AMD Shares Surge 25% on OpenAI Deal, but Market Raised Concerns
AMD shares have surged by over 25% following a deal with OpenAI. However, the stock market and analysts have raised concerns about the nature of these deals and their potential risks.
AMD has agreed to supply multiple generations of its Instinct processors to OpenAI. The deal involves AMD issuing warrants for up to 160 million shares, potentially giving OpenAI a 10% stake in the company. However, it's unclear if OpenAI will directly purchase the chips, as it lacks the revenue to do so. Oracle has signed a deal with OpenAI to provide data center infrastructure, and it's suspected that they might be the ones buying the AMD chips.
Market observers and analysts have expressed concerns about the 'circularity' in these deals, where investors also act as suppliers. They worry about potential market manipulation and the sustainability of these arrangements. Paul Tudor Jones, a hedge fund manager, has voiced his nervousness about these dynamics. Despite the concerns, some analysts argue that these deals could significantly boost the AI industry if successful.
The AMD-OpenAI deal has sparked a positive market reaction, with AMD shares soaring. However, concerns persist about the nature of these deals and their potential risks. The market awaits further details on who will directly purchase the AMD chips and how these arrangements will unfold.
