OpenAI Walks Back Government Bailout Comments Amid $1.4 Trillion Infrastructure Push

Sam Altman says he doesn't want the government to bail out OpenAI if it fails | TechCrunch

OpenAI execs have been fielding plenty of questions about how they expect to pay for the $1.4 trillion worth of data center build-outs and usage commitments they've accrued this year, given that their revenue -- while rising rapidly -- is a $20 billion annual run rate, CEO Sam Altman said Thursday in a post on X. Altman's comments came in response to comments made by Open AI CFO Sarah Friar -- which she quickly walked back. Speaking at a Wall Street Journal event on Wednesday, Friar said she wanted the US government to "backstop" her company's infrastructure loans. This, she explained, would make the company's loans cheaper and help ensure it could always be using the latest, greatest chip. A backstopped loan is when the government guarantees it so if the company defaults, taxpayers pick up the bill. Lenders tend to reward low-risk loans like that with better terms. Friar said that using older chips, which compute-constrained OpenAI must do, makes financing options more affordable, but that the company's goal is to always put its state-of-the-art models on the latest, greatest chips. So how to pay for this revolving door of chips? She said the company is looking for an "ecosystem" to help including banks, PE firms and, she hoped, the government. When asked what she wanted the government to do, she said, "... the backstop, the guarantee that allows the financing to happen. That can really drop the cost of the financing but also increase the loan-to-value, so the amount of debt that you can take on top of an equity portion." She also implied that such talks, particularly in the U.S. were already in the works saying, "I think we're seeing that. The U.S. government, in particular has been incredibly forward-leaning, has really understood that AI is almost a national strategic asset." After the Wall Street journal published the clip of her discussing this desire for a federal backstop, and plenty of X users with big followers scoffed at the idea, Friar quickly walked back her comments. "I want to clarify my comments earlier today. OpenAI is not seeking a government backstop for our infrastructure commitments. I used the word 'backstop' and it muddied the point," she posted on LinkedIn. On Thursday, Trump's AI Czar David Sacks weighed in. Sacks (who is a big Silicon Valley VC himself), wrote on X the US has no plans to bail out any AI company. "There will be no federal bailout for AI. The U.S. has at least 5 major frontier model companies. If one fails, others will take its place," he posted, adding that what the government wants to do is make "permitting and power generation easier." While not naming her, he also forgave Friar for "clarifying" her stance. In the wake of this, Altman wrote a lengthy post on X echoing Sacks' sentiments. "We do not have or want government guarantees for OpenAI datacenters. We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market," he wrote. He also clarified that the backstopped loans have been discussed -- but not for his company. "The one area where we have discussed loan guarantees is as part of supporting the buildout of semiconductor fabs in the US, where we and other companies have responded to the government's call and where we would be happy to help (though we did not formally apply)." It is hard to fault Friar for floating the idea. She's right that such a guarantee would make her financing job easier, even if, as Sacks wrote in his string, the idea of asking for a taxpayer-funded bailout is "ridiculous." As she's now heard a resounding public "no" from someone she'd need in her corner for that idea, she and OpenAI CEO Sam Altman can expect plenty more questions about how they expect to pay for their $1 trillion buildout. Indeed, Altman seems braced for just such a thing. "We expect to end this year above $20 billion in annualized revenue run rate and grow to hundreds of billion by 2030. We are looking at commitments of about $1.4 trillion over the next 8 years," he wrote, adding that the company feels good about it's "prospects" especially its enterprise offering, new consumer devices and robotics.

Sam Altman backs away from OpenAI's statements about possible U.S. gov't AI industry bailouts -- company continues to lobby for financial support from the industry

CEO says the company doesn't want federal guarantees while lobbying for broader industrial subsidies tied to AI infrastructure. OpenAI CEO Sam Altman clarified on Wednesday, November 6, that "we [OpenAI] do not have or want government guarantees for OpenAI datacenters," following a wave of speculation prompted by recent comments from the company's chief financial officer. Altman's post on X follows a policy document submitted by OpenAI proposed expanded federal support for the infrastructure needed to scale artificial intelligence systems, positioning AI data centers and related equipment as eligible for U.S. manufacturing incentives. His remarks come just hours after Trump's AI chief, David Sacks, stated that there would be "no federal bailout for AI." The original confusion stemmed from remarks made by CFO Sarah Friar, who said at a Bloomberg event that a federal "backstop" could help unlock investment for future data center expansion. Those comments, widely interpreted as a request for taxpayer guarantees, drew scrutiny given the scale of AI server costs and energy requirements. While Altman has said OpenAI is investing heavily in future compute, it is not seeking a bailout for its facilities. "We plan to be a wildly successful company, but if we get it wrong, that's on us," he said. Behind the scenes, however, OpenAI is still seeking federal support, just not for itself directly. In an October 27 submission to the White House Office of Science and Technology Policy, the company called for updating the Advanced Manufacturing Investment Credit (AMIC) to include "AI server production; and AI data centers," alongside support for grid-related hardware like high-voltage transformers, HVDC converters, and transmission lines. OpenAI's proposal places AI infrastructure in the same policy lane as chipmaking, suggesting Washington treat large-scale inference deployments and their supply stacks as a manufacturing priority. OpenAI's filing also calls for targeted grants, loans, or loan guarantees to help accelerate U.S.-based production of the electrical equipment needed to power AI clusters. "Direct funding could also help shorten lead times for critical grid components -- transformers, HVDC converters, switchgear, and cables -- from years to months," the company wrote. This is a notable distinction because, although OpenAI isn't asking for the federal government to underwrite its data center projects, it is advocating for manufacturing and infrastructure subsidies that could indirectly benefit hyperscalers, OEMs, and power suppliers building out the next wave of AI compute. The company has not disclosed how much of its future capacity buildout would rely on public incentives like those that could become available through AMIC.

OpenAI CFO walks back remarks about federal loan guarantees

Money-losing biz says it does not need government help to meet massive infrastructure commitments OpenAI CFO Sarah Friar says that her company is not seeking federal loan guarantees after suggesting the opposite in an on-stage interview at a Wall Street Journal event. Speaking at the WSJ's Tech Live event in Napa, California on Wednesday, the former DoorDash CEO was discussing the challenge of financing the training of leading AI models on the best available chips, which becomes more difficult if they have to replace cutting-edge silicon with new SKUs every few years. "If the timeline on the chip stays short, that gets harder," said Friar. "And so this is where we're looking for an ecosystem of banks, private equity, maybe even ... the ways governments can come to bear." "Meaning like a federal subsidy or something?" asked WSJ tech and media editor Sarah Krouse. Friar replied, "Meaning like just first of all, the backstop, the guarantee that allows the financing to happen, that can really drop the cost of the financing, but also increase the loan to value, so the amount of debt that you can take on top of an equity portion ... " "Some federal backstop for chip investors," Krouse interjected. Following the publication of the interview and social media scolding, Friar offered a different interpretation of her words. "I want to clarify my comments earlier today," said Friar in a LinkedIn post on Wednesday evening. "OpenAI is not seeking a government backstop for our infrastructure commitments. I used the word 'backstop' and it muddied the point. "As the full clip of my answer shows, I was making the point that American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part. As I said, the US government has been incredibly forward-leaning and has really understood that AI is a national strategic asset." The Mercatus Center, a free-market think tank affiliated with George Mason University, illustrates the problem with federal funding intervention by citing the 2009 bankruptcy of energy firm Solyndra following $535 in government loan guarantees. "With a loan guarantee, the government agrees to pay a private lender for some portion or even all of the loan in the event that the borrower is unable to pay it back," wrote Matthew D. Mitchell and Tad DeHaven, in 2018. "When that happens, it is effectively a bailout for the lender. This makes a loan guarantee a privilege twofer: the borrowing firm obtains credit that it otherwise would not be able to (or at least not at such favorable terms), while the lender gets to offload some or all of the risk onto taxpayers." Friar's remarks evidently hit a nerve among onlookers growing nervous about an AI bubble and the possibility of further alienating a public already fretting over AI-leavened energy bills. In a Thursday post on X, David Sacks, an entrepreneur and Chair of the President's Council of Advisors on Science and Technology, said, "There will be no federal bailout for AI. The US has at least five major frontier model companies. If one fails, others will take its place." Sacks acknowledged that the administration does want to make permitting and power generation easier to facilitate the rapid buildout of data center infrastructure without increasing residential electricity rates - which are up 5.1 percent in the past year, according to the Bureau of Labor Statistics. "Finally, to give benefit of the doubt, I don't think anyone was actually asking for a bailout," he continued. "(That would be ridiculous.) But company executives can clarify their own comments." Friar also said that OpenAI isn't planning to pursue an initial public offering soon, meaning that the cash burning biz will continue to dine out on the forbearance of investors. The company had a net loss of at least $11.5 billion during the quarter that ended September 30, based on financial statements from Microsoft, which owns a portion of the AI peddler. ®

Investor angst over Big Tech's AI spending spills into bond market

Investors have been selling off the debt of US tech heavyweights, showing how jitters over Silicon Valley's boom in spending on artificial intelligence have spilled into the bond market. A basket of bonds issued by so-called hyperscalers -- companies that are building vast data centres, including Alphabet, Meta, Microsoft and Oracle -- has sustained a hit in recent weeks. The spread, or premium in yield investors demand to buy the debt over Treasuries, has climbed to 0.78 percentage points, the highest level since Donald Trump sent markets reeling in April with his tariff plans, and up from 0.5 points in September, according to Bank of America data. The widening spread highlights how investors are increasingly concerned with the way tech groups are turning to debt markets to finance their investments in AI infrastructure. "The important thing the market woke up to in the past two weeks is that it's the public markets that are going to need to finance this AI boom," said Brij Khurana, a fixed income portfolio manager at Wellington Management. JPMorgan on Monday said building AI infrastructure will cost more than $5tn and "will likely require participation from every public capital market as well as private credit, alternative capital providers and even government involvement". The mammoth scale of investment in AI infrastructure has raised concerns about overcapacity, long-term profitability and energy demands. Google, Amazon, Microsoft and Meta will spend more than $400bn on data centres in 2026, on top of more than $350bn this year. Tech giants are issuing debt at a quick rate to fund their AI expansion efforts despite having large cash hoards, something some investors worry could signal a shift to higher levels of leverage. "The hyperscalers collectively hold [about] $350bn in liquid cash and investments and are expected to generate [roughly] $725bn of operating cash flow in 2026," JPMorgan said. "Even so, substantial new debt supply is coming to the credit markets from these high-quality issuers." In recent weeks, Meta, Alphabet and Oracle have hit markets with blockbuster debt packages, some with maturities as long as 40 years. Meta last month forged a $27bn private debt deal with investors including Pimco and Blue Owl Capital to fund development of its "Hyperion" data centre in Louisiana. It raised an additional $30bn in bonds at the end of October, the biggest corporate bond deal since 2023. Meanwhile, Alphabet sold $25bn of bonds in early November, $17.5bn of which were raised in the US and $7.5bn in Europe. Oracle sold $18bn of bonds in September to fund infrastructure leases such as OpenAI's "Stargate" data centre in Abilene, Texas. Analysts noted Oracle's debt has been hit particularly hard in recent months. An index compiled by the Financial Times tracking its debt that has been trading since before the latest bond sale has fallen nearly 5 per cent since mid-September, compared to a price fall of about 1 per cent for a broad Ice Data Services basket tracking US high-grade tech debt. Oracle has about $96bn of long-term debt, according to Bloomberg data. It has rapidly grown its debt balances as part of a series of deals to lease computing power to ChatGPT maker OpenAI, which the US software group said would generate $300bn in revenue over the next 5 years. But credit rating agency Moody's has flagged significant risks from Oracle relying on large commitments from a small number of AI companies to fund its growth. Some analysts argue the decline in hyperscalers' bonds in the wake of such large issuance is healthy. "As long as we are still pricing incremental risk, it's a good sign. The thing I worry about is a rally on more supply rather than a sell-off," said George Pearkes, a macro strategist at Bespoke Investment Group. "We're still in early innings in this debt cycle for AI," he said.

