00:00Ian, I'm going to start with you. The basics of the deal. Six gigawatts over time, AMD accelerators,
00:05but also other gear. It's a big deal for them. Yeah, it's a real endorsement from one of the
00:10biggest buyers of this kind of equipment. Obviously, they're playing catch up with
00:13Nvidia who had their own deal with Meta last week. So this is a real strong affirmation.
00:18And it also includes a share of warrants as well that are going to Meta.
00:23Riley, this is all about Meta Compute. Talk us through just how large the scale is for
00:29demand for this sort of infrastructure right now. It's insatiable demand from Meta. Mark Zuckerberg
00:35last month announced Meta Compute with ambitions to get hundreds of gigawatts to fuel its data
00:41centers and ultimately reach that super intelligence goal where AI can outpace human
00:47intelligence. And this is just the latest in a frenzy of deals. Again, we're anticipating 135 billion in
00:53capex this year. But now we know the spending won't stop. The warrants part is very interesting.
01:00It's very similar to what AMD did with OpenAI. There are operational and financial milestones in both
01:08directions in order for Meta to potentially become a very big shareholder of AMD. Could you explain that,
01:14Ian? Yeah, I mean, the way the way to look at it, Lisa Su said, look, this basically ties us
01:18closer to
01:19Meta. They get these shares if we're in a very good position. I mean, the last tranche, I believe,
01:25is about $600. Yesterday, they closed at less than $200. So we've got a room to go before that
01:31becomes a reality. But her point was that this kind of locks us together and tightens our relationship.
01:37It was really interesting to read through the materials in our reporting, Riley. Like AMD has played
01:43this card before. The emphasis is on inference. So MI450, generation of accelerator, the engineering
01:49teams will work together. But the inference part, like, is there anything unique about this different
01:54to what Meta is doing with NVIDIA? Because we had a very similar deal very recently.
01:58It's a really good question. Not only is it similar to what Meta is doing with NVIDIA, but Meta also
02:03has
02:04its own internal pipeline of custom chips that it's building for AI purposes. What we heard yesterday
02:10is that they see different applications, different workloads here being supported by all three of
02:16those verticals. And so they're trying to diversify as they pursue this massive scale
02:22in terms of compute. Ian, take us back to NVIDIA, because we've got their earnings coming up tomorrow.
02:29And how much does this show that there is anxiety that companies are diversifying, looking at AMD,
02:36looking at their own in-house chips? Or actually, does it still not a concern? NVIDIA is still dominant?
02:42Yeah, I mean, at this point, all we can do is say, look at the numbers and the numbers,
02:46assuming NVIDIA comes in and executes on what Wall Street thinks it's going to do.
02:50The numbers say there's no anxiety here. All boats are floating. Everybody's benefiting from the same
02:56massive spending in equal measure. And I guess what would change that would be if NVIDIA does not hit
03:02those targets, does not exceed those targets? That, I think, would change the conversation considerably.
03:08And, Riley, the conversation is nuanced when it comes to capital expenditure.
03:12Many would say, yes, a lot of it is about the chips, it is about the data centers, but it's
03:15also
03:15about the power. Can we understand really how much Metra is having to focus in on where they can spend
03:22on
03:23GPUs or their own homegrown chips and where they do it globally as well?
03:27So we asked yesterday where they thought they would deploy these chips, and they couldn't specify
03:32which data centers. We know that some of their biggest projects are targeting five gigawatts,
03:37right? But they need to get certain regulatory approvals, and they need energy companies to be
03:42able to deliver. They're on the ground. So as for the merging of the energy in the compute here,
03:49time will tell as we home in on where those chips will actually go.
03:53Well, it's probably time for a bit of a reality check-in, and I'm hoping that you'll provide it
03:57for us. Like, in any given quarter right now, AMD is going to do $10 billion of revenue, all told,
04:02every single segment. NVIDIA's data center business is at more than $50 billion a quarter. Yes,
04:08that includes networking, but they're now one and the same, right? You can't have chips without the
04:12other. How do we know if this is evidence that AMD is catching up?
04:17I mean, again, you have to go back to the percentages, the growth percentages. At the
04:22moment, both of them would say, you know, this isn't about competition. This is about there's so
04:27much demand. A company like Meta, which makes its own chips, is buying from both of us. That would be
04:32the answer. But ultimately, when the market slows down, and you can be the judge of when that happens,
04:38then we'll see the market share shift, because then it'll really matter.
04:42Meta is not a hyperscaler, but it operates its own data centers at hyperscale, if you know what I
04:48mean. I'm thinking back to when Mark Zuckerberg was sat next to the president, $600 billion over
04:53the next few years. And then he's also talked about this idea that they might misspend $200
04:57billion here or there, here or there, but that's no bad thing. He's front-loading purchases. Just
05:03explain his thesis a bit. Yeah, his strategy is just that. He's used the language of front-loading
05:08capacity. They're going to try to get as much as they can, gobble it up while there's still
05:12availability. And this, he says, could be applied not just for AI purposes, but for that core social
05:19media business, which still drives more than 98 percent of their revenue, right? So they see
05:26applications across the board, and they're not worried about getting too much in the interim.
05:31Ian, why does AMD have to keep giving its shares away?
05:36Again, we asked Lisa about this, and she said that, at least this is Lisa Sue, the CEO, and she
05:41said
05:41this is different than the open-air ideal. The open-air ideal is a slightly different arrangement.
05:46Back as a company, obviously, that is seeking liquidity. Meta clearly does not need liquidity.
05:52This is just a way of showing Meta's commitment to what they're doing. You've got to remember that,
05:58you know, AMD is only a couple of generations into being any type of presence at all in this
06:03market. So if a big buyer of this stuff comes along and says, oh, we like your gear, oh, guess
06:08what? We also like you as a company and like your prospects, then that is somehow a bigger
06:13validation than just a straight purchase agreement. And that really was what they were pushing as
06:17an idea that, look, this is how closely we are tied together.
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