AMD Inks Chip Deal With OpenAI That Triggers Explosive Rally

Summary

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Bloomberg Businessweek Podcast Summary

Episode: AMD Inks Chip Deal With OpenAI That Triggers Explosive Rally
Date: October 6, 2025
Hosts: Carol Massar & Tim Stenovec
Special Guests: Ed Ludlow (Bloomberg Tech), Mandeep Singh (Bloomberg Intelligence), Leslie Marks (McKenzie Investments), Rick Welts (CEO, Dallas Mavericks)

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Overview

This episode unpacks the ripple effects of AMD’s landmark chip deal with OpenAI, which sent AMD shares soaring and ignited sharp market moves across tech. Joining from OpenAI’s Developer Day, Bloomberg’s Ed Ludlow and Mandeep Singh break down the business intricacies, circular financing questions, and what OpenAI’s growing ecosystem means for tech companies (and their shareholders). The episode also checks in with Dallas Mavericks CEO Rick Welts on the business of sports, and with Leslie Marks of McKenzie Investments about the broader market environment.

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Key Discussion Points & Insights

1. AMD-OpenAI Deal: Structure & Implications

• Milestone-Driven Equity:
  • Unlike Nvidia's deal where investment is more direct, AMD will only grant OpenAI equity once strict milestones—especially building 1 gigawatt of data center capacity—are achieved ([02:13] Ed Ludlow).
• No Upfront Capital:
  • “AMD will sign over stock to OpenAI only when they’ve met specific milestones... OpenAI has to fund, finance, and build 1 gigawatt of capacity... the burden is still on them.”
    — Ed Ludlow ([02:13])

2. Circular Financing & Market Complexity

• OpenAI’s Web of Deals:
  • Unlike Nvidia’s deal (which “could be worth up to $100 billion with OpenAI”), the AMD agreement avoids direct circularity by tying equity transfers to performance ([03:08] Tim Stenovec, [03:35] Ed Ludlow).
  • Multiple financing possibilities (debt, issuing equity, others), with no exact answers from OpenAI:
    • “Greg Brockman said we’ll look at all those mechanisms.”
      — Ed Ludlow ([03:35])
• Market Logic:
  • “The market is simply focused, irrespective of the mechanism for financing, on the revenue growth that comes out the other side.”
    — Ed Ludlow ([04:53])

3. AI Market Momentum & Public Markets Reaction

• Stock Moves by Mention:
  • Shares of Cisco, Figma (up 16%), Salesforce (up 2.6%), HubSpot, Zillow, and TripAdvisor all leaped following mentions in OpenAI’s event ([07:24] Tim Stenovec).
• OpenAI’s Unlisted Power:
  • OpenAI, despite being private, commands huge market attention, moving stocks just by association.
    • “OpenAI is fast becoming a whale in the stock market… its narrative, the market moves, are remarkable.”
      — Carol Massar ([09:44])
    • “It was the confirmation of OpenAI’s $500 billion valuation… that was driving sentiment in the public equity markets.”
      — Ed Ludlow ([10:21])

4. The New Operating System: ChatGPT as Platform

• Expanding Ecosystem:
  • OpenAI’s strategy is to make ChatGPT an “operating system,” integrating third-party software via APIs, turning ChatGPT into something akin to the Apple App Store.
  • “What OpenAI announced was very simple API access for several third parties to ChatGPT … the idea is you link it to, say, your Figma platform or your Spotify account.”
    — Ed Ludlow ([11:46])
• Software is the Sticky Part:
  • “The application is the sticky part. It's never the chips or the architecture. And that's what OpenAI is saying: we have the best models… we want diversification in terms of inference capacity.”
    — Mandeep Singh ([19:36])

5. Winners, Losers, and the Race for AI Infrastructure

• Threats to the Hyperscalers:
  • OpenAI moving beyond reliance on Microsoft, pursuing independence with its own data centers, and entering $300B deals with Oracle ([21:06] Mandeep Singh).
  • OpenAI wants chips from multiple vendors (AMD, Nvidia) to reduce dependency and gain bargaining power.
• Nvidia’s Position:
  • Still holds moat in training due to chip performance, especially on power efficiency, but faces pressure on margins and pricing from AMD-OpenAI deal ([24:54]-[26:59]).
  • “Nvidia having 75% gross margin… now that OpenAI is saying, ‘I’m going to use AMD’... ultimately Nvidia has to lower its pricing.”
    — Mandeep Singh ([24:56])
  • Not expected that Nvidia would indirectly own AMD via equity “that’s too far-fetched.”
    — Mandeep Singh ([23:06])

6. Economic and Societal Impact of Generative AI

• Cost & Sustainability:
  • High computational costs could limit use cases, especially for generative video tools like OpenAI’s “Sora.”
    • “This technology is expensive... To generate that type of video, you are spending a pretty decent chunk of compute and it’s costing you a lot.”
      — Mandeep Singh ([30:55])
• Job Disruption & Societal Fears:
  • Widespread potential for white-collar job displacement (e.g., coding, customer service, content creation).
  • “Let’s say it gets to the point… AI is just going to decimate some white-collar jobs… who are Meta’s advertisers going to be if none of us have jobs?”
    — Tim Stenovec ([28:49])
  • Dangerous potential for persuasive deepfakes, political misinformation, and endless “stupid stuff” to consume ([29:14]-[30:31]).

7. Investment Perspectives

• Are We in a Bubble?
  • Leslie Marks (McKenzie Investments) argues fundamentals like improved margins support today’s higher valuations, not bubble behavior ([47:05]-[49:52]).
  • Strong earnings momentum, margin expansion, and bullish sentiment are supporting higher multiples.
  • Advocates diversification beyond megacaps, highlighting Japan, gold, and China tech as opportunities ([49:52]).