OpenAI walks back statement it wants a government 'backstop' for its massive loans -- company says government 'playing its part' critical for industrial AI capacity increases

It was more a suggestion that it would be a good idea, or something that would be useful... OpenAI's Chief Financial Officer, Sarah Friar, has walked back claims she made in an interview with the Wall Street Journal. Where she originally said that OpenAI was "looking for an ecosystem," where various institutions could back OpenAI through financing arrangements, like providing a "guarantee," she's now said that wasn't the intention. Instead, Friar says the company wants the US government to "play its part," in maintaining industrial capacity, she said in a post on LinkedIn. "I want to clarify my comments earlier today. OpenAI is not seeking a government backstop for our infrastructure commitments. I used the word "backstop," and it muddied the point," Friar said in her post. "As the full clip of my answer shows, I was making the point that American strength in technology will come from building real industrial capacity, which requires the private sector and government playing their part." She then went on to praise the US government for being "incredibly forward-leaning," and clearly understood that AI was a strategic asset. That is an interesting way to explain away her earlier comments, which do seem quite explicit when taken within the original context. In an interview with WSJ's Sarah Krouse, Friar said that OpenAI's main goal has been to maintain its technological lead, with both the models and the hardware it uses for training and inference. That means buying up the latest chips before the competition, which is where its need for such incredible investment comes in. However, it was in discussing the financing of these deals and investments that Friar suggested OpenAI would benefit from a government guarantee of its loans. "This is where we're looking for an ecosystem of banks, private equity, maybe even governmental... the way governments can come to bear," Friar said. When asked for clarification, she continued; "First of all, the backstop, the guarantee that allows the financing to happen, that can really drop the cost of the financing but also increase the loan to value, so the amount of debt you can take on top of an equity portion for..." Krouse then pressed her, asking if that meant a "federal backstop for chip investment?" "Exactly," Friar said. "I think we're seeing that." She went on to praise the US government as understanding how AI is a "strategic asset," and that it was important for competition with China. That was what her LinkedIn post seemed to lean on more as the substantive part of the interview, even if it only appears to be a minor point in the original clip. When Krouse asked if OpenAI was discussing a form of financing guarantee with the White House, Friar deflected, saying, "We're always being brought in by the White House, to give our point of view as an expert on what's happening in the sector." Almost seeming to cotton on that she'd said something dramatic in the interview, she then said that there was "nothing to announce, nothing that's going on right now." Elsewhere in the interview, Friar said that OpenAI was not working on an IPO at this time and suggested the market should embrace AI further instead of worrying about a bubble.

Trump AI czar Sacks says 'no federal bailout for AI' after OpenAI CFO's comments

Venture capitalist David Sacks, who is serving as President Donald Trump's artificial intelligence and crypto czar, said Thursday that there will be "no federal bailout for AI." "The U.S. has at least 5 major frontier model companies. If one fails, others will take its place," Sacks wrote in a post on X. Sacks' comments came after OpenAI CFO Sarah Friar said Wednesday that the startup wants to establish an ecosystem of private equity, banks and a federal "backstop" or "guarantee" that could help the company finance its infrastructure investments. She softened her stance later in a LinkedIn post and said OpenAI is not seeking a government backstop for its infrastructure commitments. She said her use of the word "backstop" clouded her point. "As the full clip of my answer shows, I was making the point that American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part," Friar wrote. The White House did not immediately respond to CNBC's request for comment. OpenAI directed CNBC to Friar's LinkedIn post. Sacks said the Trump Administration does want to make permitting and power generation easier, and that the goal is to facilitate rapid infrastructure buildouts without raising residential electricity rates. "To give benefit of the doubt, I don't think anyone was actually asking for a bailout. (That would be ridiculous.)," he wrote.

Why Debt Funding Is Ratcheting Up the Risks of the A.I. Boom

Cade Metz has covered artificial intelligence for more than 15 years. For years, the tech industry's giants, which make tens of billions of dollars in annual profits, usually built new data centers with their own money. Just last year, Google expanded an already massive computing facility in Oklahoma, while Amazon went to work on a new data center in Indiana that will eventually use enough electricity to power over a million homes. But a new set of free spenders is emerging in the gallop toward bigger and bigger artificial intelligence projects. Smaller outfits -- far from household names, not nearly as wealthy but eager to get in on the A.I. boom -- have started to build their own giant data centers. And they are borrowing tens of billions of dollars to do it. In September, Meta agreed to buy $14.3 billion in computing power from CoreWeave, a New Jersey company that went public this year. CoreWeave has told financial analysts that for every $5 billion in computing power it plans to sell to customers over the next four years through new data centers, it must borrow $2.85 billion. The same month, Microsoft made a similar deal with Nebius, a start-up based in Amsterdam, for $19.4 billion. To help build its data centers, Nebius recently sold $3.16 billion in what are called convertible notes, which can be converted into company shares years down the road but begin as debt. Now, there are growing concerns that these smaller companies are shouldering risks they may not be able to handle, entwining themselves in relationships that financial analysts say are worryingly opaque. So are a handful of much larger companies that are working with OpenAI, the San Francisco company that launched the A.I. boom with its ChatGPT chatbot three years ago. The debt used to fund data centers could exceed $1 trillion by 2028, or more than a third of all dollars spent on these facilities, according to analysts at Morgan Stanley. If A.I. technologies do not pull in as much revenue as expected over the next several years, the debt-laden companies could be left holding the bag for the rest of the industry. "People are lending an awful lot of money to companies based on speculative returns," said Gil Luria, head of technology research at the technology analyst D.A. Davidson. The shift to debt financing is reminiscent of the dot-com boom in the late 1990s, when many companies racked up debt as they raced to lay the fiber-optic cables that would become today's high-speed internet. When the bubble burst, companies like WorldCom, Global Crossing and Lucent went bankrupt or had to sell themselves to larger rivals. Contributing to this mounting pile of debt are projects led by OpenAI. Even though the company is pulling in billions of dollars in annual revenue, its chief executive, Sam Altman, has said it will not be profitable until 2029. But OpenAI and several partners, including the software giant Oracle and the Japanese conglomerate SoftBank, plan to spend more than $400 billion building data centers in Texas, New Mexico, Ohio and Wisconsin. It is unclear how much debt the company and its partners are taking on to pay for all of that. Days after OpenAI announced its new data centers, Oracle said it would take on an additional $18 billion in debt. Analysts at KeyBanc Capital Markets estimate that Oracle will have to borrow $25 billion a year over the next four years to build these facilities. And in some cases, Oracle is paying for only part of the data center. At OpenAI's first data center in Abilene, Texas, Oracle is paying for the computer hardware inside, while a company called Crusoe is responsible for erecting the building, the cooling equipment and other infrastructure. For its part of the project, Crusoe borrowed $15 billion through a partnership involving Blue Owl Capital, a private credit lender that is helping to fund several data centers across the country and will own the one in Abilene. Meta recently arranged a similar deal with Blue Owl to borrow $27 billion for a data center in Louisiana. SoftBank and OpenAI intend to pay for new facilities in Ohio and Texas in part by borrowing money, according to two sources familiar with the arrangement who spoke on the condition of anonymity. In recent weeks, OpenAI made a series of unorthodox deals to raise additional money. First, it sold a stake in the company to the chipmaker Nvidia for $100 billion. Then AMD, an Nvidia rival, agreed to essentially give OpenAI tens of millions of AMD shares, which could be worth tens of billions of dollars. OpenAI has also agreed to buy computer chips from those companies as it builds its data centers. If OpenAI does not need those chips, Nvidia and AMD can pull out of the deals, but OpenAI and others could still be on the hook for the debt they have taken on. (The New York Times sued OpenAI and Microsoft in 2023, claiming copyright infringement of news content related to A.I. systems. The two companies have denied those claims.) "The risk is that companies will buy a bunch of computer chips for A.I. and they won't have the revenues to pay for them," said Andrew Odlyzko, a mathematician and historian who specializes in the technological manias of the recent and distant past. "Bubbles take a long time to build. But they burst very quickly." As companies borrow money to build data centers, their collateral is sometimes the computer chips they will install in these giant facilities; if the companies default on their loans, their lenders own the chips. But computer chips, like cars, are worth less over time. The risks could extend beyond the tech industry, financial experts say. The data center debt is held by a wide array of financial institutions, including traditional banks, private credit lenders like Blue Owl and Ares Management, and the many companies that are funding new computing facilities. "Who is holding all this debt? It is not like it is just being held by big banks. It is all over the place," said Paul Kedrosky, a research fellow at M.I.T.'s Institute for the Digital Economy who has closely tracked spending on new data centers for A.I. "A lot of little pieces of debt are spread throughout the economy." The opacity of many of these deals has made that hard for financial analysts to figure out, said Jeremy Kress, an associate professor of business law at the University of Michigan who specializes in systemic risk in the economy and financial stability. If the loans are highly leveraged -- meaning that the lenders have taken on their own debt to make the loans -- the risks go up. "Leverage in the system is what drives risk," Mr. Kress said. "And it is hard to know how much leverage is in the system."

Why Is the AI Czar Already Saying OpenAI Won't Get a Bailout?

Is it a good sign or a bad sign that the biggest player in an emerging industry actively making trillion-dollar commitments that are artificially propping up the economy is asking for government support, and representatives of the government are weighing in on it? Asking for a friend. Yesterday, OpenAI's CFO Sarah Friar made headlines when she said during an appearance on the Wall Street Journal’s Tech Live event that she expects the federal government will provide a "backstop" to guarantee the company will be able to finance its massive and rapidly expanding infrastructure of data centers. The same day, Sam Altman appeared on Tyler Cowen's "Conversations with Tyler" podcast and said, “Given the magnitude of what I expect AI’s economic impact to look like, I do think the government ends up as the insurer of last resort.†Now, to the average listener, it may sound like multiple members of OpenAI's C-suite asking for the federal government to guarantee that it won't let the company fail should, say, it turn out to not be able to generate anywhere near the revenue it has projected or pay back the massive financial promises it has made. But, rest assured, they insist that is not what they meant by the words that they chose to say. In a LinkedIn post, Friar walked back the "backstop" phrasing, which she said "muddied the point" that she was making (go ahead and ignore the fact that when the interviewer followed up to ask her if she specifically meant a “federal backstop for chip investment,†she replied, “Exactlyâ€). Instead, she said that what she meant to say was "American strength in technology will come from building real industrial capacity, which requires the private sector and government playing their part." Altman also got in on the post-talk corrections, saying in a long X post, "We do not have or want government guarantees for OpenAI datacenters. We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market." Instead, he clarified, "the one area where we have discussed loan guarantees is as part of supporting the buildout of semiconductor fabs in the US, where we and other companies have responded to the government’s call and where we would be happy to help," which he noted is "different from governments guaranteeing private-benefit datacenter buildouts." So okay, OpenAI was definitely not asking for government money to help it make good on its financial commitments that many times outpace its current revenue. Which is good, because at least one government representative said they wouldn't get it if they were asking. David Sacks, Donald Trump's AI czar (who seems to still hold that title despite the 130-day limit on special government employees), took to X to say, "There will be no federal bailout for AI." Instead, Sacks said, "we do want to make permitting and power generation easier. The goal is rapid infrastructure buildout without increasing residential rates for electricity." Great, seems like everyone is on the same page! OpenAI is definitely not asking for the federal government to provide financial guarantees for its seemingly endless spending spree on data center commitments that it needs to keep its operation afloat, and the federal government is definitely not offering that money over fears that the company at the center of the economy's only growth sector could go belly up. Everything seems very normal and on the level here, glad we got that all sorted out.

Sam Altman says OpenAI is not 'trying to become too big to fail'

Sam Altman has said OpenAI should never become "too big to fail" and would not seek a government backstop for its debt, as the chief executive attempts to address concerns the start-up's $1.4tn spending plans could shift massive risks from Silicon Valley investors to US taxpayers. "If we screw up and can't fix it, we should fail, and other companies will continue on doing good work and servicing customers. That's how capitalism works and the ecosystem and economy would be fine," Altman wrote on X on Thursday. His lengthy post comes as the ChatGPT maker tried to walk back comments by its chief financial officer on Wednesday which suggested the $500bn start-up was calling for a federal backstop to help finance the development of artificial intelligence chips and infrastructure. Sarah Friar, OpenAI's CFO, said at a Wall Street Journal event on Wednesday the government could provide "the backstop, the guarantee that allows the financing to happen" alongside an "ecosystem of banks [and] private equity". OpenAI has committed to spend $1.4tn on computing power and equipment over the next eight years through a series of deals, many of which include circular financial terms that tie the start-up's fortunes to large public tech companies including Nvidia, AMD and Oracle. Some analysts are concerned that if OpenAI's bet on AI fails to deliver enough revenue to meet these commitments, it could cascade into major losses for the US stock market and economy. A government backstop would also tie the taxpayer into its complex financing. Altman wrote on X that "we do not have or want government guarantees for OpenAI datacenters" and the company is not "trying to become too big to fail". The company is also preparing to raise tens of billions of dollars of debt to help finance those costs, according to its executives. OpenAI's revenue would hit $20bn on an annualised basis by the end of this year, up from $12bn in the middle of the year, he said. Altman also revealed the ChatGPT maker expects to hit hundreds of billions of dollars in revenue by 2030. The company's massive computing needs meant it lost about $12bn in the past quarter, according to financial disclosures last week from Microsoft, its biggest investor. OpenAI declined to comment on the filings. Altman said it would "make a lot of sense" for the US government to build its own "a strategic national reserve of computing power", and loan guarantees would be appropriate in "supporting the build-out of semiconductor fabs in the US". Donald Trump's administration has pushed to bring the most advanced chipmaking back to the US, wielding the threat of tariffs and promising exemptions for companies that build in the country. In July, it unveiled a plan to boost US AI technology exports, floating the possibility of loans and loan guarantees as well as equity investments in the sector. It has also thrown its support behind troubled Intel, taking a 10 per cent stake in the US chipmaker in August as the company attempts to establish itself as a serious manufacturing rival to Taiwan's TSMC. David Sacks, Trump's AI tsar, on Thursday said: "There will be no federal bailout for AI. The US has at least five major frontier model companies. If one fails, others will take its place."

