OpenAI has inked roughly $1 trillion in deals for computing power this year.
That’s according to a report Tuesday (Oct. 7) by the Financial Times (FT), which notes that these agreements dwarf the artificial intelligence (AI) startup’s revenues while raising questions about how it can honor those commitments.
The report came one day after OpenAI forged a new agreement with chipmaker AMD, following similar deals with Nvidia, Oracle and CoreWeave, as the company seeks the computing power it projects it will need to power AI offerings such as ChatGPT.
According to the FT, these deals would give OpenAI access to upwards of 20 gigawatts of computing capacity, around the equivalent of power from 20 nuclear reactors, over the next decade. Each 1GW of AI computing capacity costs about $50 billion to use at current prices, per estimates by OpenAI, making the total cost about $1 trillion.
These deals, the report added, have tied some of the world’s largest tech companies to OpenAI’s ability to turn a profit and meet its heavy financial obligations.
The company “is in no position to make any of these commitments,” said Gil Luria, analyst at DA Davidson, who added that OpenAI could lose roughly $10 billion this year.
“Part of Silicon Valley’s ‘fake it until you make it’ ethos is to get people to have skin in the game. Now a lot of big companies have a lot of skin in the game on OpenAI,” he said.
In other AI news, PYMNTS wrote earlier this week about the changing face of AI funding. Billions are still flowing into the industry, “but not where they used to,” that report said.
The largest recent funding rounds went to firms focused on deployment, compute and pricing, the systems that determine AI’s efficiency and potential for profitability.
“The focus is shifting from invention to execution as investors look for what they can scale,” PYMNTS added, citing recent rounds from the likes of Cerebras Systems, which raised $1.1 billion at an $8.1 billion valuation to boost chip production and data center capacity.
“The movement of capital toward companies like these reflects a broader transition. Investors are supporting firms that make AI usable, reliable and measurable, turning research advances into systems that work at scale,” that report said.
“As PYMNTS reported, more than half of global venture investment this year went to AI startups, a trend reflected in this week’s funding activity.”
Source: https://www.pymnts.com/