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Notable Quotes & Memorable Moments

“AMD will sign over stock to OpenAI only when they’ve met specific milestones… OpenAI has to fund, finance, and build 1 gigawatt of capacity… the burden is still on them.”
— Ed Ludlow ([02:13])

“Nvidia commits to making a $100 billion investment into OpenAI… but they do take OpenAI equity. In this case, AMD passes its own shares to OpenAI, but not capital.”
— Ed Ludlow ([03:35])

“The market is simply focused, irrespective of the mechanism for financing, on the revenue growth that comes out the other side.”
— Ed Ludlow ([04:53])

“OpenAI is fast becoming a whale in the stock market that it is shunned. I mean, OpenAI is not a publicly traded company. And yet… shares of companies are moving as a result of this deal.”
— Carol Massar ([09:44])

“The application is the sticky part. It's never the chips or the architecture… we have the best models. We have ChatGPT, the application. So that's the end product.”
— Mandeep Singh ([19:36])

“If I have more compute capacity, one: I can undercut everyone else in terms of offering my model, and I'll be more aggressive with pricing… Just being a model provider is not a good business. That's what OpenAI [is] suggesting.”
— Mandeep Singh ([23:35])

“Let's say it gets to the point where people are getting so good at creating this stuff without actually doing it with skills. ... The concern is that AI is just going to decimate some white-collar jobs—who are Meta platforms' advertisers going to be if none of us have jobs?”
— Tim Stenovec ([28:49])

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Timeline of Key Segments

| Timestamp | Segment / Highlight | |---------------|--------------------------------------------------------------------------------------------------------------------------| | [02:13] | Ed Ludlow explains AMD-OpenAI deal structure and financing uncertainty | | [03:08]-[04:33]| Circular financing and comparison to Nvidia-OpenAI deals | | [05:27]-[06:13]| Discussion of current market logic, examples from other tech deals | | [07:24] | Stocks rallying on OpenAI mentions during the event | | [09:44] | OpenAI’s outsize market impact, even as a private company | | [11:46]-[13:11]| ChatGPT as an operating system and App Store analogy | | [18:41] | Mandeep Singh on AMD’s opportunity and deal context | | [21:06] | OpenAI’s push for hyperscaler independence and chip diversification | | [22:01] | OpenAI’s current financial position – negative gross margins, compute intensity of AI | | [24:54] | Potential impact on Nvidia; pricing pressure from AMD deal | | [26:02] | Market constraints: capacity, power, and lead times | | [28:49] | Societal risks—deepfakes, job displacement through AI | | [30:55] | Cost realities for generative AI content (e.g. Sora); OpenAI subsidies | | [47:05] | Leslie Marks on valuation, fundamentals, and equity market context |

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Tone & Takeaway

Smart, skeptical, and analytical—hosts and guests unpack the hype and unknowns behind headline-grabbing AI deals, always tying the financial engineering back to underlying business models and real-world market impacts. While OpenAI’s moves are fueling unmatched market optimism (and fear), the conversation urges listeners to stay focused on fundamentals—earnings, margins, and sustainable use cases—while acknowledging the rapid societal and workforce changes accelerated by generative AI.

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For those who haven’t listened:
This episode is a fast-paced, insightful look at the intersection of AI’s business boom, tech stock surges, the race for infrastructure dominance, and what it means for both investors and society at large. Expect candid analysis from industry insiders, some cautious optimism, and healthy skepticism on what’s substance and what’s sizzle in AI’s market moment.

Transcript

[Carol Massar]

When we go into a new region, networks matter. Experience matters. For an inside look at the global connections that help businesses succeed, search for Turning Point Brought to you by Bloomberg Media Studios and HSBC Running small and medium sized businesses is hard work. Business owners need to be sure their ads are working just as hard as they do. Amazon Streaming TV ads makes your marketing dollar work harder With Amazon ads, trillions of insights help small and medium businesses reach the right customers that matter. Your ads will show up during the shows the people are actually watching, and measurement tools show you what's working the hardest. Gain the edge with Amazon ads Introducing the all new Adobe Acrobat studio now with AI powered PDF spaces. Do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn [e-mail] do that with Acrobat. Bloomberg Audio Studios Podcasts Radio News this is Bloomberg businessweek Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg businessweek Daily Podcast with Carol Massar and Tim Stanweck on Bloomberg Radio and of course co host of Bloomberg Tech, joining us now from San Francisco where he is at OpenAI's developer day. Hey Ed, who feels like we keep getting these big announcements. We're all getting a bit wary of them. What feels like this circular finance that we've talked with you about among those involved in the air spend and build out. I heard Lisa sue say a win for amd. A win for Open Air feels like a win for everybody. Is it really? Do we know for certain?

[Ed Ludlow]

Well, she also said that she has full confidence in open AI and the reason she said that is I had made the point to her that Open Air still has to come up with the money for this. The difference between the Open Air and AMD deal compared with the Open Air Nvidia deal is the structure. So it's almost the reverse. AMD will sign over stock to Open AI only when they've met specific milestones, both operational and financial. So in the first instance, OpenAI has to fund finance and build 1 gigawatt of capacity. If they do that, AMD will give Open Air some stock or rather technically OpenAI has the right to buy a tranche with shares at a penny apiece, but the burden is still on them. And so the point I was making with Lisa is, have you seen into their books? Where are they going to get the money from to fund this, to bring it online?

[Tim Stenovec]

It is, is it? Could this be weird on the circular financing thing that, you know, in Video could have this deal that could be worth up to $100 billion with open AI, Nvidia's invest $5 billion or will invest $5 billion in Intel. What does that mean? That in video, if they have open air equity, then they're kind of an owner or could be an owner of amd.

[Ed Ludlow]

Exactly. Yeah. It's much more fair to say that the Nvidia Open Air circumstance is circular financing because Nvidia commits to making a $100 billion investment into open AI. We actually don't know if that's in the form of cash or if it would be like chips in lieu of cash. But they do take Open Air equity. In this case AMD pass its own shares to Open AI, but not capital. And so if you're going to build 6 gigawatts of capacity over many years, you know, that is like the peak energy demand of like a major US city. We're talking lots of money up front in capital expenditure and Open Air has got to do that. Now we posed many questions to both Lisa Su and OpenAI President Greg Brockman, who was sat next to her. Will it be debt? Will you issue more equity? Will you do something else? And he basically, Greg Brockman said we'll look at all those mechanisms. And so there are many more questions still we don't have answers to.

