Look at Openai’s intertwined dealmaking nets

Openai CEO Sam Altman is everywhere.

His artificial intelligence startup, currently valued at $500 billion, has taken over billions of dollars in transactions with infrastructure partners to hundreds of billions of dollars.

These spending drives the market.

The Nasdaq and S&P 500 hit highs this week later nvidia We have agreed to invest up to $100 billion in Openai. It followed a $300 billion deal between Openai and Openai Oracle A $500 billion infrastructure project is also being funded in July as part of The Stargate program Softbank.

That commitment never stops there. coreweave On Thursday, it was agreed to provide up to $22.4 billion of Openai on AI infrastructure, up from the $11.9 billion first announced in March. Earlier this month, chip makers Broadcom It said it had secured $10 billion in new customers, and analysts quickly pointed out Openai.

Openai says scaling is key to driving innovation and future AI breakthroughs, but investors and analysts are beginning to frown at the amount of mindborgling money, as Openai relies on increasingly connected webs of infrastructure partners.

For example, Openai acquired a $350 million stake in CoreWeave in March prior to the IPO. Nvidia formalized Openai’s financial interests by participating in a $6.6 billion funding round in October. According to a May report from the Financial Times, Oracle spends around $40 billion on Nvidia chips to power one of Openai’s Stargate data centers. Earlier this month, CoreWeave disclosed orders worth at least $6.3 billion from Nvidia.

And through a $100 billion investment in Openai, Nvidia will gain fairness in startups and simultaneously earn revenue.

According to the company’s CFO Sarah Friar, Openai is expected to generate $13 billion in revenue this year. She told CNBC that the tech boom requires bold bets on infrastructure.

“When the internet started, people kept feeling like, ‘Oh, we’re overbuilding, too much,'” Frier said. “Look at where today, okay?”

Altman told CNBC in August that he was willing to run the company with losses in order to prioritize growth and its investments.

However, some analysts have raised the red flag, claiming Openai’s deal with Nvidia is reminiscent of vendor funding patterns that helped destroy the Dot-Com bubble in the early 2000s.

Nvidia has been the biggest winner of AI Boom to date, as it produces the graphics processing units (GPUs) needed to train models and run large AI workloads. Nvidia’s Openai investments will be paid in installments over several years, but will help Startup build a GPU-based data center.

“There’s no need to be skeptical of the promises of AI technology in general about viewing this announcement as a troubling signal about how the entire space has become self-referential,” the bespoke investment group wrote in a note to its clients on Tuesday. “If NVDA has to provide revenue-driven capital to sustain growth, the entire ecosystem may be unsustainable.”

Peter Boockvar, chief investment officer of BFG Wealth Partners, said the company’s name in the late 1990s was ringing its ears after Openai-nvidia deal was announced.

But the important difference is that the transaction is “a lot bigger in terms of dollars,” he wrote in a note.

“For this whole massive experiment to work without causing a big loss, Openai and its associates will need to generate enormous income and profits to pay for all the obligations they are signing up for, and at the same time return to investors,” Boockvar said.

An Openai spokesperson introduced CNBC this week in comments from Altman and Friar, adding that it is pursuing “a first century opportunity to demand ambition equal to the moment.”

According to Bain & Company’s 2025 Technology Report, the total amount of calculation demand could reach an astonishing 200 Gigawatts by 2030. Building enough data centers to meet this expected demand would cost around $500 billion a year. This means that AI companies will need to generate a total of $2 trillion in annual revenue to cover these costs.

Even if businesses are lagging behind their investments in the cloud and data centers, “the amount will still be $800 billion less than the revenue they need to fund all investments,” Bain said.

There’s a clear, difficult fight ahead, but the Open Altman dispelled concerns on Tuesday and rejected the idea that infrastructure spending is overflowing.

“This is what we need to offer AI,” Altman told CNBC. “Unlike previous technological revolutions and previous versions of the Internet, there is so much needed infrastructure, and this is a small sample.”

-CNBC’s Yun Li and Mackenzie Sigalos contributed to this report

Watch: Openai’s Sam Altman defends Stargate expansion as demand for AI surges