OpenAI’s large chip purchases now top its revenue.

OpenAI – (Special Correspondent / Web Desk) – OpenAI is making huge orders for advanced computer chips, spending hundreds of billions of dollars to stay ahead in the artificial intelligence field. This massive spending has investors wondering how the company, known for ChatGPT, plans to pay for everything.

In a very short time, the company has agreed to buy a staggering number of powerful data processors from chip makers like Nvidia, AMD, and Broadcom. The energy needed to run all these chips is immense, equal to the output of about twenty large nuclear power plants.

A financial expert noted that fulfilling these chip orders will require an unbelievable amount of money. This creates a major challenge for OpenAI, which expects to lose billions of dollars this year and does not plan to become profitable until 2029, even though it is bringing in about $13 billion in revenue.

OpenAI has not shared its payment plan publicly. However, one of its founders admitted that keeping up with the huge demand for AI is tough and will require some clever and new ways to secure funding.

The chip companies involved are also staying quiet about their specific deals with OpenAI. Reports suggest Nvidia plans to invest a massive sum into OpenAI over several years. This creates a cycle where OpenAI would use that money to buy Nvidia’s own chips, and Nvidia would get a stake in the successful AI company.

Another chip maker, AMD, is trying a different method. It is offering OpenAI the chance to own a part of AMD. Financial experts see this as an unusual move that shows AMD is eager to compete and gain attention in a market led by Nvidia.

The situation is extremely high-risk. One senior analyst told investors that OpenAI’s CEO holds a power that could either severely damage the global economy or lead it to a fantastic technological future, and no one knows which outcome is more likely.

Even selling ownership shares in OpenAI at its very high valuation may not be enough money to cover the chip costs. This means the company might have to take out enormous loans, possibly using the physical chips themselves as guarantee for the debt.

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Other tech giants like Google and Meta have a big advantage. They can pay for their own AI projects using the enormous profits from their online ad businesses, something OpenAI cannot do.

All this unchecked spending reminds some people of the dot-com bubble of the 1990s, which eventually burst. However, other experts point out a key difference: the demand for AI technology today is very real and widespread, backed by OpenAI’s incredible growth and hundreds of millions of users for its ChatGPT tool. Still, they acknowledge the difficult balance between future potential and the risky nature of such giant investments today.