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AMD and OpenAI have inked a significant AI chip supply pact, potentially worth over $100 billion, marking a key development in the AI infrastructure race. Bitcoin has also surged to new peaks above $125K, driven by safe-haven demand amid concerns about a potential US government shutdown.

With both AMD and Bitcoin making major moves, the attention now turns to how the partnership may affect the AI chip market and what other implications the digital assets may have on traditional safe haven assets.

In today's financial recap:

  • AMD-OpenAI Team Up to Tackle AI Chip Demand

  • Bitcoin Surges Past $125K on Safe-Haven Demand

  • SWIFT and Big Banks Build Blockchain Network

  • Hong Kong Bolsters Financial Role as China's Fintech GatewayHong Kong Bolsters Financial Role as China’s Fintech Gateway

AMD-OpenAI Team Up to Tackle AI Chip Demand

The TradeWatch: AMD and OpenAI have signed a multi-year AI chip supply agreement, potentially worth tens of billions annually, giving OpenAI the option to acquire up to 10% of the chipmaker.

Unpacked:

  • AMD’s deal with OpenAI to supply AI chips is expected to generate tens of billions in annual revenue and more than $100 billion over four years due to the agreement’s ripple effect.

  • AMD’s CFO, Jean Hu, stated that the partnership with OpenAI is expected to deliver substantial revenue for AMD and enhance OpenAI’s AI infrastructure buildout while noting that the arrangement is expected to be highly accretive to AMD’s earnings and that AMD stock rose as much as 35% but later decreased to 24.78% and encouraged users to View Quote Details.

  • The agreement stipulates that OpenAI will have the option to purchase up to 160 million shares of AMD, representing roughly 10% of the company, with shares vesting as AMD meets specific milestones for delivering its MI450 chips.

Bottom line: This partnership underscores the intense competition in the AI infrastructure market, especially as OpenAI seeks to diversify its chip suppliers. The deal not only benefits AMD financially but also validates its AI chip technology as a viable alternative to Nvidia.

Bitcoin Surges Past $125K on Safe-Haven Demand, Record ETF Inflows

The TradeWatch: Bitcoin soared to a record high, exceeding $125,000, fueled by U.S. government shutdown concerns and massive crypto ETF inflows.

Unpacked:

  • Bitcoin’s surge occurred amid growing fears of a U.S. government shutdown, driving investors towards it as a safe-haven asset.

  • Record inflows into spot Bitcoin ETFs, reaching ~$3.2B last week, significantly contributed to the price surge.

  • Grayscale has launched the first US-listed spot crypto ETFs allowing staking which highlights a growing acceptance and evolution of crypto investment products.

Bottom line: Bitcoin’s record-breaking run signals its increasing acceptance as both a mature asset and a hedge against traditional market instability. This milestone underscores the growing integration of cryptocurrency into mainstream finance.

SWIFT and Big Banks Build Blockchain Network to Revolutionize Global Payments

The TradeWatch: SWIFT, in collaboration with over 30 major banks, is developing a blockchain infrastructure for real-time, 24/7 cross-border payments compatible with stablecoins and CBDCs, modernizing the global payments system.

Unpacked:

  • The initiative seeks to establish a shared digital ledger, enabling instant cross-border payments and bridging traditional banking with digital currencies.

  • Swift’s blockchain overhaul directly addresses the slowness and expense of traditional wire transfers, which can take days to settle.

  • The heavyweight banking consortium backing this includes JPMorgan Chase & Co. and HSBC Holdings plc, signaling a major shift in how institutions approach digital assets.

Bottom line: This move signals that the wall between traditional finance and digital assets continues crumbling as banks are building the plumbing to move them at scale. Swift’s strategy appears to be: if you can’t beat them, interoperate with them.

Hong Kong Bolsters Financial Role as China’s Fintech Gateway

The TradeWatch: UBS China chief Janice Hu highlights Hong Kong’s crucial role as a bridge between mainland China and global capital markets, particularly in fintech innovations like stablecoins and tokenized assets.

Unpacked:

  • A surge in cross-border flows this year underscores Hong Kong’s enduring role as China’s financial springboard, enabling initiatives like the Belt and Road by providing equity bridges to Central Asia.

  • The city’s frameworks for digital assets, from licensing stablecoin issuers to exploring tokenization, are closely watched across the border as Beijing considers the next steps in digital assets.

  • Beijing moved to cement Hong Kong’s role as an international finance centre when the China Securities Regulatory Commission unveiled measures designed to deepen connectivity and broaden the city’s product base.

Bottom line: Hong Kong’s unique position allows it to serve as both a conduit for capital and a testing ground for financial experiments, solidifying its importance in China’s global financial strategy. This evolution is key to understanding shifting dynamics within the global fintech ecosystem, especially in the Asia-Pacific region.

The Shortlist

  • AI surges as Q3 venture funding reports another huge wave, with Anthropic, xAI, and Mistral AI among those raising substantial rounds.

  • Analyst remains bullish on Palo Alto Networks amid a heightened focus on AI safety and cybersecurity investment.

Cheers,

— Michael & the TradeWatch.io editorial team