[Carol Massar]

Well, that's I guess my thing is like why don't these companies just do deals? I'll buy you chips, I'll do my build, I'll do this thing the way we do it normally rather than all of these big announcements with a lot of questions that feel like we don't really know that there's anything there there.

[Ed Ludlow]

The market is simply focused, irrespective of the mechanism for financing on the revenue growth that comes out the other side, particularly like software name. And so that was the justification that Greg Brockman made. He said the revenue will come. As you know, we've been writing a lot about the debt markets underpinning this and debt investors feel the same way. All I'd say is there is also a technology story. You know, if you're going to build A data center and one of you is providing the chips and the others is going to use the capacity for software. It does make sense to partner and work together to make the engineering make sense.

[Tim Stenovec]

If you're watching on Bloomberg TV or on YouTube or Bloomberg Originals, you got this great graphic up that kind of helps us keep up. This is by no means exhaustive, but shows where some of the money has gone in recent months. When it comes to this space, again, by no means exhaustive there, it's kind of like Carol, we're connecting, really got a whiteboard and we're kind of connecting pieces because to keep these things straight is pretty difficult.

[Carol Massar]

Well, yeah, I mean that's the thing. And you know, we need to all be smart. We are smart. And you know, we keep seeing these deals coming at us. We hear people saying, well, when like a matter of reports and some other, you know, the big hyperscalers. We do see the impact of the air spend, but I do wonder if it's going to carry through our economy like everyone expects.

[Ed Ludlow]

Well, in matters case, for example, they have a core legacy business that is advertising. And in most of the most recent quarters they've demonstrated significant top line growth and to a certain extent bottom line growth, which is them saying, we invested in AI, I made our ads better and more valuable. We're making more money from it. With Chat GPT, it's a lot harder to see that. But that's here at Developer Day, it's really important. So the piece of news that came out from the keynote was they now have 800 million weekly users, active users of chat GPT. The data point that market participants keep hitting me over the head with is how many of those free users are converted to being paid subscribers. Because unless you have that data, we can't know what the top line growth for Open Air looks like. But look in the markets right now, I mean, you guys will have to tell me. I don't have a Bloomberg in front of me, but I saw a pool of about a dozen stocks that jumped in the last hour just because they got name checked by Open Air here today. And it's by association the idea that if using Chat GPT you can access third party apps or third party company offerings, everyone's going to make money. You know, the market has a pretty simple logic in that respect.

[Tim Stenovec]

Yeah, for those who do have Bloomberg's in front of them, just type in and movers into the Bloomberg terminal. Cisco System shares up to session high during Open Air event Figma shares extend gain to 16% after being mentioned at Open Air events. Salesforce shares also jump up 2.6% during the open air event. HubSpot, Zillow, TripAdvisor, Carol, all moving higher as a result of what was talked about at the Open Air event.

[Carol Massar]

And this goes back to Ed. You know, you were trying to press sue and you know, in your conversation and I just. Right. And I just think about what are the big questions that still remain for you? You, what you're, you know, you're reporting on these ins and outs. You're there at this event. We think about Open Air a lot. We talk about Chachi Beat a lot. Who's to say that there isn't some other, you know, chat that comes in and takes over? I don't know, there's just a lot going on. What are the big questions that remain in a day when we get this big announcement? What wasn't answered for you still?

[Ed Ludlow]

Yeah, I think the financing. You know, I think in any corner of the Bloomberg newsroom, you've got to understand the debt markets because look at the role that debt played in previous financial crisis, the dot com bubble, what happened with Silicon Valley bank, what happened in Asia earlier in the 2000. I wasn't around then. But debt is a big underpinning here. And I think the signal that Greg Brockman gave us was they'll look at all mechanisms, including debt. So that's one part of it. On the other hand, this is, I'm a technology journalist and Technology Matters, Open Air is going to use AMD chips for inference. Inference is where you run the model, not training. You are actually running people's queries and workloads. And if you look at all the movers that Tim listed today, what Open Air was basically, basically saying is chatbots becoming an operating system. You use it for a number of functions, but you can also integrate it with all the other software you're using. And actually that's a pretty clear answer to some of the questions about will revenue be generated from this. People use all of these platforms for hours each day and, you know, the market seems to buy that if they can build the capacity of AMD in the timeline that they've said they will, they can actually start doing things of you.

[Carol Massar]

Isn't it wild though? Ryan Vlastelica has this great story and the headline on it is OpenAI is fast becoming a whale in the stock market that it is shunned. I mean, Open Air is not a publicly traded company. And yet Tim put down a bunch of names that are moving As a result of this, this deal, last week we saw Open Air sending shares of e commerce companies like Shopify, Etsy soaring after unveiling an instant buy option in ChatGPT. I mean, it is remarkable the narrative, the market moves that are revolving around Open Air, which again makes me say.

[Ed Ludlow]

What are one of the things that I do each day? Yeah, one of the things I do each day. And I know you guys do it as well. When I first log on to my Bloomberg, I do ni Globe wrap and I look at the markets wrap because they always have a pretty good handle on the sentiment of the morning. And last Wednesday or Thursday it was equity markets push higher on Open Air enthusiasm. It was the confirmation of OpenAI's $500 billion valuation in the private markets that was driving sentiment in the public equity markets and that was well sourced. It's based on lots of conversations with market participants that is again a reflection of the names that Tim read out today. OpenAI, a private company, is driving all kinds of of markets at the moment with what it is saying and to an equal extent, the activity it is doing in both hardware and software.

[Tim Stenovec]

Well, there's a lot of activity happening behind you, Ed, at the Open Air Developer Day conference. In just about an hour, we're going to hear from you again. You're going to be speaking with OpenAI CEO Brad Lightcap. You're going to have a conversation with him that I'm sure is going to touch on a lot of these themes. Before then though, the reason all of these companies are moving, can you talk a little bit about this idea of Open Air or rather Chat GPT because becoming an operating system and how these publicly traded third party companies are starting to use the technology to make their software, to make whatever they're offering the services better.

