"There has been a breakdown in negotiations over project financing, as well as the timeline of when the expanded capacity might come online. This may be fine for OpenAI; it can presumably find other datacentres. It is less fine for OpenAI's partner on the project, Oracle, which has already spent billions on hardware for the site."
"It is one of a number of cracks appearing in the capital side of the AI economy that are making investors rather nervous. Both companies have said the development will not derail their AI plans. They also said that a month ago, when a different $100bn deal melted down between OpenAI and Nvidia, the world's biggest maker of the chips that train AI models."
"Future datacentre leases agreed by the largest cloud computing companies (including Amazon, Oracle and Microsoft) are up nearly 340% in two years and now top $700bn, according to Bloomberg. It is a lot of money if the technology does not start delivering on its promise to supercharge economic productivity."
OpenAI is backing out of expanding a flagship datacentre in Abilene, Texas, part of the massive $500bn Stargate infrastructure project designed to secure American AI leadership. Negotiations broke down over financing and timeline for capacity expansion. While OpenAI can find alternative datacentres, Oracle has already invested billions in hardware for the site. This represents one of several fractures in AI economy financing, following a previous $100bn deal collapse between OpenAI and Nvidia. Despite companies claiming their AI plans remain unaffected, investor nervousness is growing. Datacentre leases by major cloud companies have surged 340% in two years to $700bn, creating significant financial risk if AI fails to deliver promised productivity gains.
#ai-infrastructure-investment #stargate-project #datacentre-financing #economic-productivity-concerns #tech-industry-consolidation
Read at www.theguardian.com
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