrong stuff with AI. What should we do? I'm like, fire the lawyer. You know, like, I mean, the problem is not the AI. The problem is you need quality control. Whoever the first point of contact is coming out of that AI, like they have to be the quality control. And if you can push yourself up the value chain and hire people to be that quality control who know what they're talking about, that's real value, right? A hundred percent. So, yeah, exciting time. One quick correction I will make at the end of this episode. It is not the Stargate project doing the 10 gigawatts. It is indeed the NVIDIA deal that OpenAI has where they're going to be doing 10 gigawatts. Just making sure that's corrected for the record. Thank you so much, everyone, for tuning into the podcast. If you want to find – like, so much is happening. It's absolutely crazy. But if you want to find the number one place to keep yourself and your organization in particular up to speed with everything happening in AI, I would highly recommend you take Connor's AI mindset course. I'll put a link in the description or in the show notes to it. But this is some organizations are literally buying like 10,000 seats inside of his course for everyone in their whole organization. I've just seen how much this has upscaled their entire organization. So if you work at a great organization and you feel like a lot is going on with AI, do not worry. I would highly recommend finding a way, talk to your manager, or if you're the manager, the decision maker, go and get this for your organization. It's the number one way to upskill your whole organization. Check it out. Connor's AI Mindset course linked in the description. All right. Thanks, everyone, so much. Make sure to leave a rating and a review. As always, we will catch you in the next episode.