🃏 When Sam Altman snapped “Enough” at an investor’s question about how OpenAI could justify USD 1.4 tn in spending commitments against USD 13 bn in revenue, it wasn’t just irritation, it was the sound of a leader whose ambition may have outpaced reality, realizing that people could see through him.

The testy exchange on venture capitalist Brad Gerstner’s podcast came as OpenAI announced a USD 38 bn agreement with Amazon Web Services (AWS) — the latest in a series of massive infrastructure commitments that now total close to USD 1.5 tn. Beneath Altman’s defensive posturing (runtime: 74:20) lies a more troubling reality: the AI revolution he has championed may be built on financial engineering rather than genuine economic transformation.

The man who promised everything: Altman didn’t just promise to build a better chatbot — he promised to cure cancer, to create “a legitimate PhD-level expert in anything” that would usher in an era of artificial general intelligence capable of transforming humanity. “Scaling frontier AI requires massive, reliable compute,” Altman said when announcing the AWS agreement, positioning himself as the architect of civilization’s next leap forward.

But faced with OpenAI’s mounting financial pressures — USD 12 bn in losses just last quarter, according to Microsoft’s earnings report — the company that once promised cures and expertise is now relying on humanity’s oldest commercial impulse: selling intimacy to lonely men. It’s a stunning decline from the lofty rhetoric of yore, and reveals what may be Altman’s fatal flaw: a “consistent pattern of lying” that his own former colleagues warned about in the 52-page memo that cost him his job (if only temporarily).

New details from a recent deposition of Ilya Sutskever, OpenAI’s former chief scientist, reveal the depth of concern that prompted the attempted coup in 2023. According to Gizmodo, Sutskever spent over a year building his case against Altman before submitting the memo to the board, noting that Altman had allegedly been pushed out of startup accelerator Y Combinator for similar reasons. The board fired Altman on 17 November of the same year, and when he returned four days later, more entrenched than before, the board members who questioned had left.

What is now becoming clear is how Altman’s pattern of providing “different stories to different people” may extend to OpenAI’s entire financial architecture. The Silicon Valley giant has constructed an intricate web of circular agreements where it receives bns from other tech companies before sending those bns back to the same companies to pay for computing power and services, according to a New York Times investigation.

The financial shell game: From 2019 through 2023, Microsoft pumped more than USD 13 bn into OpenAI. OpenAI then funneled most of those bns back to Microsoft to buy cloud computing power. Microsoft, notably, accounts for about 20% of Nvidia’s revenue and is OpenAI’s largest investor, creating a triangle of mutual dependence. When OpenAI outgrew Microsoft’s capacity, Altman replicated the model with other partners:

  • CoreWeave: OpenAI agreed to pay the data center company more than USD 22 bn for computing power across three agreements, while receiving USD 350 mn in CoreWeave stock that could help pay for that same computing power. CoreWeave reportedly derives 60% of its revenue from OpenAI while taking on enormous debt to build facilities for its primary customer.
  • Oracle: Agreed to spend USD 300 bn building new data centers for OpenAI, with OpenAI then paying Oracle roughly the same amount to use these facilities. Despite the massive agreement, Oracle is losing USD 100 mn quarterly on its data center rentals to OpenAI and is forecast to burn nearly USD 29 bn in freecashflow by FY 2028.
  • Nvidia: Announced it would invest USD 100 bn in OpenAI, which could help OpenAI pay for data centers — while OpenAI buys Nvidia’s chips to power them.
  • AMD: OpenAI signed an agreement to buy up to 160 mn shares in the chipmaker at a penny per share — roughly a 10% stake that could supply additional capital to build data centers where it will buy AMD chips.
  • Amazon: This week’s USD 38 bn AWS agreement became possible only after OpenAI renegotiated its Microsoft contract to remove Microsoft’s right of first refusal. The announcement sent Amazon’s stock up more than 5%, adding USD 10 bn to Jeff Bezos’s net worth in a single day.

When confronted by Gerstner about the gap between revenue and spending, Altman offered no specifics, only insisting OpenAI is “doing well more revenue than that” and claiming that the company could reach USD 100 bn in gains… by 2027.

But the numbers tell a different story. OpenAI pulls in bns in revenue annually from customers, but it still loses more money than it makes. Microsoft’s recent earnings suggested that the AI company lost approximately USD 12 bn in the past quarter alone. The company’s blockbuster ChatGPT product — which accounts for the majority of its revenue — is struggling to convert users, with only 5% of its 800 mn active members paying for subscriptions.

This catastrophic conversion rate explains why OpenAI is now chasing revenue wherever it can find it, including pivoting to adult content and a browser that could open up ad revenue streams. This isn’t innovation, it’s desperation — tacit admission that the transformative economic benefits Altman promised aren’t materializing on a timeline that can sustain current investment levels.

Tomorrow’s issue follows the thread to analyze what may happen if faith in Atlman’s vision is lost, and if his fancy financial footwork may take the global economy down with him.

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