Chips by the millions and losses by the billions

Sam Altman’s group, creator of ChatGPT, is engaged in a frantic shopping spree with specialized electronics giants to acquire the processors needed for its development. The company doesn’t expect to be profitable until 2029.

Thrown headlong into the artificial intelligence (AI) rush, OpenAI is ordering hundreds of billions of dollars worth of chips—amounts that are out of line with its current revenues and worrying some investors.

In less than a month, the creator of ChatGPT has just committed to acquiring 26 gigawatts (GW) of processors from Nvidia, AMD, and Broadcom, representing at least ten million units in total, requiring the electricity production of more than twenty nuclear reactors.

« It’s going to take hundreds of billions of dollars to meet their commitments, » summarizes Gil Luria of the financial consulting firm D.A. Davidson.

But OpenAI only expects to generate around $13 billion in revenue in 2025, loses several billion dollars each year, and doesn’t expect to be profitable until 2029.

In the case of Nvidia, the Santa Clara, California-based giant has committed to acquiring $100 billion worth of OpenAI stock over several years, a fresh infusion of cash that could allow the AI ​​darling to absorb part of the cost of chips.

This mechanism is often referred to as circular financing, with a supplier offering the means for a customer to purchase its goods or services.

AMD, for its part, agreed to give its client shares, the value of which could reach tens of billions of dollars, a highly unusual transaction as it does not include any consideration.

« This is another example of unhealthy behavior, » points out Gil Luria, who also testifies, in passing, to the fact that « AMD is prepared to do anything to sell its AI chips. »