OpenAI CFO Sarah Friar says company isn't seeking government backstop, clarifying prior comment

OpenAI CFO Sarah Friar said late Wednesday that the artificial intelligence startup is not seeking a government backstop for its infrastructure commitments, clarifying previous comments she made on stage during the Wall Street Journal's Tech Live event. At the event, Friar said OpenAI is looking to create an ecosystem of banks, private equity and a federal "backstop" or "guarantee" that could help the company finance its investments in cutting-edge chips. But in a LinkedIn post late Wednesday, Friar softened her stance. "I used the word 'backstop' and it muddied the point," Friar wrote. "As the full clip of my answer shows, I was making the point that American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part." OpenAI has inked more than $1.4 trillion of infrastructure deals in recent months to try and build out the data centers it says are needed to meet soaring demand. The agreements have raised questions around how the company can afford to make such massive commitments. In September, Friar told CNBC that OpenAI expected to generated roughly $13 billion in revenue this year. But on a podcast over the weekend, OpenAI CEO Sam Altman told investor Brad Gerstner that the company is doing "well more revenue than that." Altman bristled when Gerstner asked how OpenAI could make more than $1 trillion of spend commitments given its revenue. "Brad, if you want to sell your shares, I'll find you a buyer," Altman said. "Enough." In her LinkedIn post, Friar emphasized that the U.S. government will be a crucial partner for the company as it works to build out its infrastructure. "As I said, the US government has been incredibly forward-leaning and has really understood that AI is a national strategic asset," Friar wrote.

OpenAI Races to Quell Concerns Over Its Finances

OpenAI's top executives raced to contain growing alarm over the artificial intelligence company's financial situation on Thursday after its chief financial officer suggested that the U.S. government could "backstop" the firm's funding deals. Sarah Friar, OpenAI's chief financial officer, faced widespread online pushback after she raised the prospect of government aid for the company at a Wall Street Journal technology conference on Wednesday. OpenAI has embarked on a deal spree to build computing infrastructure to power A.I. development, and Ms. Friar said the company wanted to find creative ways to finance its ambitious -- and expensive -- plans. "This is where we're looking for an ecosystem of banks, private equity, maybe even governmental, the ways governments can come to bear," Ms. Friar said at the conference in Napa, Calif., adding that it would be "the backstop, the guarantee that allows the financing to happen." Her comments set off concern amid rising unease over whether an industrywide A.I. spending frenzy can be sustained. OpenAI, Meta, Google, Microsoft and other A.I. companies are pouring billions of dollars into building data centers and related infrastructure to power the development of the technology, with some of the companies increasingly turning to creative financing deals to fund the expansions. Critics have said many of these deals are circular chains of financing, with chipmakers, data center providers and A.I. labs trading cash and stock back and forth with no immediate promise of a return on investment. It also remains unclear if A.I. products can generate large enough revenues to justify the costs of the infrastructure boom, leading to fears of a potentially dangerous bubble. Late Wednesday, Ms. Friar said in a LinkedIn post that using the word "backstop" had "muddied the point." "I was making the point that American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part," she wrote. On Thursday morning, David Sacks, the White House's artificial intelligence and crypto czar, said the federal government had no intention of providing any kind of bailout to A.I. companies that flounder. "The U.S. has at least 5 major frontier model companies," Mr. Sacks wrote on social media. "If one fails, others will take its place." His post stoked the debate further. On Thursday afternoon, Sam Altman, OpenAI's chief executive, weighed in. "We do not have or want government guarantees for OpenAI data centers," Mr. Altman posted on social media. "We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market." An OpenAI spokesman did not provide further comment. (The New York Times has sued OpenAI and Microsoft, claiming copyright infringement of news content related to A.I. systems. The companies have denied the claims.) OpenAI, which is valued at $500 billion, has raised billions of dollars so it can grow and obtain computing power to develop its technology. Last month, the company completed a conversion to a for-profit structure, which allows it to operate like a more traditional company while it raises the money it needs to develop A.I. The change also sets the stage for the company to go public. At the same time, OpenAI has signed a series of deals with some of the world's largest technology companies -- including Amazon, Oracle, Nvidia and Microsoft -- that puts the start-up on the hook for more than $1 trillion of capital commitments to buy chips, computing power and data center infrastructure over the next 10 years. On Wednesday, Ms. Friar said that OpenAI was not pursuing an initial public offering "right now" and was looking at ways to increase its revenue. That included experimental revenue-sharing agreements with enterprise customers e-commerce and potentially introducing advertising into some of its products, she said. OpenAI has said that it has more than one million enterprise customers on its platform. On Thursday, Mr. Altman said that OpenAI expected to end this year with "$20 billion in annualized revenue" and anticipated growing to "hundreds of billions" over the next five years. That revenue falls short of the commitments OpenAI must meet over the next decade, which is where government support could play a role in the future. "As I said, the U.S. government has been incredibly forward-leaning and has really understood that A.I. is a national strategic asset," Ms. Friar said on LinkedIn. For now, she said she does not expect the A.I. boom to end. "I don't think there's enough exuberance about A.I., when I think about the actual practical implications and what it can do for individuals," Ms. Friar said at Wednesday's tech conference.

Sam Altman's bet: Can OpenAI's ambitions keep pace with industry's soaring costs?

As investor jitters grow, the loss-making ChatGPT firm's vast spending commitments test the limits of Silicon Valley optimism It is the $1.4tn (£1.1tn) question. How can a loss-making startup such as OpenAI afford such a staggering spending commitment? Answer that positively and it will go a long way to easing investor concerns over bubble warnings in the artificial intelligence boom, from lofty tech company valuations to a mooted $3tn global spend on datacentres. The company behind ChatGPT needs a vast amount of computing power - or compute, in tech jargon - to train its models, produce their responses and build even more powerful systems in the future. The cost of its compute commitment - the AI infrastructure such as chips and servers that power its world famous chatbot - is $1.4tn over the next eight years, a figure that dwarfs its $13bn in annual revenues. Over the past week this gap has appeared chasm-like, becoming a backdrop to market nerves over AI spending and statements by OpenAI executives that did little to answer concerns. Sam Altman, the OpenAI chief executive, first attempted to deal with it in an awkward exchange with a leading investor in the company, Brad Gerstner of Altimeter Capital, that ended with Altman ordering: "enough". Speaking on his podcast with Altman last month, Gerstner described the company's ability to pay for more than $1tn in compute costs, while revenue is running at $13bn a year, as a question "hanging over the market". Altman responded: "First of all, we're doing well more revenue than that. Second of all, Brad if you want to sell your shares, I'll find you a buyer. I just, enough." Then last week the OpenAI chief financial officer, Sarah Friar, suggested that the US government could underwrite some of the chip spending. "This is where we're looking for an ecosystem of banks, private equity, maybe even governmental, the ways governments can come to bear," she told the Wall Street Journal, adding that such a guarantee "can really drop the cost of financing". Was OpenAI, which recently announced it is becoming a fully fledged for-profit company worth $500bn, really saying that AI companies should be treated like banks in the late 2000s? This triggered immediate attempts at clarification from Friar, who took to LinkedIn to deny that OpenAI was seeking a federal backstop, while Altman sought to set the record straight on X. In a long post, Altman wrote "we do not have or want government guarantees for OpenAI datacenters", adding that taxpayers should not bail out companies that make "bad business decisions". Instead, perhaps, the government should build its own AI infrastructure and give loan guarantees to support chip manufacturing in the US. Benedict Evans, a tech analyst, says OpenAI is trying to match the other big AI players such as Mark Zuckerberg's Meta, Google and Microsoft - itself a leading backer of OpenAI - which are supported by their already hugely profitable business models. "OpenAI wants to match or exceed the infrastructure - the tens and hundreds of billions of dollars of compute - of the big platform companies. But those companies have cashflows from their existing businesses to pay for this and OpenAI does not, so it's trying to bootstrap its way into the club," he says. There are also questions over the circular nature of some of OpenAI's compute deals. For instance, Oracle will spend $300bn building new datacentres for OpenAI in Texas, New Mexico, Michigan and Wisconsin - and OpenAI will then pay back roughly the same amount to use those datacentres. Under the terms of a transaction with Nvidia, the leading maker of the chips that AI companies use, OpenAI will pay Nvidia in cash for chips, and Nvidia will invest in OpenAI for non-controlling shares. Altman also addressed the revenue issue, writing that OpenAI expects to end the year above $20bn in annualised revenue and then grow to "hundreds of billion[s]" by 2030. He added: "Based on the trends we are seeing of how people are using AI and how much of it they would like to use, we believe the risk of OpenAI of not having enough computing power is more significant and more likely than the risk of having too much." In other words, OpenAI believes that $1.4tn can be paid off by future demand for its products and by ever-improving models. It has 800 million weekly users and 1 million business customers. It makes its revenues from ChatGPT subscriptions for consumers - which account for 75% of its income - and offering businesses its corporate versions of ChatGPT, while also allowing companies and start ups to build their own products with its AI models. One Silicon Valley investor, who does not have a financial interest in OpenAI, says OpenAI can build on its popularity but its success is contingent on factors such as the models improving, the cost of operating them getting cheaper and the chips used to power them becoming less costly. "The belief is that OpenAI can leverage its strong brand and ChatGPT's position as a popular choice among consumers and businesses to build a suite of high value and high margin products. The question is at what scale can they build out these products and revenue models and how good can these models get," says the investor. But it is loss-making. OpenAI says reporting of its losses, including reports that it lost $8bn in the first half of the year and about $12bn in the third quarter, are inaccurate, although it does not deny it loses money or provide alternative figures. Altman believes the revenue will come from a number of sources. For instance: growing demand for paid-for versions of ChatGPT; other companies using its datacentres; people buying the hardware devices it is building with iPhone designer Sir Jony Ive; and that "huge value" will be created by AI's achievements in scientific research. So that is the bet: OpenAI needs $1.4tn worth of compute, a number dwarfing its current revenues, because it believes demand and ever better iterations of its products will pay it off. Carl Benedikt Frey, author of How Progress Ends and the associate professor of AI and work at Oxford University, is sceptical about OpenAI's hopes and points to recent evidence of a slowdown in AI adoption in the world's largest economy. The US Census Bureau, for instance, reported that AI adoption has been declining in recent months among companies with more than 250 employees. "On various measures AI adoption has been falling in the US since the summer. We do not know exactly why, but it does suggest that we are at a stage where some users and businesses feel they are not quite getting what they hoped for from AI so far," says Frey, adding that without "new breakthroughs" at the company he does not see it reaching $100bn in revenue by 2027 - a figure Altman has hinted at. OpenAI says it is seeing accelerating business adoption, with the corporate version of ChatGPT growing nine times year over year as it gains customers from an array of sectors including banking, life sciences and manufacturing. Altman acknowledged on X, nonetheless, that the bet might not pay off. "But of course we could be wrong, and the market - not the government - will deal with it if we are."