[Ed Ludlow]

Yeah. For those listening on radio and watching on TV that are familiar with software, what OpenAI announced was very simple API access for several third parties to chat GPT and they demonstrated it on stage. You know, I use chat for hours each day, but the idea is you link it to say your Figma platform or your Spotify account even, and you can use some of the features of those platforms within Chat GPT. That was a sort of direct catalyst to those stocks moving. But what they also spoke about on stage, and Sam Altman did pretty good job of kind of explaining it, is that Chat GPT is going to basically act much like the App Store does on os. Right. With Apple, Paul, you have a community of developers. Those are all the people that are here today. The thousands of them that are building applications. And where will they publish those applications? Well, they'll be reviewed by OpenAI and they will be integrated either as APIs or standalone applications within Chat GPT. That is how the economy around the Android Play store, the Apple iOS store works. You have people build software and then you have a place, a library, a cafe catalog where all of those things list. In some cases, you charge an ad hoc subscription to use those applications. And that's kind of what OpenAI is saying here, that Chat GPT can be very interesting, although it's also contingent on the developer community stepping up and doing it.

[Carol Massar]

Who needs to be worried? Alphabet? Like who needs to be worried? As we watch this unfold and everything seemed to kind of revolve around Chachi Beat OpenAI and as you said, like if this is one of the new big search engines going forward, I mean, Alphabet with its own search engines and making its own pivot, do they need to be worried though?

[Ed Ludlow]

Yeah, I mean, you guys, I actually should have checked and I just did. And I don't know what Apple, Microsoft or Alphabet did during that keynote. I mean, did they go down or up?

[Carol Massar]

Alphabet's right now up about 2%. So it's near its highs of the the session.

[Tim Stenovec]

And if Microsoft's up 2.4%.

[Carol Massar]

Yeah, so at its high of the session, all in, right?

[Ed Ludlow]

Yeah, yeah, yeah. You know, I don't know the answer to that about whether they'd be worried. I mean, we've done a lot of reporting on Open Air going its own way and having more independence from Microsoft. The original idea was that Microsoft would use OpenAI's underlying work in models to improve their own software capabilities. Of course, one of the recent developments is Microsoft is using Anthropic for its own in house software applications and has looked at one of OpenAI's rivals. But you are right, it's about OpenAI wanting to do more across software. You know, one of the other beneficiaries in the keynote was, I think Salesforce. You can correct me, Tim, if I'm wrong. I saw Salesforce as one of the movers servicenow as well. You know, it's just another sales channel in some sense. You can access another person's software through Chat GPT and you know, the market again, its logic is very simple, that it drives use and that's good, you know, when you have a partnership with Open Air.

[Tim Stenovec]

Salesforce shares up 3% right now, up as much as 4.2% during that keynote. Ed Ludlow, he's at OpenAI's developer day.

[Carol Massar]

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[Rick Welts]

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[Tim Stenovec]

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[Rick Welts]

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[Carol Massar]

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[Rick Welts]

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[Tim Stenovec]

Let's bring in Mandeep Singh, global head of tech research at Bloomberg Intelligence. He joins us here in the Bloomberg Interactive Brokers studio. So I just want to start with the validation or not, of AMD's technology here. Ed reminded us that this is an inference deal, not a training deal. But how should we look at this in the context of Nvidia being the standout leader when it comes to this.

[Mandeep Singh]

Tech look, I mean, for amd, there weren't many options. When you look at, you know, Nvidia and Broadcom partnering with all the hyperscalers, AMD clearly has just 2% market share right now. And what do you do when Nvidia announces a big investment in OpenAI to the tune of 100 billion or multi years? And in this case, I think AMD had to do something. So I'm sure they gave a very sweet deal to OpenAI in terms of, you know, the margins they're going to charge OpenAI the level of custom silicon work that they are willing to do for OpenAI. And OpenAI has a great advantage that it can, you know, bargain and really get these sweet deals right now with everyone.

[Tim Stenovec]

A sweet deal meaning here's 160 million shares of our company at a penny apiece, maybe.

[Mandeep Singh]

And look, I mean, I don't know.

[Tim Stenovec]

I mean, this is.

[Mandeep Singh]

Nobody can look that far out. But the fact that Nvidia is willing to spend $10 billion, you know, in OpenAI and AMD gave them this option that they could buy the shares, you know, if it hits a certain level. That just goes to show that OpenAI wants to show that it has the power, not the chip makers. And so over time, if you look at, you know, software cycles, the application is the sticky part. It's never the chips or the architecture. And that's what OpenAI is saying. Look, guys, we have the best models. We have chatgpt the application. So that's the end product. And they want Diversification in terms of the inference capacity.

[Carol Massar]

Listen, we have this chart and for those who are on radio, it's just showing all of the deals that OpenAI is doing or some of companies are. Some of the.

[Tim Stenovec]

Not all of them.

[Carol Massar]

Yeah, whether it's Microsoft, although they've been pulling back and like lining up other deals. You know, I want, we're trying to so hard be smart about this because it's easy to get caught up in it. And it does feel like this has become increasingly a momentum trait. I'm not saying people aren't making money out of it, but how do we make sense? Because is there a chance that open air and ChatGPT is not ultimately the big model or the big next generation search engine for everybody? Like, like how do we be smart about this spend? Because is some of it potentially a fluff fluffy and not going to go anywhere?

[Mandeep Singh]

I know there are references to circular financing and all that, but the best way to think about this is the concentration that you see among the players, whether it's, you know, Nvidia being exposed to the hyperscalers. And now the number of hyperscalers are growing because OpenAI was dependent on Microsoft like you said. Now it's trying to become an independent hyperscale vendor. In fact, they said they may open their own data centers. They have a $300 billion deal with Oracle now. So they want to be a hyperscaler who does end to end work like Google does. It has its own chip. It processes 980 trillion tokens per month. And that's what OpenAI wants to get to that they have their own chips. They use chips from AMD Nvidia and not just rely on one provider.

[Carol Massar]

But they are still a private company. What are, what are things that, that we might not know in their financials.

