OpenAI executives have fielded a lot of questions about how they expect to pay for the $1.4 trillion in data center construction and usage commitments they’ve raised this year, given that their revenue — while growing rapidly — is running at an annualized rate of $20 billion, CEO Sam Altman said Thursday. in a post on X.
Altman’s comments came in response to comments made by OpenAI CFO Sarah Friar, which she quickly retracted. Speaking at a Wall Street Journal event on Wednesday, Friar said she wanted the US government to “stop back” her company’s infrastructure loans. This, he explained, would make the company’s loans cheaper and ensure that it could always use the latest, greatest chip.
A backstopped loan is when the government guarantees it, so if the company defaults, taxpayers pick up the bill. Lenders tend to reward low-risk loans like this with better terms.
Friar said that using older chips, which OpenAI has to do with limited computing, makes financing options more affordable, but that the company’s goal is to always put its latest models on the latest, top-of-the-line brands.
So how do you pay for this revolving door of brands? He said the company was looking to an “ecosystem” to help, including banks, PE firms and, he hoped, the government.
When asked what the government wanted to do, he said, “… the backstop, the guarantee that allows the financing. This can actually reduce the cost of financing but also increase the loan to value, so that the amount of debt you can take on is more than a portion of the equity.”
He also hinted that such talks, particularly in the US, were already in the works, saying: “I think we’re seeing that. The US government, in particular, has been incredibly forward-looking, has really understood that AI is almost a national strategic asset.”
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After the Wall Street Journal publication the clip of her conversation that desire for a federal backstop, and lots of it X users with big fans scoffing at the idea, Friar quickly answered her comments.
“I want to clarify my comments earlier today. OpenAI is not seeking a government backstop for our infrastructure commitments. I used the word ‘backstop’ and it got the point across,” he posted on LinkedIn.
On Thursday, Trump’s AI czar David Sachs said.
“There will be no federal bailout for AI. The US has at least 5 major frontier model companies. If one fails, others will take its place,” he posted, adding that what the administration wants to do is make it easier to “licensing and power generation.” Although he did not name her, he also forgave the Friar for “clarifying” her stance.
After that, Altman wrote a lengthy post on X echoing Sacks’ sentiments.
“We do not have or want government guarantees for OpenAI data centers. We believe that governments should not pick winners or losers and that taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market,” he wrote.
He also clarified that revolving loans have been discussed — but not for his company.
“The one area in which we have discussed loan guarantees is as part of supporting the establishment of semiconductor factories in the US, where we and other companies have responded to the government’s call and where we would be happy to help (although we have not made a formal request).”
It’s hard to blame Friar for floating the idea. He’s right that such a guarantee would make it easier to finance, even if, as Sachs wrote in his column, the idea of asking for a taxpayer-funded bailout is “ludicrous.”
Now that she’s heard a resounding public “no” from someone she’d need in her corner for this idea, she and OpenAI CEO Sam Altman can expect plenty more questions about how they expect to pay for the $1 trillion windfall.
Indeed, Altman seems prepared for such a thing.
“We expect to end this year in excess of $20 billion in annualized revenue and grow into the hundreds of billions by 2030. We are looking at approximately $1.4 trillion in commitments over the next 8 years,” he wrote, adding that the company feels good about its “prospects,” especially in its enterprise offering, new consumer devices and robotics.