Scott Galloway warns of 'nowhere to hide' in markets if the OpenAI story unravels | Fortune

Galloway, speaking on his Prof G Markets podcast, characterized the current market reliance on AI as precarious, noting AI has been responsible for 80% of the stock market returns since the launch of ChatGPT in late 2022. Co-host Ed Elson reminded the audience "AI is what is holding the stock market together and also holding the economy together," with OpenAI at the center of the story. The immediate catalyst for Galloway's alarm is a series of "red flags" signaling a possible financial implosion at OpenAI, which Elson described as a "trainwreck from a financial management perspective." Amid some pushback from Galloway, Elson explained OpenAI is currently generating an estimated $13 billion in annual recurring revenue (ARR), yet it is spending more than double that amount. CEO Sam Altman has projected spending commitments of over $1 trillion, with the plan being to spend $1.4 trillion to $1.5 trillion over the next several years, creating a massive shortfall of about $1.2 trillion given their current cash reserves. Much of Galloway and Elson's discussion was centered around what they described as a disastrous podcast appearance by Altman and his friend and OpenAI investor Brad Gerstner, who asked about how the company intends to finance this massive buildout. Elson called Altman's response "horrendous ... I couldn't think of a more defensive, frantic, sociopathic response." He added that "if you're trying to shake investors' confidence in OpenAI, I would say this is how you do it." Galloway suggested OpenAI will file to go public at some point in 2026, because of its sheer size. On the other hand, he said such a response would not be acceptable for a public-company CEO: "When you are on an earnings call and someone asks you a fair question, no CEO that I've heard of who holds onto his job turns around and says, 'Well, if you don't like it, you can sell your shares.'" He called it a "rare misstep," probably reflective of the stress that Altman is under right now. Galloway and Elson also commented on OpenAI CFO Sarah Friar going viral for the wrong reasons: telling the Wall Street Journal the company is seeking federal government support -- a "backstop" -- to help finance future data centers. Galloway sees this potential taxpayer bailout as yet another tell the company lacks a viable financing plan and will likely have to seek financing in the form of debt, which he believes could be the beginning of the end for the AI bubble. Further undermining confidence are leadership concerns, including the recently released deposition of former OpenAI cofounder Ilya Sutskever, who referenced a memo alleging Altman was fired due to a "loss of confidence" and a "consistent pattern of lying." Galloway argues highly inflated bubbles typically pop due to a "narrative shock" -- a spectacular event that causes a massive change in sentiment. If he had to bet on a trigger, he said, he believes "the implosion of OpenAI" is the most likely cause of such a crash. The current rich valuations of companies such as Nvidia, Oracle, AMD, and Microsoft are determined by contracts and handshake agreements with companies like OpenAI. Galloway said he suspects many of these deals are "jazz hands," an expression for a lot of flash to disguise a lack of substance, or all sizzle and no steak. If the market loses faith and the music stops, the consequences could be staggering. Galloway noted that historically, great technology companies that reached massive valuations -- like Meta, Nvidia, and Netflix -- have seen drawdowns between 50% and 70% in a 12-month period. In the last several years, Meta and Netflix have experienced near-death experiences as stock wobbles wiped out two-thirds of their market capitalizations in a single day, for instance. Galloway warned given the scale of the top 10 companies now, such a similar decline for Nvidia would be catastrophic. Galloway stressed when 40% of the S&P 500 is riding on just 10 companies, "if they get cut in half, nobody gets out alive." Top analyst Torsten Slok, chief economist for Apollo Global Management, has been consistently sounding the alarm about concentration in the S&P 500 throughout 2025. Just on Saturday, Slok posted a chart showing equity returns over the past five years are "all about the Magnificent Seven," with virtually no growth coming from anywhere else. Onstage at the Fortune Most Powerful Women summit in October, editor-in-chief Alyson Shontell asked JPMorgan CEO Jamie Dimon about AI's "money-pit" problem. Dimon responded "some asset prices are high, in some form of bubble territory." He stressed "AI itself is real," driving huge efficiencies in "very specific things" for his bank such as risk and fraud and marketing. Generative AI, on the other hand, Dimon put in the "other category" that is difficult to measure right now. He said gains using it are largely anecdotal in terms of efficiencies, with some people arguing it saves them hours. "What's that worth? Did you just spend two hours doing something else? We don't really know." Galloway referenced something similar: the coming moment when major corporations who have been trialling AI adoption on huge multimillion-dollar contracts say they can't really measure where generative AI has gotten them. When a company says "we're scaling it back dramatically because it hasn't offered the ROI we expected, if a bunch of other companies jump in and say, 'Yeah, actually, the same's true here,' these companies, if the music stops, there's not only not any chairs, there's like hot coals they're all going to sit on." Galloway concluded if the OpenAI story unravels, the resulting market decline will be extraordinarily dramatic: "there's going to be nowhere to hide."

AI's golden boy under pressure as ChatGPT burns through billions

Sam Altman's mentor, the Silicon Valley investor Paul Graham, once gave his protégé a vivid endorsement. "You could parachute him into an island full of cannibals and come back in five years, and he'd be the king," Graham said in 2008 in a blog about the qualities entrepreneurs need to raise money from investors. At the time, Altman was just 23 and running a now-defunct smartphone app. Despite his apparent qualities, neither he nor Graham could have predicted that 17 years later, Altman would be at the forefront of what would become perhaps the most expensive infrastructure project in history. OpenAI, the artificial intelligence company Altman runs that is behind ChatGPT, has convinced investors to part with tens of billions of dollars to fund plans to spend $1.4tn (£1.1tn) on data centres and AI chips over the next eight years. The company hopes the exorbitant spending spree - equivalent to the total outlay from China's colossal Belt and Road initiative - will help deliver artificial general intelligence (AGI), the point at which AI surpasses humans. To date, it has agreed to purchase some 26 gigawatts of computing capacity - 15 times Britain's entire data centre footprint. AGI has been seen as the holy grail for decades, and whether it is possible is a hotly debated question in AI circles. But just as critical a question may be whether Altman, the 40-year-old poster child of the AI boom, can continue to convince the world's richest investors and companies to part with unprecedented sums of cash to fund his vision. OpenAI was recently valued at $500bn, making it the world's most valuable start-up, but the company is showing no signs of being able to finance its own operations.

OpenAI boss calls on governments to build AI infrastructure

OpenAI CEO Sam Altman called on world governments Thursday to invest in AI infrastructure, as questions grow about whether the ChatGPT-maker, the world's most valuable private company, can absorb artificial intelligence's massive costs. "What we do think might make sense is governments building (and owning) their own AI infrastructure, but then the upside of that should flow to the government as well," Altman wrote in a long post on X, clarifying OpenAI's position amid growing scrutiny of the company's ambitious spending plans. The company behind ChatGPT was facing scrutiny after its chief financial officer Sarah Friar told a business conference Wednesday that the US government could help attract the enormous investment needed for AI computing and infrastructure by guaranteeing loans to pay for the buildout. After fierce criticism, the executive later retracted the statement, saying her point was clumsily explained, which Altman reiterated in his own post. "We do not have or want government guarantees for OpenAI datacenters," Altman wrote. "We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market," he added. "If we screw up and can't fix it, we should fail, and other companies will continue on doing good work." The comments came as OpenAI faces questions about its financial trajectory. OpenAI has become a highly pivotal company, with the AI race launched by the release of ChatGPT driving Wall Street to new records even as doubts grow about the broader health of the American economy. Altman said the company expects to reach over $20 billion in annualized revenue this year, a significant accomplishment for a startup, and is looking at infrastructure spending commitments of approximately $1.4 trillion over the next eight years. This includes a $300 billion partnership with Oracle and a $500 billion Stargate project with Oracle and SoftBank that was announced at the White House in January. He projected that OpenAI revenue will grow to hundreds of billions of dollars by 2030, driven by as-yet-unreleased consumer devices, robotics, and AI-powered scientific discovery. Given the strategic importance of the technology, Altman argued that building a "strategic national reserve of computing power" makes sense for governments, particularly as massive infrastructure projects take years to complete. He cited severe compute constraints already forcing OpenAI and competitors to limit availability of their products and delay new features, warning that the risk of insufficient computing power outweighs the risk of overbuilding.

Trump Admin Says It's Not Bailing Out the AI Industry Regardless of How Hard It Crashes

During the Wall Street Journal's Tech Live conference on Wednesday, OpenAI chief financial officer Sarah Friar hinted at the possibility that the government could "backstop the guarantee that allows the financing to happen" as the AI industry continues to take on even more debt. Friar regretted her comment almost immediately, clarifying in a subsequent post on LinkedIn that "OpenAI is not seeking a government backstop for our infrastructure commitments." The suggestion clearly caused immense chagrin to OpenAI's leadership; even CEO Sam Altman emerged to put out the fire, tweeting that "we do not have or want government guarantees for OpenAI data centers." Yet the damage was already done, exacerbating an already testy stock market. Ongoing fears over an AI bubble triggered a major tech selloff earlier this week -- and reassurances by president Donald Trump's "AI czar" David Sacks that there will be "no federal bailout for AI" haven't helped. Shares of AI chipmaker Nvidia are continuing their tumble, sliding nearly four percent in early trading on Friday. The company's shares are down over 13 percent so far this week; AI software giant Palantir was hit even harder, currently down over 16 percent so far this week. And if the AI bubble really does burst -- a calamity that some experts worry could take the entire US economy with it -- the Trump administration is saying that the government wouldn't intervene. That's despite the White House being extremely amenable to the industry's needs, with the president going as far announcing a $500 billion AI infrastructure initiative, dubbed Stargate, earlier this year. In a tweet, Sacks clarified that competition would sort out any such eventuality, arguing that the US "has at least five major frontier model companies. If one fails, others will take its place." At the same time, Sacks said that "we do want to make permitting and power generation easier" in a followup. "The goal is rapid infrastructure buildout without increasing residential rates for electricity." Altman, Friar, and Sacks' coordinated efforts to extinguish the fire that the CFO's "backstop" comments ignited highlight an AI industry in a precarious state. Even before Friar's comments on Wednesday, investors had become concerned that AI industry stalwarts, like Nvidia and Palantir, may be grossly overvalued, with analysts predicting a correction following months of soaring valuations. What the situation looks like for OpenAI, which, according to Friar, isn't looking to go public any time soon, remains far more murky. In his latest tweet, Altman argued that "we expect to end this year above $20 billion in annualized revenue run rate and grow to hundreds of billion by 2030." That's despite "looking at commitments of about $1.4 trillion over the next 8 years." In other words, OpenAI would have to massively grow its current revenue -- just to afford soaring debt payments in the coming years without any government assistance.

OpenAI walks back remarks on government support for AI spending spree

Sarah Friar, chief financial officer of OpenAI Inc., during a media tour of the Stargate AI data center in Abilene, Texas, US, on Tuesday, Sept. 23, 2025. (Kyle Grillot/Bloomberg via Getty Images) A top OpenAI executive backtracked on comments she had made endorsing a federal backstop for the AI startup's enormous research and development spending. "OpenAI is not seeking a government backstop for our infrastructure commitments," OpenAI CFO Sarah Friar said in a social media post on late Wednesday. "I used the word 'backstop' and it muddied the point." Friar added that she had intended to say U.S. tech capabilities rests on the ability to expand industrial capacity with government and the private sector working in tandem. OpenAI did not immediately respond to a request for additional comment. Earlier on Wednesday, Friar had thrown her support behind a government guarantee so AI firms like OpenAI can maintain their spending spree on chips and new data centers. Those remarks came at a tech conference organized by The Wall Street Journal. Friar said there that a backstop "can really drop the cost of the financing, but also increase the loan to value, so the amount of debt that you can take on top of an equity portion." When The Journal asked Friar whether she meant a federal backstop, Friar responded: "Exactly." "I think the U.S. government in particular, has been incredibly forward leaning, has really understood that AI is almost a national strategic asset," Friar said. "That we really need to be thoughtful when we think about competitive competition with, for example, China." Friar added that the company has consistently been given a seat at the White House to weigh in on AI-related issues, including a government guarantee. The White House did not immediately respond to a request for comment. OpenAI is now a firm with a valuation of $500 billion. The AI giant has inked $1.1 trillion in agreements with chipmaking companies and cloud computing firms to propel an almost unchecked rise. On Monday, OpenAI announced a $38 billion deal with Amazon to widen its cloud computing services over seven years. Still, concerns linger among analysts about the potential for an AI bubble that could pop and wreak havoc on an economy already demonstrating signs of stalling out. In a recent podcast interview with investor Brad Gerstner, OpenAI CEO Sam Altman batted down questions about maintaining the company's huge spending commitments while earning only a small fraction in revenue. OpenAI, the maker of ChatGPT, still hasn't turned a profit in its nascent existence. Other business executives argue that the AI sector should adopt a hands-off approach that doesn't invite the government to step in with bailouts if a company fails. "Most of the AI spending is concentrated in a few firms that are incredibly rich and can afford to lose the money there," Matt Calkins, CEO of software development firm Appian, recently told Quartz. "I don't think it ought to be too big to fail. I see Sam Altman trying. I see OpenAI doing big deals with so many different partners that they won't want OpenAI to fail."

