| Over the last few months, OpenAI CEO Sam Altman has been on a tear of dealmaking, announcing multibillion dollar agreements with the biggest tech companies in the world. He's committed to spending a grand sum total of $1.4 trillion on datacenters in the coming years — an eyebrow-raising figure for a company which claims its annual revenue is projected to reach $20 billion this year, begging an all-important question: What happens if he can't pay? At an event this week, OpenAI CFO Sarah Friar seemed to suggest that the government could act as a "backstop" for the company's commitments — comments she later walked back. And in a long-winded post on X, Altman addressed the question of what happens to OpenAI if its web of deals falls apart: "If we screw up and can't fix it, we should fail, and other companies will continue on doing good work and servicing customers," Altman said. "...We of course could be wrong, and the market—not the government—will deal with it if we are." The odds don't look great right now. In order to come through on its compute commitments, OpenAI's revenue would have to grow to an estimated $577 billion by 2029, roughly the size of Google's revenue that same year, Tomasz Tunguz, a general partner at Theory Ventures, wrote in a recent blog post. But OpenAI has options. One likely scenario is that the AI company pays for and utilizes only a portion of the compute it has booked, said D.A. Davidson analyst Gil Luria. In that case, companies like Oracle, Amazon, Microsoft, CoreWeave and others will most likely renegotiate the contracts and ensure they get at least some amount of business from OpenAI, especially if the alternative is getting none at all. "They don't want OpenAI to go bankrupt, so their incentive is to renegotiate," he told Forbes. Experts note chief dealmaker Altman doesn't have anything to lose. He has repeatedly claimed he does not have a stake in the company, and won't have a stake even after OpenAI has restructured to become a public benefit corporation. "He has the upside, in a sense, in terms of influence, if it all succeeds," said Ofer Eldar, a corporate governance professor at the UC Berkeley School of Law. "He's taking all this commitment knowing that he's not going to actually face any consequences because he doesn't have a financial stake." As OpenAI has grown in prominence, tech giants have clamored to strike deals with the AI behemoth. "More of the world wants to work with us, so deals are quicker to negotiate," Altman said recently. And they've reaped the upsides: Oracle, Nvidia, AMD and Broadcom gained a collective $636 billion in market cap on the days their deals were announced "The math that Mr. Altman is doing in his head is 'they need me more than I need them,'" Luria said. "If you owe the bank a hundred thousand dollars, the bank owns you. If you owe the bank a hundred million dollars, you own the bank," said Lloyd Walmsley, a Mizuho analyst who covers Meta, Google and Amazon. Read the full story on Forbes. |
