00:00Committing to spending billions of dollars on AMD data center gear over the next five years.
00:05Ed Ludlow has a story. Ed, that is quite a move for that name, up 9%.
00:10Yeah, it's very large-scale deployment. So it's six gigawatts in phases.
00:15And, you know, it kind of replicates the structure that AMD has already done with open AI,
00:22a similar sort of arrangement where they are kind of getting into the bigger leagues,
00:27closing the gap on NVIDIA in this market. Overall, you know, AMD does $10 billion of revenue each quarter, all
00:35told.
00:36NVIDIA's just data center segment is $50 billion. So there's still a ways off.
00:41But, you know, what is interesting about this in particular is it's AMD's kind of latest generation accelerator-based system,
00:48the MI450. And what they're really talking up is that you basically say to Meta, okay, let's do this together
00:54for five years.
00:55Your engineers come and work with our engineers and you can help us install the systems.
01:00And that kind of projects quite a lot of confidence for the market toward AMD in particular.
01:05So, Ed, Lisa asked the question earlier. We know what the CapEx intentions are for the year ahead and probably
01:10beyond.
01:11And yet these stocks have been held back somewhat, notably NVIDIA, over the past several months.
01:16Ed, what gives? Where's the news here?
01:18Yeah, I mean, the capital expenditures get stated and then an assessment was made on the health of that, the
01:25portion of capital expenditures
01:27and its impact on cash flow. For example, it's very likely that Amazon as a hyperscaler will at some point
01:34flip into negative free cash flow,
01:36which everyone is completely calm about. Meta is not a hyperscaler. It doesn't sell cloud computing services, but the scale
01:42of its infrastructure
01:43that it operates is the same, right? And it is said $600 billion there or thereabouts over the next few
01:49years.
01:50And Mark Zuckerberg has gone a little bit beyond that saying that actually in the scheme of things, it's absolutely
01:55okay if they spend a couple hundred billion dollars.
01:58It misspend it is how he put it or incorrectly. The risk of not spending it is greater.
02:04And, you know, on any given day in reaction to earnings, as long as that company shows top line growth
02:09in its bread and butter business,
02:10the market is either okay or not okay with that.
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