OpenAI Sought Government Loan Guarantees Days Before Sam Altman's Denial - Decrypt

A letter OpenAI sent to the White House on October 27 directly contradicts Altman's denial, explicitly requesting loan guarantees and other federal financial support for AI infrastructure. OpenAI explicitly requested federal loan guarantees for AI infrastructure in an October 27 letter to the White House -- which kindly refused the offer, with AI czar David Sacks saying that at least 5 other companies could take OpenAI's place -- directly contradicting CEO Sam Altman's public statements claiming the company doesn't want government support. The 11-page letter, submitted to the Office of Science and Technology Policy, called for expanding tax credits and deploying "grants, cost-sharing agreements, loans, or loan guarantees to expand industrial base capacity" for AI data centers and grid components. The letter detailed how "direct funding could also help shorten lead times for critical grid components -- transformers, HVDC converters, switchgear, and cables -- from years to months." "Initial investments could be made using existing authorities such as the Defense Production Act Title III and the Department of Energy's Loan Programs Office," OpenAI said. Just 10 days later, on November 6, Altman posted on X that "we do not have or want government guarantees for OpenAI data centers," adding that "taxpayers should not bail out companies that make bad business decisions." The contradiction emerged after OpenAI CFO Sarah Friar told a Wall Street Journal event on November 5 that a federal "backstop" could help lower financing costs and increase debt capacity for AI infrastructure. Her comments triggered fierce backlash. For example, Florida Governor Ron DeSantis tweeted that the government should not bail out tech companies. Sacks wrote that "there will be no federal bailout for AI." Friar quickly walked back her comments on LinkedIn, saying OpenAI wasn't seeking a government backstop for infrastructure commitments. "I want to clarify my comments earlier today. OpenAI is not seeking a government backstop for our infrastructure commitments. I used the word 'backstop' and it muddied the point," she wrote. "As the full clip of my answer shows, I was making the point that American strength in technology will come from building real industrial capacity, which requires the private sector and government playing their part." Altman's lengthy X post the next day amplified this message. "Our CFO talked about government financing yesterday, and then later clarified her point, underscoring that she could have phrased things more clearly. As mentioned above, we think that the U.S. government should have a national strategy for its own AI infrastructure," his tweet reads. Of course, this move also generated backlash. AI researcher Gary Marcus published the October 27 letter, calling Altman's denial "lying his ass off" and noting the letter explicitly requested the very loan guarantees Altman claimed not to want. The letter remains publicly available on OpenAI's content delivery network. This isn't the first time Altman's statements have faced scrutiny. OpenAI's board briefly fired him in November 2023 for being "not consistently candid," according to the board's statement. Former board member Helen Toner later detailed on a podcast how Altman had withheld information and made it difficult for the board to fulfill its oversight duties. A recent deposition from former OpenAI Chief Scientist Ilya Sutskever, who voted to remove Altman, further documented concerns about his candor. OpenAI did not immediately respond to requests for comment about the October 27 letter or the apparent contradiction with Altman's statements.

OpenAI's Sam Altman is not looking for government rescue if things go bad: 'Taxpayers should not bail out companies that make bad business decisions'

Despite top bankers, Ex-Intel CEO Pat Gelsinger, that guy who bet against the 2008 housing market, and even the makers of ChatGPT, suggesting AI is in a bubble, OpenAI's CEO, Sam Altman is not looking to be bailed out if things go south. As spotted by Bloomberg, Sam Altman recently took to X to declare: "We do not have or want government guarantees for OpenAI datacenters. We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market. If one company fails, other companies will do good work." Instead, Altman proposes that governments should build their own AI infrastructure and then see any positives from such a commitment. "Building a strategic national reserve of computing power makes a lot of sense. But this should be for the government's benefit, not the benefit of private companies." He continues, "If we screw up and can't fix it, we should fail." It seems like Altman's post is reflecting on a recent podcast he did with Tyler Cowen. In this, among things, Altman says, "when something gets sufficiently huge, whether or not they are one paper, the federal government is kind of the insurer of the last resort, as we've seen in various financial crises and insurance companies screwing things up." This is to say that once a company is big enough, it could be more damaging to a country to let it go under than to prop it up. This was seen with banks in the 2008 housing crisis. Just because Altman reportedly isn't looking for a bailout doesn't mean OpenAI won't receive government support. Altman talks about loan guarantees from the US government to go towards the building of semiconductor fabs in the US. Given President Donald Trump's aggressive tariff approach this year, this would be in the stated interest of both Altman and Trump. America wants more production within the country, and OpenAI requires more and more computing power every single year. "We believe the risk to OpenAI of not having enough computing power is more significant and more likely than the risk of having too much." Back in August, Altman claimed that it would be spending trillions of dollars on data centre construction in the "not very distant future. In the latest post, Altman acknowledges, "This is the bet we are making, and given our vantage point, we feel good about it." The US government isn't the only one throwing its weight behind OpenAI. In July, the UK government signed a "memorandum of understanding" with OpenAI to see the chatbot maker creating high-paid tech jobs, driving investment in infrastructure, and crucially giving our country agency over how this world-changing technology moves forward Still, OpenAI and the US government are pursuing the same goal. In July, the Trump administration unveiled its AI action plan to rapidly build out data centres, create hardware for AI development and remove federal regulations on AI to "win the AI race". And the notion of governments getting involved in AI infrastructure begs one question: Who bails those governments out if they fail?

OpenAI's Sam Altman backtracks on CFO's government 'backstop' talk

Sam Altman, CEO of OpenAI, delivers remarks at the Federal Reserve on July 22 in Washington, D.C.Andrew Harnik / Getty Images file OpenAI CEO Sam Altman says the company has no plans to seek a government backstop for its $1 trillion worth of data center investments, further walking back comments made by the company's chief financial officer this week that some interpreted as indicating the company would seek one. In an X post Thursday, Altman said the ChatGPT maker neither has nor wants guarantees for its data centers. "We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market," he wrote. "If one company fails, other companies will do good work." The post comes amid increasing concerns around the amount of investment going toward artificial intelligence and data centers, a trend some see as stretching stock market valuations to their limit while putting downward pressure on an already shaky labor market. "The Magnificent 7 comprise over 30% of the S&P 500 -- a level of concentration exceeding even that of the dot-com bubble," analysts at LSEG wrote in a note on Monday. The seven companies include Apple, Meta, Alphabet, Amazon, Microsoft, Tesla and Nvidia. These anxieties have led to significant selling in shares of Nvidia, Palantir and other AI-related stocks this week. The Nasdaq 100, a basket of the 100 largest nonfinancial companies that have their shares listed on the Nasdaq exchange, is currently on pace for its worst week since April. This week alone, Nvidia has fallen more than 7%, wiping out more than $400 billion in market value. Microsoft has also slumped 4% and Palantir has plunged 13%. Late Wednesday on LinkedIn, OpenAI CFO Sarah Friar clarified comments she made earlier that day during a panel hosted by The Wall Street Journal in which she said she hoped the federal government would play a role in supporting investments in AI. The Journal and subsequently other media outlets seized on the remarks as suggesting the company was seeking a federal guarantee. "OpenAI is not seeking a government backstop for our infrastructure commitments," she wrote. "I used the word 'backstop' and it muddied the point. As the full clip of my answer shows, I was making the point that American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part." Looming behind the reassurance is the question of how OpenAI plans to make good on the $1.4 trillion in commitments it has made to build out AI infrastructure. In September, Friar told CNBC that OpenAI expected to generate approximately $13 billion in revenue this year, raising concerns about its financial trajectory. On a tech podcast released last weekend, Altman appeared to grow agitated when host Brad Gerstner asked how OpenAI would fund the commitments given current revenues. "Enough," Altman said according to a transcript posted on X. "I think there's a lot of people who would love to buy OpenAI shares." In the Thursday post, Altman acknowledged the revenue question is a legitimate one -- but said the company is "feeling good about our prospects," pointing to potential revenues from business-use, or enterprise, offerings of its products, as well as unspecified "consumer devices and robotics" that company leaders "expect to be very significant." Another potential revenue source includes AI "that can do scientific discovery," Altman said, but added they "have hard time putting specifics on." Analysts are increasingly highlighting potential red flags hanging over the AI investment cycle, especially the web of deals that some say gives the appearance that funds are simply being passed back and forth between the same companies. The scale of investments "could be interpreted as a vote of confidence that the users downstream will crack the profitability code, and an investment that reflects the desire to participate in the resulting growth," Thomas Shipp, head of equity research for LPL Financial, wrote in a note published Thursday. He continued: "A more pessimistic take would be that this circular financing is being used to buttress the financial position of unprofitable business lines to maintain demand for chips. The AI ecosystem has many such relationships." "Investors have welcomed AI dealmaking and driven share prices higher following deal announcements," he said. "That said, we are watching for signs that enthusiasm may be waning."

OpenAI is Not Seeking a Government Backstop for Infrastructure: CFO Sarah Friar Clarifies | AIM

Sarah Friar, OpenAI's Chief Financial Officer, clarified that the company is not seeking a government backstop for its infrastructure commitments. Her clarification came after she suggested in an interview with The Wall Street Journal that government involvement, through guarantees or other financial mechanisms, could help support OpenAI's investment in the chips and data centres. "OpenAI is not seeking a government backstop for our infrastructure commitments. I used the word 'backstop' and it muddied the point," she said in a LinkedIn post. For context, a backstop means a government guarantee or financial safety net that reduces risk for lenders -- such as a promise to cover losses or ensure repayment. "I was making the point that American strength in technology will come from building real industrial capacity, which requires the private sector and government playing their part," she added, further reiterating the support the US government has provided in propagating AI-related projects and companies. Previously, at a business conference held by WSJ, Friar stated that maintaining state-of-the-art AI capabilities requires constant investment in the most advanced chips, which form the foundation of AI infrastructure. She explained that OpenAI's approach has always been to operate on the technological frontier, but doing so depends on the availability and financing of these high-performance chips. She questioned how long a frontier chip stays cutting-edge, noting that if high-end chips remain useful for years, financing large-scale compute becomes easier. But if technology advances quickly, shortening chip lifecycles, the financial risk and cost rise. To manage that, Friar said OpenAI and similar companies are looking to build an ecosystem of financial partners, such as banks, private equity firms, and potentially governments, to help share the cost and risk of this infrastructure. When asked whether this meant government subsidies, she clarified that the support wouldn't necessarily come in the form of direct funding. Friar said she was referring to a potential government backstop -- in the form of credit guarantees or risk-sharing arrangements -- that could lower borrowing costs and allow companies to take on more debt for large-scale chip and data centre investments, making such infrastructure projects more financially sustainable. She went on to add that the U.S. government "has been incredibly forward-leaning," recognising that "AI is almost a national strategic asset." She said it was important for the country to "grow our AI ecosystem as fast as possible" in light of global competition. Asked whether OpenAI was in talks with the White House to formalise such support, Friar said, "We're always being brought in by the White House to give our point of view as an expert on what's happening in the sector, for sure," but clarified there was "nothing in the works." Friar's comments exacerbated the conversations on social media about the possibility of an AI bubble, given how the company has forged large-scale, capital-intensive partnerships with NVIDIA, Oracle, AMD, and Amazon's AWS -- all in the last few weeks -- while now appearing to seek governmental support for investments.

AI can't be allowed to become too big to fail

OpenAI's problem is not a lack of interest. ChatGPT receives about six billion visits a month, and almost one billion people use it regularly. Given such an audience, you might think one could chisel out a profit. The problem is that revenue cannot cover OpenAI's very high costs, made worse by its future commitment to $1.4tn. Ominously, while generative AI is transforming some fields, such as language translation and information retrieval, it is falling far short of what OpenAI chief executive Sam Altman has led people to expect. AI has been sold as the engine for a radical social and economic transformation, but it's too unreliable to be trusted with automating even the most basic office tasks. Around 95pc of business trials have yielded no return on investment, Massachusetts Institute of Technology has found, and AI investment decisions are now being deferred. Just ask Rightmove, whose shares tumbled on Friday as investors questioned its high AI spend. Rather than applying himself to the most essential task of running a business, which is bringing expenses into line with revenue, Altman has doubled down. He dangles a science-fiction utopia of superintelligence or artificial general intelligence (AGI) that current tools and methods will not achieve. Some of his decisions also look questionable, such as spending billions of dollars on creating designer talking trinkets. Therefore, the market must be allowed to do its work by enabling the unsentimental removal of deluded executives and stripping out ideas that sound great but could never be profitable. But that's not how OpenAI sees it. It is not so much "too big to fail" but "too important to be inhibited in any way". The operation's chief financial officer, Sarah Friar, made that clear this week. She called AI "a national strategic asset", invoking China, and urged growth "as fast as possible". She later claimed that she had misspoken, and Altman issued a 15-paragraph clarification. However, a document later emerged confirming that OpenAI had indeed been seeking state aid after all. OpenAI regards the latest chips and vast data centres as a necessity, but China's approach has thrown that into question. Starved by sanctions on the most powerful Nvidia chips, Chinese engineers have been making small but useful generative AI models that run on a fraction of the resources - and showing up the gas-guzzling American AI strategy. A small Chinese team developed DeepSeek for one-hundredth of the expense of a comparable US model. In August, a model called XBai-o4 beat both OpenAI's o3-mini and Anthropic's Claude Opus. Such staggering achievements now occur almost weekly. More importantly, China's tiny AI models are open source. Anyone in the world can examine them line by line for PRC bugs or backdoors, and then, if they wish to, incorporate them into their own products or systems without asking for permission. For example, Xbai-o4 was open source. So what OpenAI says it wants the most, it doesn't really need. And in any case, what's the rush? "We acknowledge there is an 'AI arms race' underway, but we're not sure if it is winnable at this point," said Jefferies tech analyst Surinder Thind recently.