[Mandeep Singh]

Right now that they have negative gross margins. And so one of the ways that they are trying to fix that is by arbitraging against the semiconductor chip makers who are giving them the compute capacity. And we know that this stuff, like one of the things with generative AI, it's very compute intensive.

[Carol Massar]

Right.

[Mandeep Singh]

And it's not changing. Even though we have GPT5. Like there's nothing that has changed in terms of compute efficiency. It still requires 10 times more compute than your CPUs that were used for, you know, traditional software. So it is an expensive technology.

[Tim Stenovec]

Okay, hold on though. You said, you know, I don't, I don't want to push aside the circular financing thing because this is kind of blowing my mind here. Yeah, If Nvidia has a deal with or with Open Air, that's up to $100 billion. So let's say Nvidia gets equity and OpenAI as a result of that. Yeah. Then OpenAI then gets equity in AMD as a result of this deal. Would that essentially mean that Nvidia is an owner of amd?

[Mandeep Singh]

No, I think that's too far fetched. I mean, think of companies having minority stakes. So there are instances where Google has a minority stake in Lyft. You know, there's so many instances because.

[Tim Stenovec]

Google Ventures was an investor in it early on and that's Google's venture capital arm. And you can see that within and in the past within Google's Maps application, it used to suggest, I don't know if it still does. It would suggest Lyft rides. It made sense. Yeah. And so look in this competitors though.

[Mandeep Singh]

Because the numbers are getting so big. I mean, you need financing from somewhere right now. It was the hyperscalers. The four hyperscalers were the biggest buyers of AI data center infrastructure capacity. They were the ones who were building it. And now it's like OpenAI is saying we want to be in the business of building AI data centers because they look at Google and say they're running their data centers a lot more efficiently than we are, even though we have an alliance with Microsoft. So OpenAI's big bet is if I have more compute capacity, one, I can undercut everyone else in terms of offering my model and I'll be more aggressive with pricing. And once I have the customer on board, I can sell him more services. But just being a model provider is not a good business. That's what OpenAI suggesting, that having the best model is not a good moat. Ultimately, everyone will catch up in terms of their model capacity and then they will go across different models.

[Carol Massar]

So they're evolving very quickly.

[Mandeep Singh]

They are. And that's the big bet that they're making, is if I have my own infrastructure and I have my own application, I'll be aggressive with pricing.

[Carol Massar]

So who needs to be worried then? Do the hyperscalers and their big data center built like who needs to be worried here?

[Tim Stenovec]

Nvidia.

[Carol Massar]

Nvidia.

[Mandeep Singh]

I mean, clearly Nvidia having 75% gross margin, they really have the best chip out there, they have the best system. But now that OpenAI is saying, I am going to use AMD and I have incentive that AMD does, well, who does it hurt? Ultimately Nvidia has to lower its pricing. In fact, the $10 billion investment is a way for Nvidia to lower its prices. For OpenAI, they're not doing it directly, but they're giving a $10 billion rebate saying, okay, you buy certain capacity for a 1 gigawatt data center, we'll give you $10 billion rebate. That's lowering your gross margins.

[Tim Stenovec]

Nvidia shares down about 1% right now. Still, though a $4.5 trillion company.

[Carol Massar]

But doesn't that Nvidia open. I feel a little weird, that deal.

[Ed Ludlow]

Why?

[Tim Stenovec]

What do you mean? What do you mean?

[Carol Massar]

Well, because it's like they're fueling, right? Like the selling of Nvidia chips and.

[Tim Stenovec]

Then giving here's money, here's money that you are then going to pay back to us.

[Mandeep Singh]

And look, the biggest constraint right now.

[Carol Massar]

Is powering almost false demand, which makes me a little nervous.

[Mandeep Singh]

No. So I want to concede Nvidia has by far the best chip when it comes to power constraints that are, I think, the biggest limiting factor when it comes to build out. You, like we talk about lead times, power has the longest lead time out there out of all the supply chains that we have seen. It's just not fathomable to, you know, add more gigawatt capacity takes time. It's very long lead time. And so from that perspective, Nvidia chips are the most performant when it comes to the power that's available. That's why everyone buys Nvidia, and that is a moat. But now what OpenAI is saying is we will help AMD customize their chip to the extent that they can offer us a viable alternative for inferencing, not for training. We'll still train our models using Nvidia because it's the best chip. But for inferencing, we will help handhold AMD and customize their silicon so that we can use it for inferencing.

[Tim Stenovec]

Are you done? Because I have. I want to change the subject.

[Carol Massar]

No, no.

[Tim Stenovec]

But I want to make sure you're satisfied.

[Carol Massar]

But it's just. I am satisfied. But it just makes sense. I think this market is evolving.

[Tim Stenovec]

So Carol asked Mandeep, like, who should be worried? And I thought Mandeep was going to say all of us, all of you, everybody. Because I've been seeing what OpenAI is doing with Sora over the last few days. Have you guys seen these videos? So in some cases, you have people who are able to use this making videos of Sam Altman going on ice raids or Sam Altman stealing GPUs from somewhere, or you have somebody in Hollywood Showing the effect that it could have on Hollywood. And he put like a, you know, a main character from a Netflix show copyrighted, certainly in an, in a video. I think it was, maybe it was with Shrek, I don't even remember. Like this. The stuff looks not quite, it's not quite there. It's not quite there, but it does look like a friend of mine can jump off a building like Superman or Stephen Hawking in a famous case. Now the last few days is in a half, half pipe at the X Games. I mean this stuff is pretty incredible.

[Mandeep Singh]

Yeah, I mean the number of creators I think will grow. You can become a creator. You don't need a camera or you know, a professional set up to do that.

[Tim Stenovec]

Scary.

[Mandeep Singh]

It is scary. But with that being said, everyone out there is competing for engagement time. That's what all of these companies are doing, whether it's Metta or Alphabet with YouTube and look for Meta or TikTok, it's all about keeping people on their platform. Now if Sora is able to generate good content that people are engaging with, suddenly that attention time span shifts from meta to soar.

[Tim Stenovec]

Okay, I want to paint a bleak future for us because this is what's.

