AMD Shares Soar on OpenAI Deal

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Watch AMD Shares Soar on OpenAI Deal - Bloomberg on Dailymotion

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00:00You have exposure to AMD. It's added more than 17 billion dollars in market cap on one day alone.

00:05What does this deal signal? Yeah well I think it's a really exciting deal here for AMD. I think it

00:11validates their roadmap and their silicon and software strategy and I think it gives them a

00:17really big lead customer to really scale and I think that this will probably attract other

00:23customers to their roadmap and continue to build out Rockham. And I've always had this like thesis

00:28that the TAM is really big and if companies can deliver on that compute that there's there's a

00:36lot of companies that can win in the overall compute TAM. So overall very exciting and you know I think

00:43it's got a good setup for the next few years for the company's runway. I mean Lisa Sue just telling

00:48us that maybe she's being conservative when she puts the AI accelerator TAM at 500 billion dollars

00:52Tony. I'm interested though at OpenAI telling us Greg saying that we're looking at all kinds of

00:57ways of financing this. How are you feeling about this knitting together of purchasers and creators

01:05designers of chips? Yeah well I think that taking a step back over the last kind of 10 years everybody's

01:12kind of underestimated this TAM and I think what's exciting about AI is that there are a lot of

01:18productivity use cases here and we're starting to see AI agents really form and then I think physical AI.

01:24So I think as long as like the end use cases are delivering a lot of value and there's promise

01:29there I think that's what matters in terms of the ROI and I think a lot of these kind of contracts I

01:34mean they are backstopped by really blue chip companies like Microsoft or Oracle. So in terms of

01:40you know how I'm feeling about the financing I think it's it continues to be probably a good attractive

01:45way to do as long as the use cases are intact. Tony the mechanics of the deal are that OpenAI has the

01:52right to buy up to 160 million shares of AMD at a penny a piece but that right contingent on the

01:59operational and financial milestones that we discussed it is not circular financing it's something

02:06different but how comfortable are you with that mechanism? Well I think it can make a lot of sense

02:12right like I mean it puts the two companies kind of in co-development and partnership and I think

02:19there's shared economics it's a win-win for both companies I think some of the prices the warrants

02:24are struck at a pretty you know high price on the AMD stock price so I think it's good for both sides

02:31and if they win they win together so to me I think it can make sense. Does this alter AMD's position

02:40in the AI accelerator market in other words they're closing the gap a little with NVIDIA?

02:47Yeah well I think that both companies are doing really well and they're doing

02:51things a little bit differently but I think that you're alluding to kind of the market narrative

02:57of AMD was kind of in between kind of NVIDIA on the GPU side and then Broadcom on the custom side

03:04I think this can help lift the narrative to go from like a second place GPU player to a co-developed

03:11partner of OpenAI on the AI compute side so I think it positions them well gives them credibility scale

03:18and additional kind of co-development R&D to improve their roadmap so to me it definitely is a big positive

03:26and I don't think it's a zero-sum game I mean I think it just further signifies the demand for AI

03:33computing it's good for the country to build this much capacity because I do think the end payoffs are

03:39immense. I mean Tony we're at a new record high for the Nasdaq 100 at one point AMD was at a record high

03:45the valuations get ever higher when I'm looking at your holdings top holding Apple Alphabet NVIDIA

03:50Meta. Do you feel confident that these are going to continue to gain in value with this AI story?

03:57I think there's a good long-term story behind all our holdings and I think a lot of them are

04:03beneficiaries of AI they're strong companies that are great platforms and as a result I think that

04:10you know we are entering this inflection and AI driving a ton of productivity you think about

04:15you know output being productivity and labor I think productivity is going up and labor is going

04:21to be relatively uncapped I think as a limiting factor so to me I think it's exciting it's never

04:29been a better time to be a tech investor I think there's just so much change in dynamism

04:33so I'm excited for the multi-year here. Tony if you'll humor me please my column today was about

04:40all of the debt deals that are underpinning the AI infrastructure build out that we're seeing you

04:46know everyone seems to have a different comfort level with that as well how sanguine are you about

04:51the role of debt in what we're seeing? Yeah I think that you know the key signal here is you know

04:58what what is this AI capacity this AI infrastructure capacity worth and what's the useful life I think

05:05a few years ago we were debating is is the useful life of a GPU data center three or four years and

05:11I think that was just too short um you look at a lot of the GPUs you know from seven eight years ago

05:17they're still being fully utilized um because the AI workloads continue to evolve and then when you

05:22fully depreciate these assets like they're at a price point that could make sense for other uh LLMs

05:28be running on them and so I think that you know the useful life of these GPUs are definitely

05:33more than four or five years and um you know there's just more and more use cases you think

05:39about robotics like you know diagnostics um simulation uh there's just a ton more than we

05:46thought there were three years ago and I think that's what will keep the utilization high of these

05:51data centers as long as that you know continues I think it makes a lot of sense

05:55so

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