OpenAI seeks government backing to boost AI investments

ChatGPT creator OpenAI, the world's largest private company, is asking the US government to provide loan guarantees for its massive infrastructure expansion that will eventually cost more than $1 trillion. Speaking at a Wall Street Journal business conference, OpenAI CFO Sarah Friar explained that government backing could help attract the enormous investment needed for AI computing and infrastructure, given the uncertain lifespan of AI data centers. "This is where we're looking for an ecosystem of banks, private equity, maybe even governmental," Friar said. Federal loan guarantees would "really drop the cost of the financing," she explained, enabling OpenAI and its investors to borrow more money at lower rates to meet the company's ambitious targets. The proposal -- unusual for a Silicon Valley tech giant -- would theoretically reduce OpenAI's borrowing costs since the government would absorb losses if the company defaulted. Such guarantees would also dramatically expand OpenAI's potential lender pool, as many banks and financial institutions face strict limits on high-risk lending. OpenAI's request for government support comes amid a massive spending spree on computing infrastructure, raising questions about how the company will recoup these investments. By some estimates, OpenAI has committed to approximately $1 trillion in infrastructure deals this year alone, including a $300 billion partnership with Oracle and a $500 billion Stargate project with Oracle and SoftBank. While the company expects revenues in the tens of billions this year -- impressive for any startup -- that figure falls far short of covering the computing costs required to power OpenAI's advanced chatbots. During the interview, Friar dismissed reports that OpenAI plans to go public soon. "IPO is not on the cards right now," she said, emphasizing that the company's current priority is growth. Recent media reports had suggested OpenAI was preparing for a public offering after completing a complex governance restructuring that would allow the company to accept public shareholders on Wall Street.

OpenAI Exec Says It Could Use Some Financial Support From the Government

The government could "backstop the guarantee that allows the financing to happen." As investors are growing increasingly concerned over an AI bubble, triggering a major tech selloff earlier this week, OpenAI is still in full-steam-ahead mode. During the Wall Street Journal's Tech Live conference on Wednesday, the ChatGPT maker's chief financial officer Sarah Friar revealed that the company has no plans of going public, contradicting rumors. "IPO is not on the cards right now," she said at the event. "We are continuing to get the company into a state of constantly stepping up into the scale we are at, so I don't want to get wrapped around an IPO axle." And as the company eschews a public listing, Friar said that it's looking to create an "ecosystem of banks, private equity, maybe even governmental" so it can take on even more debt. She hinted that the US government could "backstop the guarantee that allows the financing to happen," but didn't elaborate any further on how such an arrangement would work. Her comments were bound to raise plenty of eyebrows on Wall Street. OpenAI has been losing a staggering amount of money and has yet to prove it can deliver on a return on investment. Does that really make it a prime candidate for governmental backing? Could Briar be implying that the government should bail OpenAI out in case things go south? It didn't take long for Friar to take to LinkedIn and renege on her previous statement, saying that "OpenAI is not seeking a government backstop for our infrastructure commitments." "I used the word 'backstop' and it muddied the point," she added. Even CEO Sam Altman intervened on X-formerly-Twitter in an apparent attempt to calm spooked investors, saying that "we do not have or want government guarantees for OpenAI data centers." "We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market," he wrote, arguing that it makes "a lot of sense" for the government to have its own "strategic national reserve of computing power." Despite OpenAI's immediate 180 following Friar's foot-in-mouth blunder, the Trump administration has already shown that it's willing to go far in its efforts to facilitate AI deals and even clear the way for infrastructure buildouts by loosening environmental regulations. For now, OpenAI doesn't seem overly concerned about the billions of dollars it's suspected to be bleeding every quarter. A recent analysis by The Register suggested that it lost $11.5 billion last quarter. The firm is planning to spend upwards of $1 trillion over the next five years to build out AI infrastructure, capital expenditure that would require the company to rapidly scale up its revenue as well to be able to make payments on a growing mountain of debt. That could be far easier said than done. OpenAI CEO Sam Altman recently boasted that its blockbuster product, ChatGPT, has 800 million users -- except that only a mere five percent are willing to pay for a subscription, forcing the company to subsidize hundreds of millions of free users by taking on the expense of additional compute. Worse yet, recent figures suggest ChatGPT revenue is starting to plateau in Europe and elsewhere, indicating waning demand. Briar said this week that the company is looking for new ways to grow sales outside of its ChatGPT, claiming that enterprise sales make up 40 percent of revenue, compared to just 30 percent at the beginning of 2025. Either way, she said that she wasn't "overly focused on a break-even moment today," saying that she has a "healthy enough margin structure that I could do that by pulling back on investment." That's despite recently completing the restructuring of its for-profit arm, in a move that critics say has largely subjugated its original nonprofit roots. Finances have clearly been a sore point for OpenAI executives. Altman similarly said that he's not concerned about making money. When he was recently challenged by OpenAI investor and podcaster Brad Gerstner about how a "company with $13 billion in revenues" can "make $1.4 trillion of spend commitments," he responded forcefully, implying Gerstner should sell his shares if he doesn't believe in the company's outlook. Given the recent slip in confidence among investors, the cracks in the immense hype surrounding AI are starting to show. Where that leaves OpenAI's planned spending spree remains to be seen. The company certainly has a lot to prove, especially when it comes to its business fundamentals. In his tweet responding to Friar's comments, Altman once again attempted to sell investors on an extremely bright future ahead, turning the hype dial up to 11 once more. "We expect to end this year above $20 billion in annualized revenue run rate and grow to hundreds of billion by 2030," he wrote. "We are quite excited about our upcoming enterprise offering for example, and there are categories like new consumer devices and robotics that we also expect to be very significant." During this week's conference, tellingly, Briar lamented that there wasn't enough excitement about AI -- despite the enormous amount of hype and tens of billions of dollars in investment. "I don't think there's enough exuberance about AI, when I think about the actual practical implications and what it can do for individuals," she said. "We should keep running at it." If things were to go south, Altman said that he's willing to take the blame instead of asking for a government bailout. "We plan to be a wildly successful company, but if we get it wrong, that's on us," he wrote.

Altman rejects idea of federal bailout after CFO floats "backstop" proposal

The statement follows CFO Sarah Friar's remarks suggesting the U.S. could "backstop" OpenAI's infrastructure loans. OpenAI CEO Sam Altman stated the company does not seek government guarantees for its data centers, despite earlier comments from CFO Sarah Friar regarding potential loan backing. Altman's statement on X Thursday addressed questions surrounding the company's projected $1.4 trillion data center build-outs and usage commitments. OpenAI's current annual revenue run rate is $20 billion. OpenAI CFO Sarah Friar, speaking at a The Wall Street Journal event on Wednesday, had suggested the U.S. government "backstop" the company's infrastructure loans to reduce costs and ensure access to advanced chips. A government backstop implies taxpayer responsibility if the company defaults, leading to more favorable loan terms from lenders. Friar noted that using older chips for compute-constrained OpenAI makes financing affordable but stated the goal is to utilize state-of-the-art chips. She indicated the company sought an "ecosystem" including banks, private equity firms, and potentially the government for financing. When pressed on government involvement, she mentioned, "the backstop, the guarantee that allows the financing to happen. That can really drop the cost of the financing but also increase the loan-to-value, so the amount of debt that you can take on top of an equity portion." She also implied ongoing discussions, particularly in the U.S., remarking, "The U.S. government, in particular has been incredibly forward-leaning, has really understood that AI is almost a national strategic asset." Following publication of her remarks by The Wall Street Journal and subsequent criticism on X, Friar retracted her comments. She posted on LinkedIn, "I want to clarify my comments earlier today. OpenAI is not seeking a government backstop for our infrastructure commitments. I used the word 'backstop' and it muddies the point." On Thursday, David Sacks, described as Trump's AI czar and a Silicon Valley venture capitalist, commented on X that the U.S. has no plans to bail out any AI company. Sacks wrote, "There will be no federal bailout for AI. The U.S. has at least 5 major frontier model companies. If one fails, others will take its place." He also stated the government's focus is on easing "permitting and power generation." Altman later echoed Sacks' sentiments. He wrote on X, "We do not have or want government guarantees for OpenAI datacenters. We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market." He clarified that discussions about loan guarantees have occurred, but for semiconductor fabs in the U.S., not for OpenAI's operations. "The one area where we have discussed loan guarantees is as part of supporting the buildout of semiconductor fabs in the US, where we and other companies have responded to the government's call and where we would be happy to help (though we did not formally apply)." Altman anticipates addressing continued questions about financing the company's projected $1 trillion buildout. He stated, "We expect to end this year above $20 billion in annualized revenue run rate and grow to hundreds of billion by 2030. We are looking at commitments of about $1.4 trillion over the next 8 years," expressing confidence in OpenAI's prospects, particularly its enterprise offerings, new consumer devices, and robotics.

White House rules out bailout for AI as bubble fears grow

Mr Sacks' comments came after OpenAI suggested it could ask for government support to help finance its $1.4tn spending plans. On Wednesday, Sarah Friar, OpenAI's chief financial officer, suggested that the company might seek a government backstop or guarantee as it borrows billions to fund spending on AI chips and data centres. The company has backtracked on the comments over concerns that taxpayer cash would be used to help inflate an AI bubble. OpenAI: 'If we get it wrong, that's on us' Sam Altman, its chief executive, said on Thursday: "We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market." He said OpenAI should not be seen as "too big to fail", a reference to the financial crisis in which major banks were rescued in order to prevent the wider economy collapsing. "If we screw up and can't fix it, we should fail, and other companies will continue on doing good work and servicing customers," he said. "We plan to be a wildly successful company, but if we get it wrong, that's on us." AI-related infrastructure spending has been seen as a key driver of US growth, meaning that a sudden collapse in confidence in the technology could have wider effects for the economy. The spending is yet to be matched by profits or revenues for AI companies, and comes amid scepticism that the technology can deliver on its grand promises. OpenAI has said it plans to invest $1.4tn (£1tn) over the next eight years, far more than it has raised to date. The pledges have helped drive the valuations of AI companies such as Nvidia and Oracle to record highs, even though the company has not yet raised the cash needed to fund the spending. Mr Altman said he expected the company's annual revenues to grow to hundreds of billions of dollars by the end of the decade. He said the company had discussed US government financing for microchip facilities, but not asked for any. Mr Sacks said the Trump administration wanted to make it easier to build data centres and secure electricity supplies. "The goal is rapid infrastructure build out without increasing residential rates for electricity," he said.

JPMorgan warns AI boom needs $650 billion a year, just for 10% return - bubble brewing?

