OpenAI is poised to sign $1 trillion in computing power agreements this year, crucial for maintaining its AI ambitions. Recent contracts with AMD, Nvidia, Oracle, and CoreWeave aim to secure over 20 gigawatts of capacity—equivalent to 20 nuclear reactors. At $50 billion per gigawatt, concerns arise over the viability of this financial strategy, with DA Davidson analyst Gil Luria warning of potential losses reaching $10 billion this year. This spending spree connects major tech players to OpenAI’s uncertain future, with Nvidia and AMD’s combined deals alone amounting to $800 billion. AMD’s CEO described the structure as innovative, yet it raises questions about its practicality. OpenAI’s reliance on significant venture funding and existing debt, coupled with credit agency warnings about the challenges in achieving profitability, signifies a precarious path ahead. Ultimately, this complex financial web could mirror Silicon Valley’s “fake it until you make it” mentality, leaving future stability in doubt.
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