OpenAI recently signed a computing power agreement worth approximately $1 trillion, an astonishing figure far exceeding its current funding capacity, highlighting the company's bold bet to ensure its dominance in the AI field.

Massive Commitments and Massive Losses

Analyst Gil Luria from DA Davidson told the Financial Times: "OpenAI does not have the capability to make any of these commitments." The company is expected to lose about $10 billion this year, while its annual revenue is currently only around $12 billion, far below the scale of its commitments.

These agreements with Nvidia, AMD, Oracle (甲骨文), and CoreWeave will provide OpenAI more than 20 gigawatts (Gigawatts) of computing power, roughly equivalent to the power generated by 20 nuclear reactors. OpenAI executives estimate that the cost of each gigawatt of AI computing power is approximately $5 billion, making the total cost close to $1 trillion.

However, CEO Sam Altman said on Monday that "profitability is not on my top ten concerns," indicating his confidence in the company's long-term prospects.

Clever Circular Financing and Equity Transactions

To support these astronomical deals, OpenAI has adopted a clever circular financing structure:

  • Nvidia: Plans to invest $10 billion in OpenAI, which can then use the funds to purchase Nvidia's chips.

  • AMD: Will provide OpenAI with warrants, allowing it to purchase up to 10% of AMD's shares at just one cent per share.

The announcement of these partnerships immediately boosted the stock prices of the partners: Oracle's market value jumped by $244 billionAMD's stock rose nearly 24% on Monday.

A "Capital-Intensive" Company Lacking Cost Discipline

A Silicon Valley investor told the Financial Times that OpenAI's capital intensity far exceeds that of Google or Microsoft, and that "there was no cost control from the beginning." The investor added that Jeff Bezos, founder of Amazon, and Larry Ellison, founder of Oracle, learned to cut costs only after nearly going bankrupt.

OpenAI has so far raised about $47 billion in venture capital and is preparing to take on hundreds of billions in debt. Partners and investors are betting that OpenAI can significantly expand its user base and successfully monetize new products