AI bubble warning 2025: The artificial intelligence (AI) industry's explosive growth could come with a harsh financial reality. According to a new report from J.P. Morgan, the sector would need to generate $650 billion in annual revenue just to deliver a modest 10% return on the massive investments expected through 2030, as per a report shared by analyst Max Weinbach on social media X. To put that into perspective, the report equates this to an extra monthly payment of $34.72 from every iPhone user or about $180 from each Netflix subscriber, as per a Tom's Hardware report. With around 1.5 billion active iPhone users and over 300 million paying Netflix subscribers, the figures highlight the enormous scale of spending required, especially as many consumers remain unconvinced about the value of AI-powered devices and services, as per the report. J.P. Morgan's report also warns that AI growth may not be smooth. It compares the current AI investment surge to the telecom fiber buildout, when revenues failed to match infrastructure costs. The report cautioned, "The path from here to there will not just be 'up and to the right,'" adding, "Our biggest fear would be a repeat of the telecom and fiber buildout experience, where the revenue curve failed to materialize at a pace that justified continued investment," as quoted by Tom's Hardware. ALSO READ: Goodbye, Penny! US mint in Philadelphia to press its final 1-Cent coin ever While companies like OpenAI and Anthropic have reported or projected billions in annual revenue, with OpenAI said to be on a $20 billion run rate and Anthropic targeting $26 billion by 2026, those figures are still far from industry-wide profitability, as reported by Tom's Hardware. The J.P. Morgan report also pointed to another looming risk, compute overcapacity. With AI data centers costing billions to build, a slowdown in demand could leave vast computing infrastructure sitting idle, as per the report. Even OpenAI CEO Sam Altman and Microsoft's Satya Nadella have voiced similar concerns about the potential for excess capacity outpacing demand, according to the Tom's Hardware report. ALSO READ: Japan's bond yields hit a 17-year high -- 10-year tops 1.69%, flashing 2008 crisis warning Although the report does not call it an AI bubble, it echoes growing fears in the tech world. Former Intel CEO Pat Gelsinger noted that while AI has disrupted industries, most businesses have yet to see meaningful profits from it, as per the report. A collapse in the AI market could wipe out as much as $20 trillion in market value, affecting not just AI companies but the broader tech sector, reported Tom's Hardware. However, the J.P. Morgan report warns that, "Regardless, even if everything works, there will be (continued) spectacular winners, and probably some equally spectacular losers as well, given the amount of capital involved and winner-takes-all nature of portions of the AI ecosystem," as quoted in the report. Is JPMorgan predicting an AI bubble? Not directly, but the report echoes growing fears that overinvestment could lead to one. How much market value could be at risk if an AI bubble bursts? Up to $20 trillion in global market capitalization, according to analysts.

Scott Galloway Warns Of Potential OpenAI Collapse Triggering An 'Ugly' Market Shock: 'Going To Be Nowhere To Hide' - NVIDIA (NASDAQ:NVDA)

Scott Galloway, a bestselling author and NYU professor, has issued a dire warning about the potential collapse of OpenAI, suggesting that it could have far-reaching implications for the global market. Galloway Sounds Alarm On OpenAI Speaking on his Prof G Markets podcast, Galloway highlighted the precarious nature of the current market, which heavily relies on AI. He noted that since ChatGPT's debut in late 2022, AI-related stocks have accounted for about 80% of the market's total gains. Co-host Ed Elson highlighted "red flags" and cautioned that while OpenAI is bringing in roughly $13 billion in annual recurring revenue (ARR), its spending is more than twice that figure. Galloway predicted that OpenAI will likely file for an IPO sometime in 2026 and then Altman would'nt be able to say "sell your shares," in an earnings call as the OpenAI CEO recently said to an investor, Brad Gerstner who questioned his $1.4 trillion spending plan. Scott Galloway further stated that the potential talks of a taxpayer bailout as evidence that the firm lacks a sustainable financing strategy and may be forced to turn to debt, a move he believes could mark the beginning of the end for the AI bubble. Galloway warned that if the OpenAI narrative falls apart, the ensuing market downturn could be exceptionally severe. "It's going to be ugly...there's going to be nowhere to hide," he adds. See Also: Peter Thiel Once Explained Why Bitcoin Won't Go Up 'Dramatically' And How It's Set For A 'Volatile, Bumpy Ride' Thanks To BlackRock Altman's Spending Plans Draw Scrutiny Recently, OpenAI CFO Sarah Friar's remark ignited confusion about the company's funding strategy, leading to speculation that the company was seeking a federal bailout. However, CEO Sam Altman quickly quashed these rumors, stating that OpenAI does not seek or want any kind of government guarantee to protect it from failure. Altman had also defended the company's $1.4 trillion investment in infrastructure, stating that OpenAI is bringing in far more revenue than the widely cited $13 billion annual estimate. The company also reportedly plans to launch tailored AI products for governments and businesses, new shopping tools, and revenue streams from its Sora video service and AI agents. It's also exploring new debt financing to expand infrastructure and possibly supply computing power through its Stargate data center project. Analysts Divided Over AI Bubble CNBC's Jim Cramer has warned that the company's massive spending spree could test even the strongest bulls in the AI trade, indicating potential cracks in the company's aggressive push to dominate the AI landscape. However, after a $1 trillion wipeout in the Magnificent Seven's market value -- half of it from Nvidia (NASDAQ:NVDA) -- concerns of an AI bubble are mounting. However, Goldman Sachs analysts argue it's too early to compare the surge to the dot-com crash, saying today's market looks more like the early stages of the 1990s tech boom than its peak. Sam Altman Says 'Shame on Me' If OpenAI Doesn't Become 'First Big Company' Run By An AI CEO Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. NVDANVIDIA Corp$199.990.47%OverviewMarket News and Data brought to you by Benzinga APIs

OpenAI seeks US government backing to fund $1tn expansion

OpenAI has said it might need government backing to fund a trillion-dollar spending plan amid concerns that the AI boom is being funded by enormous levels of debt. Sarah Friar, OpenAI's chief financial officer, said the company - which owns ChatGPT - could seek a federal "backstop [or] guarantee" that could allow it to borrow more money at lower rates. The business spends huge sums on high-powered chips and data centres to power AI's immense computing demands. The company's pitch for government support could be strengthened by concerns that the US economy is being propped up by vast spending on AI. Economists at Deutsche Bank have gone so far as to warn that the US would be in recession were it not for the AI investment boom. OpenAI has committed to spending $1.4tn (£1.1tn) on computing resources said Sam Altman, its chief executive, last week. Bosses have said part of that will be funded by heavy borrowing. This has fuelled concerns among economists who fear that a debt-funded spending spree on AI data centres could be a bubble, potentially leading to huge losses for lenders. Ms Friar told the Wall Street Journal's Tech Live conference: "We're looking for an ecosystem of banks, private equity, maybe even governmental" support that would help the company raise debt. She said a form of government guarantee might allow it to borrow more money, more cheaply. "The backstop, the guarantee that allows the financing to happen, that can really drop the cost of the financing but also increase the loan-to-value - so the amount of debt that you can take on top of an equity portion," she said. She said the White House had been "incredibly forward-leaning, had really understood that AI is almost a national strategic asset". A federal guarantee on an OpenAI loan would lower the interest rate, since lenders would be assured of getting their money back if the company fails. A backstop refers to an entity providing funding if other lenders fail to do so. Ms Friar later sought to clarify her comments. Writing on LinkedIn, she said: "OpenAI is not seeking a government backstop for our infrastructure commitments." Morgan Stanley has estimated that $1.5tn may be borrowed to bankroll AI investments. Growing numbers of commentators and analysts have raised concerns that soaring debt and stock market valuations could lead to a crisis in the event that the AI bubble bursts. Ms Friar also poured cold water on the prospect of an OpenAI stock market listing in the near future. "IPO is not on the cards right now," she said. "We are continuing to get the company into a state of constantly stepping up into the scale we are at, so I don't want to get wrapped around an IPO axle." She also dismissed concerns about an AI bubble: "I don't think there's enough exuberance about AI, when I think about the actual practical implications and what it can do for individuals."

Bubble warning? Bank of America warns the AI boom is running out of cash

The AI boom is hitting a money wall. Bank of America warns tech giants are burning through cash as capital spending devours 94% of free cash flow, up from 76% last year. Meta borrowed $30 billion for new data centers, while Oracle's debt nears $96 billion. Firms like Google, Amazon, and Microsoft are funding AI with loans, not profits. Rising rates add pressure. BofA says the AI investment wave is reaching a tipping point, risking a slowdown if cash returns don't catch up. Bank of America warns AI boom is running out of cash. Tech giants are spending billions on AI infrastructure but relying heavily on debt, not cash flow. This could put the boom at risk. Capital expenditures for AI infrastructure among companies like Meta, Oracle, Amazon, Alphabet, and Microsoft are now consuming about 94% of their free cash flow (operating cash flow minus dividends and share repurchases), up from 76% the previous year. This rapid expansion in AI investment requires more capital than these companies can support with just their cash flows, leading to a surge in borrowing. For example, Meta and Oracle have recently issued tens of billions of dollars in debt to finance new AI data centers and infrastructure, with Meta's $30 billion financing deal being backed by robust operating cash flow but Oracle facing riskier interest burdens relative to its net income. This raises concerns about the sustainability of the AI growth, as continued reliance on debt introduces financial risks including higher interest expenses and potential leverage issues. While companies like Nvidia exhibit stronger cash flow resilience with less debt, others face growing debt loads from both past acquisitions and new AI investments. Stock valuations for AI-focused companies remain sky-high. Investors expect massive growth. If revenue lags, the market could correct sharply. History shows similar cycles, like the dot-com boom, where hype and spending led to market shocks. But AI is not just hype. It spans industries from healthcare to finance. Success depends on balancing ambition with cash flow discipline. For investors, caution is key. Heavy spending and rising debt increase risk, even for tech leaders. Companies must monetize AI effectively. Building infrastructure is not enough; profits must follow. Cost control, clear ROI, and realistic timelines are now critical. Diversification across AI strategies can reduce exposure to setbacks. The market is becoming cautious, with investors advised to carefully monitor debt levels, interest coverage ratios, and the return on capital expenditures related to AI. If AI returns slow or valuations falter, the financial strain could lead to corrections in AI-driven stocks. According to BofA's latest data, capital expenditures (capex) are consuming nearly 94% of free cash flow for top tech firms this year -- a steep jump from 76% in 2024. That means companies are spending almost all their spare cash on AI infrastructure, leaving very little financial cushion. Meta Platforms, for instance, has borrowed around $30 billion to fund a massive data center in Louisiana. Oracle's debt has ballooned to nearly $96 billion, fueled by its cloud expansion push. Even giants like Google and Microsoft are showing signs of strain as AI costs outpace their traditional revenue growth. BofA analysts say that tech firms are no longer self-funding their AI expansions through operating profits. Instead, they're issuing bonds, drawing on credit lines, and taking on long-term debt to build infrastructure. This shift is risky. Rising interest rates mean higher borrowing costs. If AI returns take longer to materialize -- or if earnings slow -- the balance sheets of even trillion-dollar companies could feel the pressure. Oracle's growing debt burden is one example. Despite its strong cloud positioning, the company's interest expenses have surged, cutting into profits. Meta and Amazon are in similar situations -- both aggressively expanding data centers while taking on record levels of capital spending. BofA's warning echoes a familiar story: a boom built on borrowed money can quickly turn into a bust. Analysts see parallels to the dot-com bubble, where tech firms overbuilt before profits could catch up. The AI sector's current trajectory shows many of the same signs -- massive capital spending, inflated valuations, and expectations of limitless future growth. But if AI adoption or monetization slows, companies could find themselves over-leveraged with underutilized assets. Market watchers like Bill Gross -- the so-called "Bond King" -- have voiced similar concerns. He warned that some AI companies might be wasting money on data centers that won't generate enough revenue, especially if global growth cools. Still, not everyone agrees it's a bubble. Some argue the long-term benefits of AI -- automation, productivity gains, and enterprise adoption -- will justify the spending. But in the short term, the financial strain is clear. Companies like Microsoft, Google, Meta, and Amazon are projected to spend a combined $180-200 billion on AI infrastructure in 2025. That's up from roughly $125 billion in 2024, according to BofA estimates. Yet their free cash flow growth is slowing, squeezed by rising capex and financing costs. If credit markets tighten or interest rates stay elevated, the debt-fueled AI expansion could lose steam. That would impact stock valuations, corporate earnings, and investor confidence across the tech sector. BofA's final note summed it up sharply: "AI remains a generational technology shift. But the funding model is unsustainable if capex continues to outpace cash generation." Executives argue that this spending is necessary. Without heavy investment, companies risk falling behind competitors in AI capabilities. But financial analysts warn that relying too much on borrowed funds can create a bubble-like situation. Many experts are asking the same question: is the AI boom a bubble? Stock valuations for AI-focused companies are very high. Investors expect huge growth in the coming years. If growth slows or revenue doesn't keep up, prices may fall. The market has seen similar cycles before. The dot-com boom in the late 1990s shows how hype and heavy investment can inflate expectations. If companies overextend with debt and spending, a correction can follow. Yet, the situation is not identical. AI has potential across multiple industries, from healthcare to finance. If companies manage spending carefully and generate real-world results, the boom could continue. The challenge lies in balancing ambition with financial discipline. (You can now subscribe to our Economic Times WhatsApp channel)

Jim Cramer Says AI Bulls Want OpenAI To Keep Spending -- But Worry It Can't: We Are Hearing About 'Cracks'

