ChatGPT-maker OpenAI will buy a casino’s worth of chips from Nvidia competitor AMD, the two companies announced yesterday, as part of a hefty data center deal that’s inspiring both AI confidence and bubble concerns.

Under the deal’s terms:

• OpenAI will buy enough AMD chips over the next several years to generate six gigawatts of power in a bid to boost its computing capacity for ChatGPT. (For context, that’s about as much energy as 5 million US households use in a year, according to The Guardian).
• The two companies’ fates may intertwine—OpenAI will obtain the rights to buy ~10% of AMD for 1 cent per share if OpenAI hits certain milestones and if AMD’s stock price rises.

The deal will generate tens of billions of dollars in revenue for AMD over the next five years, CEO Lisa Su said. This also bestows some street cred upon AMD, which has lagged behind Nvidia in the advanced AI space. Its stock popped ~24% yesterday.

So, what’s the problem?

Similar to Carrie Bradshaw buying designer shoes on a columnist’s salary, it’s unclear how OpenAI is paying for all this. In the first half of this year, the mega startup logged $4.3 billion in revenue, but lost $2.5 billion, The Information reported.

And the deal with AMD comes weeks after OpenAI said it would invest $300 billion to purchase 4.5 gigawatts of cloud computing power from software giant Oracle.

OpenAI also inked a multibillion-dollar agreement with Nvidia last month for the king chipmaker to invest $100 billion in OpenAI over the next decade. The company plans to turn right around and spend it on Nvidia chips.

Zoom out: Despite OpenAI CEO Sam Altman’s bullishness, the recent web of deals is contributing to mounting fears of an AI bubble and concerns about the circularity of investments and customer relationships.—ML

Judge won’t block Trump from sending National Guard to Chicago, for now. Officials from Illinois and Chicago sued yesterday to stop President Trump from deploying National Guard troops to Chicago, as conflicts between the president and Democrat-led areas escalate. A federal judge declined to immediately grant that request, but scheduled a full hearing for Thursday. Trump wants the troops to quell protests of ICE agents’ aggressive immigration enforcement in Chicago. The local officials’ lawsuit argues that he’s motivated by hostility toward the city and its leaders rather than a true emergency. The president also sought to deploy the National Guard to Portland, OR, but a different federal judge blocked that twice over the weekend. The White House is appealing in Oregon, and the President has also said he could invoke the Insurrection Act to bypass the courts.

Fifth Third to buy Comerica as regional lenders consolidate. In what Bloomberg calls the biggest US bank deal this year, Fifth Third said it would acquire Comerica for $10.9 billion in stock. The acquisition, expected to close in the first quarter next year, would create the ninth-largest bank in the country with $288 billion in assets. The announcement sent Wall Street tongues wagging about whether a wave of consolidation could be coming to regional banking, as smaller banks look to compete with giants like JPMorgan and may want to take advantage of the Trump administration’s more open stance toward big mergers.

Talks toward ending Gaza war began in Egypt. Yesterday, on the eve of the two-year anniversary of the Oct. 7, 2023, attack that prompted the war in Gaza, Israel and Hamas started indirect talks in a Red Sea resort town to discuss President Trump’s 20-point peace plan. Both sides are under pressure to agree to a ceasefire, but they are also believed to be far apart on key issues—including whether Hamas will disarm and the withdrawal of Israeli troops. Going into the discussions, Hamas said it would agree to release its remaining hostages in exchange for a release of Palestinian prisoners held by Israel, but those details are still being hashed out as well. The White House is pushing for the talks to move quickly, and the initial phase is likely to take several days.—AR

The role of Prime Minister of France has a higher turnover rate than the Defense Against the Dark Arts teacher at Hogwarts. Yesterday, Sébastien Lecornu became the fourth French PM to resign in 13 months—after just 26 days on the job.

He bid adieu less than a day after naming his cabinet, following protests from parliamentarians across the political spectrum over the inclusion of several ministers from the government that collapsed last month. In a last-ditch effort, French President Emmanuel Macron gave Lecornu until Wednesday to negotiate with opposing lawmakers and find a way forward.

It’s all about debt

Macron tapped his close ally Lecornu last month to form a government, hoping it could pass a contentious belt-tightening budget as the country faces ballooning debt. The budget deficit hit 5.8% of GDP in 2024, the highest it’s been since World War II.

Investors recoiled at the folding of the crew that was supposed to shore up French finances:

• France’s benchmark stock index, the CAC 40, closed down 1.4% yesterday.
• The difference between French and German bond yields—a proxy for how risky investors believe a country’s debt to be—rose to one of the highest levels it’s been in several years.

If Lecornu’s talks fail…Macron would have to find yet another PM, call a snap parliamentary election, or resign.—SK

You can’t make this up—but perhaps Deloitte’s AI could. The company is giving a partial refund to the Australian government after a $440,000 report was found to contain numerous AI hallucinations, the latest example of how consulting firms are grappling with the new tech.

What went wrong? Australia’s Department of Employment and Workplace Relations asked Deloitte to analyze the efficiency of its welfare system. But academics pointed out mistakes in the firm’s report that included citations to nonexistent studies, AFR reported. Deloitte admitted to using an LLM (Azure OpenAI GPT-4o) and later updated the report, but noted that the updates didn’t change its overall findings or recommendations.

A ‘human intelligence problem’

That’s how Australian Labor Senator Deborah O’Neill described the error. The phrase highlights the issues arising as AI takes over the grunt work formerly done by newbie consultants:

• The Wall Street Journal spoke to experts who predict consultancies will reap more benefits from AI work in four to five years, when the tech improves. And in May, Anthropic CEO Dario Amodei said that AI could wipe out half of entry-level jobs at white-collar companies within five years.
• Harvard Business Review points out that this shift in hiring at professional services firms could leave companies wondering where partners, who do the less routine work now, will come from in the future.

Maybe more AI is the answer: Deloitte announced a massive deal yesterday to provide Anthropic’s Claude to more than 470,000 of its global employees over the next few months.—DL

Your Tinder date who made liking craft beer their entire personality might soon have a harder time getting their fix. Craft brewers are in trouble after the industry expanded just as consumer tastes were moving in a different direction, the New York Times reports:

• Craft beer sales dipped 4% in 2024, according to a lobbying group for independent brewers.
• For the first time in two decades, more breweries have closed than opened in the last year and a half.

The NYT attributes the struggles of these small-scale ale makers to a supply and demand problem: There are more than 9,900 craft breweries across the US now, compared to just 4,800 ten years ago. But during that same period, Covid lockdowns that kept people out of bars and brew pubs helped hard seltzers become the drink of choice for many, while others gave up drinking alcohol altogether as new wellness habits took hold. Industry insiders told the paper that more small breweries may tap out amid these trends.—AR