OpenAI CEO Sam Altman says concerns about the circular nature of AI deals may look valid on the surface, but they don’t hold water from an economic standpoint.
In a new post on X, Sam Altman announces that OpenAI has raised $110 billion in its latest funding round from Amazon, Nvidia and Softbank.
Amazon has committed $50 billion, including $15 billion upfront, with the remaining $35 billion contingent on OpenAI meeting certain conditions. Meanwhile, Nvidia and SoftBank are investing $30 billion each.
Following the latest funding round, OpenAI is estimated to have a $730 billion pre-money valuation.
In a new Squawk Pod interview, Altman pushes back on criticisms that AI companies are boosting each other’s balance sheets, as Nvidia and Amazon invest in OpenAI, with the ChatGPT maker using the money to buy hardware from both firms.
“I get where the concern comes from, but I don’t think it matches my understanding of how this all works. This only makes sense if new revenue flows into the whole AI ecosystem. If people are not willing to pay for the services that we and others offer, if there’s no new economic value being committed, then the whole thing doesn’t work. And it would be circular.
But revenue for us [and] for other companies in the industry is growing extremely quickly. And that’s how the whole thing works. Given the huge amounts of money that have to go into building out this infrastructure ahead of the revenue, there are various things where people finance chips, invest in each other’s companies, and all that…
Demand is just a huge part of my day, figuring out how we’re going to get more capacity and how we’re allocating the capacity we have. Then, I don’t think it looks circular, even though the need to finance this, given the huge amounts of money involved, does require a lot of parties to do deals together.”
Meanwhile, Amazon CEO Andy Jassy says he anticipated making a huge investment in OpenAI before allocating $200 billion in CapEx this year.
“Sam and I have been talking in our teams for a while, and that was very much in our projections at that time. And as I said during the call, when we said that we were going to spend about $200 billion in CapEx this year, we have very strong demand signals, a very clear line of sight to those. This is a good example of that.
Remember, the capital that we spend in 2026 is for infrastructure that will be put in place 18 to 24 months later. And so we have very high confidence that we’re going to be able to monetize what we’re spending and we’re going to like the economics a lot in that business.”
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