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OpenAI is on a deal-making tear, despite the flop of the much-hyped release of GPT-5 in August. This past month, OpenAI closed another funding round, raising its valuation from $300 billion to $500 billion. It announced a partnership with Oracle, in which OpenAI pledged to spend $300 billion over five years to finance a 4.5-gigawatt (GW) data center buildout as part of its Stargate mega-project. OpenAI and chip designer Broadcom announced a $10 billion partnership to build customized AI chips to handle the projected exponential growth in demand for generative AI tools and products. Then, OpenAI and AMD unveiled a deal in which OpenAI will purchase 6 GW of AMD AI chips, worth roughly $90 billion, and, in a twist, AMD granted OpenAI warrants to 160 million shares of its stock, potentially amounting to 10 percent ownership of AMD. In total, OpenAI has secured $850 billion in data center investments, adding up to 17 GW of planned computing capacity—more power than what New York City and its 20 million residents consume.
There’s just one problem with this master plan: OpenAI doesn’t have the money to pay for it. For example, OpenAI is committing to pay Oracle $60 billion in capex investment annually for five years. For reference, Meta, one of the most valuable and profitable companies in the world, which brought in $164.5 billion in revenue in 2024 and ended the year with a free cash flow of $52.10 billion, plans to spend $72 billion in 2025 building data centers. OpenAI, on the other hand, is on pace to bring in $12.7 billion this year, expects to lose $9 billion, predicts its losses will swell to $47 billion by 2028, and doesn’t expect to break even until 2029. How can OpenAI plan to spend five times what it brought in?
As is often the case in the AI industry, Nvidia came to the rescue, announcing a $100 billion investment in OpenAI. Now OpenAI has the money to send to Oracle to build data centers, which Oracle will fill with Nvidia GPUs. So wait—is Nvidia just paying itself?
In fact, Nvidia is the king of this kind of deal, although $100 billion for a single company certainly stands out. It regularly makes equity investments in AI startups that are also its customers. Like the mythical ouroboros, the snake that eats itself, the AI economy turns equity investments from Nvidia and other companies into purchases of their own products, effectively self-funding their own record revenues. So what happens when this recirculation can’t cover for the lack of massive amounts of available cash for the planned AI buildout?
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