He’s not done yet! Warren Buffett might be stepping down as CEO of Berkshire Hathaway, but he’s still got some tricks up his sleeve. Experts of the Oracle of Omaha explain why they’re excited about his recent $9.7 billion deal.
In today’s big story, OpenAI announced another deal focused on securing more compute power, as the tech world’s big bet on AI infrastructure continues to swell. But there’s also a key missing piece.
What’s on deck:
Markets: The bullish case for how gold could rise 150% by the end of the decade.
Tech: Tesla has been teasing a big announcement coming today.
Business: CBS News has a new leader. And it’s a sign of David Ellison’s era as a media mogul.
But first, you can call me Costco, because I’m buying in bulk.
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The big story
Open for deals
Andrew Harnik via Getty Images
It’s a day that ends in “y,” which means OpenAI is cutting another deal for more compute power.
The high-profile startup announced a multi-billion-dollar partnership with AI chipmaker AMD as part of OpenAI’s ongoing quest to accumulate as much AI infrastructure as possible.
For AMD, it’s a huge win in its fight to gain ground against Nvidia, the dominant player in the space. With its stock surging almost 40% on news of the deal, AMD investors are surely cheering the move. (Fun fact: Nvidia CEO Jensen Huang and AMD CEO Lisa Su are actually related! You can read more about Su here.)
For OpenAI, it adds to the long list of deals it has recently announced. The news follows a $100 billion deal with Nvidia and $300 billion deal with Oracle, both of which came last month.
If you’re wondering why OpenAI is partnering up with every chipmaker under the sun, BI’s Emma Cosgrove and Robert Scammell have you covered.
Still, as BI’s Ellen Thomas smartly points out, there is a key piece of the AI puzzle that’s missing. OpenAI’s massive collection of computing power is useless unless it has the electricity to power it.
John-David Richardson for BI
The OpenAI-AMD deal also raises a question: When is enough enough?
The mad dash among tech giants to secure AI infrastructure has created the kind of spending spree rarely seen in US history. And it all comes without a clear sign of significant revenue flowing in, writes BI’s Dakin Campbell.
The argument in favor of massive bets on AI infrastructure comes down to a feeling we can all relate to: FOMO (fear of missing out).
If AI changes the world like these tech executives believe it will, that requires an incredible amount of compute power. And if that’s the case, executives want to be well prepared, lest they risk not having enough. OpenAI President Greg Brockman said as much when talking through the AMD deal.
“We need as much computing power as we can possibly get,” Brockman said.
(As someone who comes from an Italian family, I can relate. My mother would die before she ran out of food during a family party.)
But to what extent is that a valid argument? Especially when the business case for AI is still being established. The biggest tech players are on track to spend more than $1 trillion on AI infrastructure before the end of the decade.
The convoluted ways companies are structuring these deals also add another layer of complexity and opacity to the entire situation. And constant release of new AI chips makes the actual accounting of the tech spend tricky, too.
The cost also goes beyond dollars and cents. In our series “The True Cost of Data Centers,” BI previously covered the various impacts — from water usage, to pollution, to power — that these buildouts have on the surrounding area. (We’ve also got a video on the topic, if that’s more your speed. And you can check out our interactive map to see if a data center is in your backyard.)
3 things in markets
Getty Images; Tyler Le/BI
1. America’s shopping spree won’t save us from a recession. It’s a typical adage that if American consumer spending isn’t slowing, the economy and labor market will be fine. That contradicts several historic trends, though. Usually, consumption falls after employment materially cracks — and by that time, it’s too late, economist Neil Dutta writes for BI.
2. What investors are looking for this week. The ongoing government shutdown has left the stock market in a weird place when it comes to economic data. That’s led investors to turn to a few items on the agenda this week, from Fed speakers to an update on the job market.
3. This market vet is all-in on gold. Ed Yardeni predicts the precious metal could reach $10,000 an ounce by 2030, or a 151% rise. He cites economic uncertainty and more for his bullish stance.
3 things in tech
Getty Images; Rebecca Zisser/BI
1. Planning a vacation was already a nightmare. Then came AI. The tech has seeped into every aspect of the travel industry, from pricing flights to detecting sneaky smokers in hotel rooms. It’s a cost-cutting tool for travel companies, but that’s not always the case for travellers.
2. Jony Ive has 15 to 20 ideas for OpenAI’s family of AI devices. And they will likely be nothing like an iPhone, Ive told CEO Sam Altman at the startup’s DevDay conference on Monday. The combination of OpenAI and Ive’s design chops poses a potential threat to Apple, which has dominated the mobile era but lags behind in generative AI, BI’s Alistair Barr writes.
3. Tesla is cooking up something new. The EV company recently posted two teaser videos on X, with one flashing the date “10/7.” Many fans think it’s Tesla’s “more affordable” Model Y; others think it’s an update on the new Roadster.
3 things in business
Daniel Paik
1. Bari Weiss is officially the top editor at CBS News. David Ellison’s Paramount Skydance is acquiring Weiss’s “The Free Press.” Read the memo she sent to CBS News staff. Not all staffers will be giving Weiss a warm welcome, though. Five current and former employees across the media outlet and Paramount told BI they had hesitations about the move. Ellison has insisted that he’s not interested in politics, but the moves he’s recently made tip to the right, BI’s Peter Kafka writes.
2. A new media mogul has entered the chat. Speaking of David Ellison, his decision to tap Bari Weiss as head of CBS News says a lot about his new tenure atop Paramount. Mainly, that he doesn’t plan on just being a walking checkbook for the legacy media companies in his portfolio. Instead, Ellison seems intent on making big moves that could both shock and invigorate his brands.
3. Verizon’s new CEO is a (somewhat) familiar face. Former PayPal CEO Dan Schulman is replacing Hans Vestberg as the company’s new chief executive. Schulman has served on Verizon’s Board of Directors for seven years and held leadership roles at AT&T, Virgin Mobile, and more. Read his first memo to staff.
In other news
What’s happening today
It’s Amazon’s October Prime Day.Samsung issues Q3 pre-earnings guidance.Tesla expected to make a product announcement.
Dan DeFrancesco, deputy executive editor and anchor, in New York. Hallam Bullock, senior editor, in London. Grace Lett, editor, in New York. Amanda Yen, associate editor, in New York.
