[N70Phone]

AMD issues new shares and gets a penny (read: effectively zero) back for them.

ALL ELSE BEING EQUAL this means everyone holding AMD has 10% of their equity/value taken away and handed to OpenAI.

But all else is not equal. OpenAI only gets the shares if they buy AMD GPUs. The intent is that this offsets the dilution by making AMD overall more valuable. (This is why the stock price jumped on the announcement) It's a GPU subsidy paid for by AMD's shareholders rather than AMD itself.

The real risk is that this further entangles AMD in the AI bubble. OpenAI already has enormous datacenter construction obligations. The likelihood of them failing to meet these new obligations, and thus this deal falling through or otherwise not materialising, is pretty high. If the AI bubble goes *POP*, AMD will be hurting a lot more than before this deal.

[dist-epoch]

> ALL ELSE BEING EQUAL this means everyone holding AMD has 10% of their equity/value taken away and handed to OpenAI.

But the stock is up 30% on the news. So lose 10%, but gain 30%, so net 20% beneficial to equity holders?

[N70Phone]

Percentage math doesn't quite work that way. (130% * 90% for gaining 30% and then giving away 10% of that, is 117% not 120%)

But yes. That's the intent.

The "problem" is that OpenAI doesn't have any of the shares yet, and it's unclear how much they actually will get. Right now AMD shareholders have the full +30% gain with none of the loss. But will the +30% gain be wiped out on the news OpenAI won't be buying as many AMD GPUs? Only time can tell.

[rchaud]

The shares haven't been issued yet, so there isn't any dilution. Equity holders could sell their holdings now and benefit, because when OAI exercises the option and gets 160m shares for peanuts, they will sell those shares ASAP to bring in cash to pay for their orders of AMD chips.