"That's thanks to a new stock sale and recent agreements with the chipmaking giant Nvidia, which plans to invest up to $100 billion in OpenAI, and the cloud-computing company Oracle, to which OpenAI will pay $300 billion for a massive chunk of its computing power. The result is a curiously recursive cash flow, because Oracle already committed to buying chips from Nvidia in May. In other words, Nvidia will pay OpenAI, which will pay Oracle, which will pay Nvidia."
"Much like the tech unicorns of decades past (think Uber, WeWork, and Spotify), the company is confident enough in its eventual dominance that it's willing to operate at a loss in the near term. ChatGPT's arrival, in 2022, was revolutionary, and it was easy to see why its parent company secured such astronomical investments and major partnerships during the initial funding frenzy."
OpenAI launched a prominent ad campaign presenting ChatGPT use cases like recipes, workouts, and road trips. The company reached a $500 billion private valuation after a stock sale and deals involving Nvidia and Oracle, with Nvidia planning up to $100 billion in investment and OpenAI committing to pay Oracle $300 billion for computing. Oracle's prior chip commitments to Nvidia create a circular cash flow. OpenAI expects losses exceeding $1 billion this year but is accepting near-term deficits to pursue market dominance. ChatGPT's 2022 debut attracted substantial user growth, but the broader outlook has become more complex.
Read at The Atlantic
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