[Carol Massar]

Going through head because are we engaging with stuff that we should be engaging with is kind of my thing.

[Tim Stenovec]

Let's say it gets to the point where the people are getting so good at creating this stuff without actually doing it with skills. Okay, so we're already in a low hire, low fire environment right now. The concern is that AI is just going to decimate some white collar jobs who are meta platforms advertisers going to be if none of us have jobs and can afford to spend any money on anything because AI has just displaced us?

[Mandeep Singh]

Well, I mean, look, I think is that bleak enough? Anything else? Right now the biggest use case out there for generative AI is coding agent. I mean, imagine the developer community has always been highly sought after and they will have to, you know, transform in terms of their jobs changing and how they use these tools. So to my mind, you know, customer service, coding agent. These are the type of profiles that are illustrative of the power of generative AI in terms of bringing productivity around. What is the current workflow? And everyone seems to be adjusting and evolving. Everyone talks about how productive the developers are there. Every hyperscaler has said their developers are 30 to 35% more productive because of generative AI.

[Tim Stenovec]

I mean, so that's one side of it, that's he's the optimist, he's Always the optimist. Because here you and I are just thinking, okay, well, no one's going to be working and everyone's going to be convinced by deep fakes. I know you're concerned about the political implications of something like this.

[Carol Massar]

I'm just concerned about.

[Tim Stenovec]

You seen these videos? They're insane. Yeah.

[Carol Massar]

I'm not happy about the political videos. And I am concerned about a society where we're just glued to our phones watching stupid stuff and. Forgive me.

[Rick Welts]

Yeah.

[Carol Massar]

I don't know if I can say this, but I'm going to go there and I just. I wonder at what point is it just too much or is that just a small percentage of where all of this is going? And, I mean, Tim and I have used Chachi PT for work and we see the productive element of it. So I just, I wonder, is all the silly videos just a small portion?

[Mandeep Singh]

So I want to go back to the cost comment that I made earlier. This technology is expensive. To generate that type of video, you are spending a pretty decent chunk of compute and it's costing you a lot. So now I think at some point.

[Carol Massar]

But who spent. Who's paying more? Exactly.

[Mandeep Singh]

Right. OpenAI subsidizer.

[Tim Stenovec]

Your electric bill.

[Mandeep Singh]

Electric bill, yes. You are paying up true power. Absolutely right. And also OpenAI subsidizing. There will be a point when they will be under pressure to show profitability. And then you have to figure out what are the solid use cases that you want to continue with.

[Carol Massar]

Right.

[Mandeep Singh]

And what are the ones where you're spending compute for an output that is not even as good as, you know, an average human produced output. And so that's where the cost benefit analysis, I think, will weed out a lot of the use cases where you're just throwing compute and the output may not improve or the curve is just too steep.

[Carol Massar]

Right.

[Mandeep Singh]

And you just can't keep spending more compute and consuming more power that is inflating a lot of things that you don't want to see.

[Carol Massar]

No, you're absolutely right. That makes a lot of sense. I've already said to my husband, you know why our power bills are high. Blame. I. It's not my fault. It's because I left lights on.

[Tim Stenovec]

Turn the light off.

[Carol Massar]

Which he does say, Mandeep saying, oh, thank you.

[Tim Stenovec]

We go everywhere with them.

[Carol Massar]

I know. What?

[Tim Stenovec]

We go everywhere with them.

[Carol Massar]

I know, I know. I mean, you're just the best. Thank you. As always. You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoon from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg business app or watch us live on YouTube. All right. As you know, obviously talking a lot about finance as we do here regularly at Bloomberg, which also means the intersection of finance, investors and sports in a big way. Rick Weltz has been in the job as chief executive officer of the Dallas Mavericks for a little more than nine months. Took over as CEO of the NBA franchise. That was on January 1st of this year following St. Marshall's nearly seven year tenure. His career spans nearly 50 years in sports and entertainment. He has held roles as president and CEO of the Golden State warriors, president of the NBA's Phoenix Suns, the WNBA's Phoenix Mercury and the NBA's senior vice president, chief Marketing officer and also president of NBA Properties. To say he has seen a lot is not even fair. Let's head to the Bloomberg News bureau in Dallas. With us is Rick Weltz, CEO of the Dallas Mavericks and Bloomberg News Texas bureau chief Julie Fine who watches and reports and talks about this space so much. Rick, it's great to have you there in Dallas with Julie. I just want to start with that intersection of business and sports investors in sports. 20 minutes ago we were talking with Jim Esposito, president of Citadel Securities. Every day it seems or every week we have a story about Apollo Ares, different investment firms, the money in sports. You've been in the world for a long time, seen the rise of money in sports and the rise of financial firms in sports. Is this a good thing in your view?

[Rick Welts]

Well, it's not only a good thing. I think it's an essential thing really. When you look at the, the valuations of franchises today, there's really a smaller and smaller universe of individuals who would either choose to or have the ability to, to purchase a major league sports franchise today. So private equities involvement is going to to be something that's going to be absolutely essential going forward.

[Carol Massar]

You know, Rick, when you talk about the future of sports, I do want to get in with you the streaming rights. You know, Dallas Mavericks, they have Mavs television and you actually are one of the few that also have a local deal. So you can see all the games here as well. But what do you see as the future of how we watch sports?

[Rick Welts]

Well, it's unfolding right now. The NBA's entering into a brand new set of broadcast agreements for this season. So we're adding Peacock and NBC, we're adding Amazon prime and we have to go where our viewers are watching us. Right. And especially our younger viewers today who are just accustomed to using streaming as their primary platform in consuming sports.

[Carol Massar]

You know, let's talk a little bit about your viewers and your fans. They had quite a shock last year with the trade of Luka Doncic. You start tonight. You kick off your preseason. Do you feel that you've really managed to bridge that gap with them?

