AMD just pulled off one of the most creative financing deals in tech history, giving OpenAI up to 160 million stock warrants potentially worth $100 billion to pay for its own chips. The unusual arrangement lets OpenAI fund a massive GPU purchase using AMD's rising stock price, with the final tranche requiring shares to hit $600 each. Wall Street analysts are calling it a high-stakes gamble that could reshape the AI chip landscape.
AMD just wrote the playbook on how to crack Nvidia's AI chip fortress. The company announced it's granting OpenAI up to 160 million stock warrants to finance what could become the largest GPU purchase in history - and Wall Street analysts think it might actually work.
The mechanics are as brilliant as they are risky. Instead of OpenAI paying cash for AMD's Instinct GPUs, AMD is essentially letting the AI giant pay with AMD's own rising stock price. The warrants vest in six tranches tied to specific stock milestones, with the final batch requiring AMD shares to soar to $600 each. That's a 180% jump from yesterday's closing price of $214.
"We would note that the final 6th tranche requires ~$1T market cap to vest - ergo, if OAI were to hold stock until the end of the deal, its stake would be worth ~$100B," writes UBS analyst Timothy Arcuri in a research note breaking down the deal's jaw-dropping math.
But here's the twist: OpenAI probably won't hold onto all that stock. Arcuri believes the more likely scenario is that OpenAI will sell AMD shares along the way to actually pay AMD for the chips. It's a financing scheme disguised as a partnership, with AMD betting its own stock appreciation can fund OpenAI's purchases.
The immediate market reaction validates AMD's confidence. Shares jumped from $165 to $214 on Monday alone after the partnership announcement, adding billions to the company's market cap in a single trading session. According to the SEC filing, the deal covers 6 gigawatts of compute capacity over multiple years - enough processing power to train the next generation of AI models.
What AMD gets in return goes far beyond revenue. OpenAI's stamp of approval transforms AMD from Nvidia's scrappy underdog into a legitimate AI chip contender. "AMD highlighted ongoing customer dialogs beyond OpenAI and expects this agreement to ultimately accelerate AMD adoption momentum," Arcuri notes. That validation opens doors to cloud giants like Microsoft, Amazon Web Services, and Google Cloud - all existing AMD CPU customers who've been locked into Nvidia for AI workloads.
