steven fiorillo
Open AI and AMD Raw Thoughts
10/7/2025, 12:44:15 AM
Economic Summary
- OpenAI agreed to purchase up to six gigawatts of compute from AMD across multiple generations, including an initial 1 GW of AMD Instinct chips (deployment targeted H2 2026), plus performance-based warrants for up to 160 million AMD shares, implying materially higher demand for server-class chips and potential supply crowding.
- Hyperscaler capital expenditures are accelerating: the speaker cited Q1 2025 CapEx up ~63% YoY and Q2 up ~67% YoY (about a $5.5 billion increase), indicating large and growing free-cash-flow-funded investment in cloud and AI infrastructure (benefitting cloud providers and chip suppliers like AMZN, GOOGL, MSFT).
- OpenAI platform scale is massive (about 4 million developers, ~800 million weekly ChatGPT users, ~6 billion API tokens per minute), highlighting sustained, rapidly growing demand for compute and ongoing expansion of addressable markets for chips and datacenter services.
- The speaker extended his expected industry build-out from an initial 18–24 months to a multi-year cycle (now 7–10 years), implying long-duration demand for semiconductors, data-center construction, power, cooling, and related infrastructure suppliers (e.g., TSM, CAT, utilities).
Bullish
- OpenAI's 6 GW AMD deal signals massive incremental chip demand.
- NVIDIA benefits indirectly as total AI compute needs expand.
- Hyperscaler CapEx is accelerating rapidly, driving sustained infrastructure spend.
- TSMC positioned as a major fabrication winner from increased AI demand.
- Infrastructure and energy suppliers (utilities, Caterpillar, cooling, racks) will benefit.
- The build-out timeline likely extends to a multi-year, 7–10 year phase.
Bearish
No bearish cases captured.
Bullish tickers
AMDNVDAAMZNGOOGLMETATSMINTCCATMSFT
AMD
Bullish
Direct 6 GW deal with OpenAI (1 GW Instinct initially), securing multi-year chip demand and strategic partnership benefits.
Bearish
Warrant-linked issuance (up to 160M performance shares) creates dilution risk and execution/timing uncertainty.
NVDA
Bullish
Indirect beneficiary of expanding AI compute demand; speaker explicitly bullish and increasing exposure.
Bearish
High-valuation segments and potential supply competition could create volatility despite demand.
AMZN
Bullish
Accelerating AWS CapEx supports increased demand for datacenter chips and infrastructure.
Bearish
Rising CapEx could pressure near-term margins despite being funded by operating cash flow.
GOOGL
Bullish
Growing CapEx and AI initiatives support sustained compute purchases and infrastructure expansion.
Bearish
Heavy AI investment and competitive spending could compress near-term profitability.
META
Bullish
AI investments and strong user engagement imply continued demand for datacenter compute.
Bearish
Large infrastructure spending may weigh on short-term margins if returns are slow.
MSFT
Bullish
Significant AI infrastructure investments (including recent facility spends) indicate scaling compute needs.
Bearish
Competitive spending and rapid expansion may introduce margin pressure; speaker noted he does not hold a position.
TSM
Bullish
Fabrication leader likely to capture a large share of AI chip manufacturing demand.
Bearish
Potential capacity constraints and geopolitical/competitive risks could limit upside.
INTC
Bullish
May eventually capture some fabrication share as AI demand grows.
Bearish
Currently behind TSMC on leading-edge manufacturing, limiting near-term market share gains.
CAT
Bullish
Infrastructure and construction demand from expanded data center build-outs should help equipment providers.
Bearish
Cyclical exposure makes benefits contingent on sustained, long-term build-out.
People mentioned
Andy JassySundar PichaiMark ZuckerbergDan Ives