[Rick Welts]

Well, you know, this is my favorite time of year, right, because there's optimism. As I checked the standings this morning, we're undefeated, we haven't played a game and every team, every, every team feels the same way, right? But we had, you know, that trade on February 1st and then this is such a crazy industry, right. 100 days later, on May 12th, with a 1.8% chance of winning the NBA draft lottery, somehow we came away with the number one pick and with that Cooper Flag. And that's, that's what's starting tonight, a new era of Dallas Mavericks basketball.

[Carol Massar]

You know, you talk about the finances of sports. Last year you did lose some sponsors and there were some season ticket holders that were, you know, very upset about this trade. But where did you land now?

[Rick Welts]

You know, sports is such a wonderful thing because it can change on a dime and it did on May 12 with the drafting of Cooper Flag, you know, the most decorated 18 year old player in the history of basketball who plays his first game for the Mavericks tonight. And really everything changes. The optimism going into this season changed the business environment completely. We're third in the league in new season ticket sales, will finish this year ahead in revenue and season ticket sales, which, you know, I wasn't quite sure was going to happen on February 1st.

[Tim Stenovec]

So ahead of the year with season ticket sales now. But on the business question and on the sponsors returning to the organization, can you give us some numbers behind sponsorships or how Flag has affected the way that companies are interested in partnering with the Mavs.

[Rick Welts]

Well, your second point is really spot on because the interest around Cooper Flag and his potential all star career in the NBA. But here in Dallas, it's combined with the optimism and energy around building a new arena and entertainment district to replace American Airlines center where we played for the past 25 years. So it's a wonderful combination from a business standpoint because we have the optimism of the team, but also a really exciting prospect about what we're going to be building in Dallas, which will be the future of our franchise.

[Carol Massar]

Well, that's where we want to go to in terms of what you are building in terms of a new arena. Mavs lease is up in 20, 30, 31. Rick, you share an arena with the Dallas Stars, but you've made it clear that the next arena that you have will be a basketball venue. I think the last time that we all caught up with you at Bloomberg, you said you had narrowed it down to several sites. So what can you tell us, or feel free to announce where you guys are going to do it? We would love to know.

[Rick Welts]

I really, really wish I could do that. We're hoping by the end of 1Q26 that we're going to have identified a site. Listen, our commitment, we've been very clear. We want to be in the city of Dallas and the city has been a great partner to this point in helping us identify sites. Not easy to do because we're looking for a minimum of 50 acres to build the arena and an entertainment district. So not a lot of. Of 50 acre parcels that you can even consider in Dallas. But we have narrowed it down and we're doing our due diligence on those very complicated project. These are very complicated things to get done. But again, we're hoping by the end of the first quarter next year to be able to announce where we're going to be.

[Carol Massar]

Of course, the team owners, the Adelson family, they've made no secret they would like to see casino gambling in Texas. You follow the Texas legislature? I follow Texas. Texas legislature. That did not get anywhere this year. Does that affect really the plans and what's going to be next for the stadium?

[Rick Welts]

No. As we look forward, we don't think the prospects for. For that happening in Texas anytime soon are very likely. So the project that we're going to build has no casino component to it. We're talking about hotels, we're talking about retail, we're talking about restaurants, we're talking about big gathering places and an arena.

[Mandeep Singh]

So.

[Rick Welts]

So there's no. There's no casino component.

[Carol Massar]

Something you don't see that often is a team opening their preseason not in their arena. You will be playing tonight in Dickey's in Fort Worth, a much smaller arena. And that's really where people will get their first vision of Cooper flag. You know, can you talk about that decision and what you're hoping comes out of the evening?

[Rick Welts]

Yeah, well, it was really in Covid when the commitment was made to play this game. The fact that it's going to be Cooper's first game in a Mavericks uniform in our home market, and we think of Dallas, Fort Worth as our home market. I think Fort Worth looks at the Mavericks as their NBA team. So I think it's going to be a super exciting night. It's going to be the first time we'll get to see Cooper. And I think there's a big, big, big buzz about that.

[Carol Massar]

I think there's people that are interested in seeing Cooper globally. Speaking of global sports, the World cup will be holding nine matches in Dallas. That's the most in any city in North America. You know, what does that do for this city in terms this whole area, in terms of being branded really a sports town?

[Rick Welts]

I don't think people yet realize the impact this is going to have. This is. The whole world is going to be focused on this. And I'm, I'm a huge soccer fan, you know, maybe this far behind NBA basketball. I own an ownership interest in a couple soccer clubs. So I think what's going to unfold here is really, really going to put Dallas on the map as a soccer mecca.

[Tim Stenovec]

Hey, I want to ask a little bit. Julie asked about gambling on site and the potential for that. Obviously that's not going to happen anytime soon. What about those sports gaming and the way that gaming and the ability for people to actually wager on these games has attracted or increased viewership, has attracted or increased engagement. How do you measure that at the Mavs organization?

[Rick Welts]

Well, you know, I think we're all tracking it and watching this unfold in real time because, you know, the argument, you know, Adam Silver was really the first of the commissioners to come out in favor of it and really talking about the level of engagement that it does provide and how people want to consume our games now. So I think, I think it's been nothing but positive at this point. Listen, it's not. The story hasn't been written yet on how this will completely play out, but I think it's been nothing but additive in terms of people's interest in watching games and, and staying and watching more than they have historically in the past.

[Carol Massar]

You mentioned Adam Silver, CBS News reporting last week as the NBA continues to grow its presence over CSR Silver, outlining a vision, a bold vision for the future that could see teams from other continents playing US based franchises in the regular season or postseason. What do you think of that?

[Rick Welts]

I think it's the most exciting time in NBA history. And I think the prospect of that for me, you know, I was hired in 1982 by David Stern, who was commissioner for the NBA for 30 years. I was the 35th employee of the NBA league office and he's not with us anymore. But this would really be the culmination of that dream. The path that we went on to really understand. Basketball is the only other sport played worldwide other than soccer and the NBA is a very unique league where all the best basketball players in the world play in one league. The idea that we could have another league in Europe, what we're doing in Africa today with with our league in Africa, I think it's really the most exciting time ever for the globalization of our sport.

[Carol Massar]

Rick seconds, Are you having more fun today or are back in 1969 when you began as a ball ball boy with the Supersonic?

