Andrew here. Breaking: The parent company of the N.Y.S.E. just agreed to invest up to $2 billion in Polymarket, the big prediction market operator. We have details on that deal and much more below.
A vendor financing flashback?
S&P 500 and Nasdaq futures have dipped into the red this morning — but AMD appears to be riding high again, thanks to its huge new deal with OpenAI.
It was the latest move by OpenAI to deploy by some counts more than $1 trillion into the artificial intelligence ecosystem, an expansive investment spree that has fueled bullishness about the industry. Such spending has lifted the stock market again and again, but concerns are growing in some sectors about the durability of the A.I. boom.
Putting OpenAI’s spending in context:
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Deals with AMD, Nvidia, Oracle, CoreWeave and others promise to give the ChatGPT maker more than 20 gigawatts of computing power over the next decade, roughly equivalent to that of 20 nuclear reactors, The Financial Times calculates.
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The electricity needed to support that compute could cost about $1 trillion, The FT adds.
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OpenAI is valued at about $500 billion, generated about $4.3 billion in sales in the first half of the year, and burned $2.5 billion during that same time, The Information reported last month.
Skeptics are also worrying about the circular nature of some deals. We’ve pointed out the vendor financing-ish quality of the up-to-$100-billion Nvidia deal, in which the chipmaker pledged to invest in OpenAI — money that would then go toward buying more of its processors.
The AMD deal announced on Monday also has a circular element to it. In exchange for agreeing to buy AMD chips for its data centers, OpenAI will receive a warrant in that chipmaker that amounts to a 10 percent stake. As the value of AMD stock grows, OpenAI could use its gains to … well, buy more AMD processors.
Some analysts and investors note that vendor financing was prevalent during the dot-com boom, obscuring the true nature of demand for the industry’s offerings — something that they worry could also overstate the robustness of the A.I. ecosystem.
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The post Is A.I. Investment Getting Too Circular? appeared first on New York Times.
