OpenAI Secures Trillion-Dollar Deals for AI Computing Power Despite Potential Losses
OpenAI, the artificial intelligence (AI) research firm, has struck multi-billion dollar deals for computing power, with its CEO Sam Altman stating that profitability is not a top priority. These agreements, worth around a trillion dollars, have already boosted partners' stock values significantly.
OpenAI's ambitious expansion has raised eyebrows among investors. Todd Lemkin from Perimeter investment firm warned in the Financial Times that OpenAI operates in a capital-intensive field, lacking Google or Microsoft's cost discipline. Despite this, OpenAI is set to incur around $10 billion in losses this year.
The deals involve complex financing structures. Nvidia, for instance, is investing $100 billion in OpenAI to secure purchases of its chips. AMD, meanwhile, has offered OpenAI options to buy up to 10% of its company at a cent per share. These agreements have given partners massive stock gains, with Oracle's market value increasing by $244 billion and AMD rising by 24%.
OpenAI's executives estimate that each gigawatt of AI computing capacity costs around $50 billion. The deals with Nvidia, AMD, Oracle, and CoreWeave have granted OpenAI access to more than 20 gigawatts of computing power. However, analyst Gil Luria notes that OpenAI lacks the capital to fund these commitments. OpenAI has raised around $47 billion in venture capital and is now preparing to take on tens of billions of dollars in debt.
OpenAI's pursuit of computing power, despite potential losses, signals its commitment to advancing AI technology. The company's ability to secure such massive deals, despite financial concerns, reflects its influence and potential in the tech industry.
Read also:
- Amazon Halts Drone Deliveries After Arizona Crashes
- US Energy Transition: Coal Plants Struggle, States Push Renewables
- Musk threatens Apple with litigation amidst increasing conflict surrounding Altman's OpenAI endeavor
- U.S. Army Europe & Africa Bolsters Regional Security with Enhanced Partnerships & Deterrence
