OpenAI Walks Back Government Bailout Comments as Leadership Clarifies Financing Strategy

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.

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.

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. ®

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.

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.

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 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."

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'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.

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 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.

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)