Enter your email to get Benzinga's ultimate morning update: The PreMarket Activity Newsletter OpenAI's aggressive push to dominate the artificial intelligence landscape may be showing signs of strain, according to CNBC's Jim Cramer, who warned that the company's massive spending spree could test even the strongest bulls in the AI trade. Cramer Flags 'Cracks' In AI Growth Narrative Cramer took to X to voice concern over the mounting costs tied to the data center boom, saying investors are now hearing about "cracks" in the trade. "On the one hand, it's 'too much spending, sell,' and on the other, it is 'too much spending, sell,'" he wrote. "The fact is that the spend is strong the bulls just want OpenAi to spend within its means. But it doesn't seem to have enough...." His remarks underscore growing unease among investors who have fueled AI's stock market rally but are now questioning how sustainable the capital-heavy growth model really is. Just earlier this month, investor Michael Burry -- the "Big Short" trader who famously predicted the 2008 housing crash -- warned that today's AI frenzy is a speculative bubble reminiscent of the dot-com bust of 2000. See Also: China EV Heat Check: Nio, Li Auto, XPeng on Fire OpenAI's $1.4 Trillion Commitment Raises Red Flags OpenAI CEO Sam Altman last week revealed that the company has committed $1.4 trillion over the next eight years, largely for data centers, chip purchases and infrastructure expansion. He expects OpenAI to close 2025 with a $20 billion annualized revenue run rate, but admitted that maintaining that trajectory takes a lot of work. Analysts warn that unless OpenAI converts growth into profit soon, it could face serious financial pressure. "They've got to start generating some serious income," TECHnalysis Research's Bob O'Donnell told Yahoo Finance. "That's the part that has people kind of nervous." Read Next: 'I'm Envious Of The Current Generation Of 20-Year-Old Dropouts,' Says Sam Altman, Admitting He Hasn't Had A 'Real Chunk Of Free Mental Space' In Years Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: katz / Shutterstock.com Market News and Data brought to you by Benzinga APIs

OpenAI races to quell concerns over its finances - The Economic Times

OpenAI moved to calm worries after finance chief Sarah Friar hinted the US government could support its funding plans. Her "backstop" remark sparked backlash amid concern over soaring AI infrastructure costs. Officials denied any bailout intentions, and CEO Sam Altman clarified OpenAI seeks no government guarantees for data centres.OpenAI's top executives raced to contain growing alarm over the artificial intelligence company's financial situation Thursday after its chief financial officer suggested that the U.S. government could "backstop" the firm's funding deals. Sarah Friar, OpenAI's chief financial officer, faced widespread online pushback after she raised the prospect of government aid for the company at a Wall Street Journal technology conference Wednesday. OpenAI has embarked on a deal spree to build computing infrastructure to power AI development, and Friar said the company wanted to find creative ways to finance its ambitious -- and expensive -- plans. "This is where we're looking for an ecosystem of banks, private equity, maybe even governmental, the ways governments can come to bear," Friar said at the conference in Napa, California, adding that it would be "the backstop, the guarantee that allows the financing to happen." Her comments set off concern amid rising unease over whether an industrywide AI spending frenzy can be sustained. OpenAI, Meta, Google, Microsoft and other AI companies are pouring billions of dollars into building data centers and related infrastructure to power the development of the technology, with some of the companies increasingly turning to creative financing deals to fund the expansions. Critics have said many of these deals are circular chains of financing, with chipmakers, data centre providers and AI labs trading cash and stock back and forth with no immediate promise of a return on investment. It also remains unclear if AI products can generate large enough revenues to justify the costs of the infrastructure boom, leading to fears of a potentially dangerous bubble. Late Wednesday, Friar said in a LinkedIn post that using the word "backstop" had "muddied the point." "I was making the point that American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part," she wrote. On Thursday morning, David Sacks, the White House's artificial intelligence and crypto czar, said the federal government had no intention of providing any kind of bailout to AI companies that flounder. "The U.S. has at least 5 major frontier model companies," Sacks wrote on social media. "If one fails, others will take its place." His post stoked the debate further. On Thursday afternoon, Sam Altman, OpenAI's chief executive, weighed in. "We do not have or want government guarantees for OpenAI data centres," Altman posted on social media.

Sam Altman Denies OpenAI Seeking Trump Government's Bailout After CFO's Comment Sparks Controversy: 'We Do Not Have Or Want...'

Enter your email to get Benzinga's ultimate morning update: The PreMarket Activity Newsletter OpenAI CEO Sam Altman has moved swiftly to quash speculation that the company is seeking a federal bailout or financial guarantees from the Donald Trump administration after a remark by his CFO ignited confusion about the company's funding strategy. Altman Rejects Bailout Talk, Says Governments Shouldn't Pick Winners On Thursday, in a lengthy post on X, formerly Twitter, Altman said OpenAI is not seeking and does not want any kind of government guarantee to protect it from failure. "We do not have or want government guarantees for OpenAI datacenters. We believe that governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market," Altman wrote. His statement came after OpenAI CFO Sarah Friar said during The Wall Street Journal's Tech Live conference that OpenAI was exploring an ecosystem involving banks, private equity, and possibly a government "backstop" to help finance the chips required to power its AI systems. See Also: China EV Heat Check: Nio, Li Auto, XPeng on Fire CFO Walks Back Comment, Says 'Backstop' Muddled Her Point Friar later clarified her remarks in a LinkedIn post, saying her use of the word "backstop" was misleading. " I was making the point that American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part," she wrote. The White House's AI czar, David Sacks, also weighed in, stating on X that "there will be no federal bailouts for AI." Massive Spending Raises Financial Questions OpenAI's spending spree has fueled mounting questions about its financial stability. Altman said the company has $1.4 trillion in commitments over the next eight years, largely tied to building and leasing data centers and purchasing advanced chips. Altman said OpenAI expects to close 2025 with a $20 billion annualized revenue run rate, but acknowledged that continued revenue growth is critical. "Each doubling is a lot of work," he said, adding that new enterprise offerings, consumer devices and robotics could help drive future income. Analysts Warn OpenAI Has to Start Generating 'Serious Income' Industry experts say OpenAI must quickly convert its growth into profit. The "big question" hanging over everyone's head, TECHnalysis Research president and chief analyst Bob O'Donnell told Yahoo Finance, is how a company like OpenAI -- which plans to spend $1.4 trillion while losing billions each quarter -- is possibly going to pay for that. "They've got to start generating some serious income," he said. "And that's the part that has people kind of nervous." Read Next: 'I'm Envious Of The Current Generation Of 20-Year-Old Dropouts,' Says Sam Altman, Admitting He Hasn't Had A 'Real Chunk Of Free Mental Space' In Years Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Meir Chaimowitz on Shutterstock.com Market News and Data brought to you by Benzinga APIs

OpenAI seeks government backing for AI chip investments By Investing.com

Investing.com-- OpenAI, creator of the wildly popular ChatGPT tool, is hoping that the government will be willing to back its financing plans to acquire more artificial intelligence chips and build data centers. OpenAI CFO Sarah Friar said during a Wall Street Journal conference on Wednesday that she hoped the government will provide guarantees for the AI startup's financing deals for chips and data centers. "This is where we're looking for an ecosystem of banks, private equity, maybe even governmental, the ways governments can come to bear," Friar said, adding that any government guarantees will substantially lower the cost of financing and also increase the loan-to-value aspect of its deals. Friar said OpenAI could achieve profitability on "very healthy" gross margins in its enterprise and consumer businesses, if it weren't seeking to invest so aggressively. Friar dismissed reports that the startup was seeking an initial public offering in the near-term, and also said she was not "overly focused" on reaching break-even. OpenAI is the world's most valuable startup, but is rapidly losing money amid outsized spending on AI infrastructure and as it focuses more on research and development over profitability.

Sam Altman says OpenAI not seeking government guarantees for data centres

OpenAI chief Sam Altman has clarified the company is not seeking government loan guarantees for its datacenters. Altman stated governments should not pick winners or losers. He believes governments should build and own their own AI infrastructure. OpenAI expects significant revenue growth and plans substantial investments in computing power for future AI breakthroughs. OpenAI chief executive Sam Altman has clarified that the company is not seeking government loan guarantees for its data centres, countering speculation that it wanted US taxpayer backing for its infrastructure plans. In a detailed note on Thursday, shared on microblogging platform X, Altman said OpenAI believes governments should not pick winners or losers and that taxpayers should not bail out companies that make bad business decisions. Our CFO (Sarah Friar) talked about government financing yesterday, and then later clarified her point, underscoring that she could have phrased things more clearly, Altman said. As mentioned above, we think that the US government should have a national strategy for its own AI infrastructure, he added. Altman added that while OpenAI does not want government guarantees for its own projects, it would make sense for governments to build and own their own AI infrastructure. In such cases, he said, the benefits should accrue to the public sector, not to private firms. The OpenAI CEO said the only context in which the company had discussed loan guarantees was related to semiconductor manufacturing in the United States, where it has responded to the government's call to strengthen domestic chip production. "The idea has been to ensure that the sourcing of the chip supply chain is as American as possible to bring jobs and industrialization back to the US," Altman wrote. Addressing concerns about how OpenAI plans to fund its expansion, Altman said the company expects to end 2025 with more than 20 billion dollars in annualized revenue and aims to reach hundreds of billions by 2030. He said OpenAI is looking at commitments of about 1.4 trillion dollars over the next eight years to build computing infrastructure, adding that this would require continued revenue growth and possible fundraising through equity or debt. Altman said OpenAI is prepared to take risks as it scales up its infrastructure. "If we screw up and cannot fix it, we should fail. That is how capitalism works," he said. "We plan to be a successful company, but if we get it wrong, that is on us." He added that OpenAI is investing heavily to meet rising demand for AI applications and future breakthroughs in areas such as scientific research, consumer devices and robotics. "We believe the risk of not having enough computing power is greater than the risk of having too much," Altman said. Also Read: After criticism, OpenAI retracts government guarantee idea

After criticism, OpenAI retracts government guarantee idea

The chief financial officer of OpenAI has retracted her idea that the US government provide loan guarantees for the ChatGPT-maker's massive infrastructure expansion, which will cost more than $1 trillion. CFO Sarah Friar on Monday explained that a government "backstop" could help attract the enormous investment needed for AI computing and infrastructure, given the uncertain lifespan of AI data centers. Federal loan guarantees would "really drop the cost of the financing," she explained, enabling OpenAI and its investors to borrow more money at lower rates to meet the company's ambitious targets. But Friar later retracted the suggestion, writing on LinkedIn that "OpenAI is not seeking a government backstop for our infrastructure commitments." "I used the word 'backstop' and it muddied the point," Friar said. "As the full clip of my answer shows, I was making the point that American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part," she said. Friar's original comments caused alarm in investment circles, coming amid a massive spending spree by OpenAI on computing infrastructure that has raised questions about how the company will recoup these investments. "Bad vibes all around," wrote Wasteland Capital, a X account closely read in Silicon Valley. OpenAI has committed to more than $1 trillion in infrastructure deals this year alone, including a $300 billion partnership with Oracle and a $500 billion Stargate project with Oracle and SoftBank. While the company expects revenues in the tens of billions this year -- impressive for any startup -- that figure falls far short of covering the computing costs required to power OpenAI's advanced chatbots.

OpenAI does not 'want government guarantees' for massive AI data center buildout, CEO Altman says

(Reuters) -ChatGPT parent OpenAI does not "want government guarantees" for its data centers, CEO Sam Altman said on Thursday, while adding that the startup at the heart of the artificial intelligence boom expects to end this year with an annualized revenue run rate above $20 billion. OpenAI is in the midst of a multi-billion dollar build-out of data center capacity and has entered into deals with chipmakers ranging from Nvidia to AMD as it spends heavily to secure the necessary infrastructure to power AI models. The startup expects its annualized revenue run rate to grow to hundreds of billions by 2030, Altman said in a post on social media platform X. The company is looking at commitments of about $1.4 trillion over the next eight years, he added. This comes at a crucial time for Wall Street, as investors mull over fears of an AI bubble, questioning the returns on hundreds of billions of dollars in investment on AI expansion. "If we screw up and can't fix it, we should fail, and other companies will continue on doing good work and servicing customers," he said. "The ecosystem and economy would be fine." David Sacks, the White House artificial intelligence and crypto czar, said earlier on Thursday that there will be no federal bailout for AI, as U.S. races to cement its position as a global leader in the booming technology. "Given our vantage point, we feel good about it. But we of course could be wrong, and the market -- not the government -- will deal with it if we are," Altman said, addressing talks of the federal government not stepping in if the massive build-out of AI infrastructure does not produce desired results. OpenAI has discussed loan guarantees as a part of scaling up semiconductor fabs in the U.S., Altman said. (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Alan Barona)