[Rick Welts]

I think I have the same level of excitement going into tonight's game as I probably did that first day I walked into Seattle supersonics locker room.

[Carol Massar]

That's a good place to be. Thank you so much. Really appreciate your time always that you give to Bloomberg. Then of course is Rick Welch, CEO of the Dallas Mavericks. And of course our thanks as well to Julie Fine. She is Texas Bureau Chief for Bloomberg News.

[Tim Stenovec]

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

[Rick Welts]

You're thoughtful about where your money goes. You've got your core holdings, some recurring.

[Tim Stenovec]

Crypto buys, maybe even a few strategic.

[Rick Welts]

Options plays on the side. The point is you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long long haul. Stocks, bonds, options, crypto. It's all there plus an industry leading 3.8% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com paid for by Public Investing. All investing involves the risk of loss.

[Carol Massar]

Including loss of principal. Brokerage services for U.S. listed registered securities.

[Rick Welts]

Options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC Crypto trading provided by BAKKT Crypto Solutions LLC. Complete disclosures available at public.com disclosures okay.

[Carol Massar]

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[Tim Stenovec]

Right now we want to bring in Leslie Marks. She's joining us this afternoon. Really appreciate her taking the time. She's CIO for equities at McKenzie Investments. The firm has $228 billion in assets under management. She joins us from Toronto. Leslie, good to have you with us on the program. Thanks for your patience. We're juggling a lot of of live interviews all over the country right now, so appreciate it. Look, the story that we've been covering today is has to do with everything with regard to AMD OpenAI OEMD shares up 25% right now. The environment with regard to the investments that are being made in private companies and public companies. How are you looking at it with AI?

[Carol Massar]

Well, exactly. I mean AI is definitely the dominant thematic that is driving public equity markets markets today and I think that people are looking at equities. And you're hearing people talk about, you know, and I heard you and Carol both talking about the comparisons between today and the 1999, 2000 era, as well as people inferring that, you know, are we in bubble conditions here based on some of the deals? I don't think so. I mean, I think that the people that talk about us being in a bubble right now are those that maybe aren't long equities or, you know, are underweight equities. And so there's some, you know, speaking their own book. You know, I just go back to as an equity person, fundamentals. And the two primary fundamentals that an equity investor needs to focus on are earnings and what do we pay for those earnings? And that really comes a lot of which comes from, of course, sentiment, which is extremely bullish right now, but also the outlook for interest rates. And I think your listeners have a very good understanding that a lower interest rate environment is generally good for multiples. So let's spend a minute here to just to talk about earnings, because earnings has been the big surprise or upside surprise in 2025. When you look at the factors that are driving equities, it's been primarily, of course, price momentum. The things that are going higher are what people want, of course, but also earnings moment has been a top factor. And earnings momentum is a very strong fundamental that we can really anchor ourselves on and say that actually with these companies reporting strong earnings, we can feel comfortable with the higher valuations that they're trading at today. All right, so is that you saying you are comfortable with the valuations that we're seeing today? Yes. And I think when you look at valuations, what people point to mostly when they say that valuations are stretched is the valuations today versus historical. But what you have to think about is today the margin profile of The S&P 500 is much higher than it has been historically. Ten years ago, the net margin for the S&P 500 was about 10%. Today it's 13 to 14%. So you actually should be paying more for equities today than you have historically.

[Tim Stenovec]

That's so interesting to hear because I think there's a lot of people who are looking around right now saying this doesn't necessarily feel like a comfortable environment to buy. And you said that. Okay, well, people who might feel that way maybe aren't long equities. But what would you say to somebody who does have cash deployed in markets right now? How do you do it with valuations like this?

[Carol Massar]

Well, I would say the most important thing for someone looking, you know, to get into the market where, you know, I totally understand the bias and the anchoring. If you're not there right now, why you would feel uncomfortable investing at, at these levels. But there are lots of opportunities and you have to be thinking about diversification. You know, when you look at what happened in Japan overnight, to see that market up over 4.5% overnight, that's incredible. And it just highlights that there are opportunities that go beyond the top 10 names in the S&P 500. And that's where investors should be looking. They should be looking to diversify their holdings. You mentioned that. I'm sitting here in Toronto right now in Canada, the S and P TSX has been an outperformer when compared with the S&P 500. That might surprise people, but gold has been a big driver of that market. When you think about gold being at record highs, it's been a big driver of the S and P tsx both on a price basis and earnings growth. So when investors are looking at, you know, where should I invest or should I invest today, we would say to them, look at diversifying your opportunities because there are opportunities globally. I mean, China is going through a very exciting time here around their technology, electric vehicles, robotics. You're seeing a lot of interest building in China, Leslie. So I think that, yeah, forgive, forgive, but we've got to run. We've got a closing bell just coming at us. But we really appreciate your input. Leslie marks over at McKinsey Investment. This is the Bloomberg Businessweek Daily podcast available on Apple, Spotify and anywhere else you get your podcast. Listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal. Mint is still $15 a month for premium wireless. And if you haven't made the switch yet, here are 15 reasons why you should. One, it's $15 a month. Two, seriously, it's $15 a month.

[Ed Ludlow]

Three, no big contracts.

[Mandeep Singh]

Four, I use it.

[Ed Ludlow]

Five, my mom uses it.

[Mandeep Singh]

Are you, are you playing me off? That's what's happening, right?

[Carol Massar]

Okay, give it a try. @mintmobile.com Switch upfront payment of $45 for three month plan. $15 per month equivalent required. New customer offer first three months only, then full price plan options available, taxes and fees extra.

[Tim Stenovec]

Cmintmobile.com Bloomberg Screen time is where creators and capital connect. My name is Lucas Shaw and I'll be inter leaders like Warner Bros. Pam.

[Carol Massar]

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[Tim Stenovec]

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[Carol Massar]

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[Tim Stenovec]

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[Carol Massar]

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[Tim Stenovec]

You can get your [e-mail] screentime and thanks to our presenting sponsors AWS and Coriant, as well as the supporting sponsors Nielsen, Turkish Airlines and Weil, Gottschall and Manges.