OpenAI has signed agreements worth over $1 trillion to secure AI computing power
OpenAI has signed contracts worth approximately $1 trillion with tech giants Nvidia, AMD, Oracle, and CoreWeave to secure the necessary computing power to develop its artificial intelligence models, including ChatGPT, Financial Times reports.
These agreements give the company access to more than 20 gigawatts of computing power over the next decade — roughly the same amount produced by 20 nuclear reactors.
According to OpenAI estimates, each gigawatt of computing infrastructure costs about $50 billion, bringing the total value of the deals to $1 trillion.
OpenAI signed its latest contract with AMD on Monday. The company had previously entered into similar agreements with Nvidia, Oracle, and CoreWeave in an effort to secure access to the resources it needs for further scaling.
According to the Financial Times, the partnership with Nvidia could cost OpenAI up to $500 billion, with AMD — up to $300 billion, and the deal with Oracle — another $300 billion. CoreWeave has already announced contracts with OpenAI worth
All these agreements form a financial network of interdependencies, where large corporations partially finance OpenAI and, in return, receive growth in their own market value and access to joint projects.
Lack of capital and “circular” investments
Analysts in the FT comments note that OpenAI does not have enough capital to independently finance such large-scale commitments. It is estimated that the company could lose about $10 billion in 2025 due to huge expenses for infrastructure, chips, and personnel.
“OpenAI is currently unable to make such commitments,” says DA Davidson analyst Gil Luria. “This is a classic example of the Silicon Valley approach of ‘fake it till you make it’ — get as many players as possible involved in the game.”
However, OpenAI receives significant financial incentives from its suppliers.
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NVIDIA plans to invest $100 billion in the company over the next 10 years, providing funds for OpenAI to purchase its chips.
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AMD has granted OpenAI warrantsa security that entitles its holder to purchase a certain number of shares in a company to purchase up to 10% of its shares at $0.01 per share if joint projects achieve certain goals, particularly those related to AMD’s market share price.
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AMD’s shares rose nearly 24% after the deal was announced, and the company’s market capitalization increased by $63 billion. Similarly, Oracle’s market value rose by $244 billion after the partnership was announced.
Financing and debt
To support its growth, OpenAI is attracting large amounts of investment and debt financing. Last year, the company received a $4 billion bank loan and approximately $47 billion in venture capital investments (a significant portion of which was negotiated with Microsoft, the company’s main partner).
OpenAI is currently preparing to raise tens of billions of dollars in debt financing to develop its infrastructure. The company has already been valued at $500 billion.
However, rating agencies such as Moody’s have expressed doubts about how profitable the OpenAI model can be: many partners, including Oracle, are now heavily dependent on its success.
CEO Sam Altman acknowledged that profitability is not a priority at this time:
“It’s not even in my top 10 priorities. We are currently in an investment and growth phase. But obviously, at some point, we need to become very profitable, and we are confident and patient that we will achieve that,” he said.
Read more: Every week, 800 million people use ChatGPT
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