Nvidia CEO Jensen Huang just delivered his verdict on AMD's blockbuster partnership with OpenAI - and he's both impressed and baffled. Speaking on CNBC's Squawk Box Wednesday, Huang called AMD's decision to offer up 10% of the company "clever" but admitted he's "surprised" they'd give away so much equity before even building their next-gen chips.
Nvidia CEO Jensen Huang isn't mincing words about AMD's unprecedented partnership with OpenAI. The chip giant's leader called the deal "imaginative" and "unique" but admitted he's genuinely surprised AMD would hand over potential 10% ownership before their next-generation MI450 chips even hit production lines.
"I'm surprised that they would give away 10% of the company before they even built it," Huang told CNBC's Squawk Box Wednesday morning. "And so anyhow, it's clever, I guess."
The market's certainly buying AMD's bold strategy. Shares have rocketed 35% this week alone since Monday's announcement, with another 5% gain Wednesday following Huang's comments. Nvidia stock climbed nearly 3% as investors digested the competitive implications.
The deal structure is unlike anything the AI chip industry has seen. OpenAI commits to purchasing 6 gigawatts worth of AMD chips over multiple years, including the forthcoming MI450 series. In return, OpenAI gets warrants for up to 160 million AMD shares - roughly 10% of the company if fully exercised - with vesting tied to deployment volumes and AMD's share price performance.
It's a direct challenge to Nvidia's stranglehold on AI computing. While Huang's company has dominated with roughly 80% market share in AI chips, competitors like AMD and cloud providers developing their own silicon are finally making moves that matter.
Huang was quick to distinguish his company's approach. Nvidia announced plans last month to invest up to $100 billion in OpenAI over the next decade - but that's a traditional investment allowing direct chip sales. "It's very different from OpenAI's deal with AMD in that it allows Nvidia to sell directly to the ChatGPT creator," Huang explained.
The Nvidia CEO was refreshingly candid about OpenAI's funding challenges. When asked how the AI startup will finance its massive infrastructure deals, Huang didn't sugarcoat it: "They don't have the money yet." He expects OpenAI to raise funds through "exponentially growing" revenues, equity, or debt to meet their commitments.
That honesty extends to Nvidia's own investment strategy. Huang confirmed the company's participation in xAI's reported $20 billion funding round, calling himself "super excited" about backing Elon Musk's AI venture. "Almost everything that Elon is part of, you really want to be part of as well," he said, adding he wishes he could invest even more.
The admission reveals something telling about Silicon Valley's AI gold rush - even Nvidia, despite its market dominance, feels the pressure to place bigger bets. Huang's only regret about previous OpenAI investments? "We didn't invest more."
Behind the public praise and competitive jabs lies a fundamental shift in AI infrastructure deals. The "circular nature" of investments - where chip companies invest in AI startups that then buy their chips - has raised eyebrows among analysts. But for now, the money keeps flowing and the partnerships keep expanding.
Nvidia has also backed AI data center operator CoreWeave, which Huang considers among the company's "terrific investments." These portfolio companies are "building out the AI infrastructure for the world," he said, positioning Nvidia not just as a chip supplier but as an ecosystem architect.
The real test comes when AMD's MI450 chips actually hit the market and prove they can handle OpenAI's massive workloads. Until then, Huang's measured response - calling the deal "clever" while questioning the timing - captures the industry's mix of respect and skepticism about AMD's high-stakes gamble.
Huang's measured reaction to AMD's equity partnership reveals the delicate balance of competition and collaboration defining today's AI chip wars. While calling the deal "clever," his surprise at the timing suggests even industry veterans are navigating uncharted territory as AI infrastructure demands reshape traditional business models. With billions in investments flowing between chip makers and AI startups, the real winners will be determined by execution rather than deal structures - and AMD's MI450 chips haven't even shipped yet.
