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- Hacker News
- Does OpenAI have $38 billion to buy this? Does AWS have sufficient free cash flow to pay for this “infrastructure” investment they speak of?
Recent analysis shows AWS is burning through Amazon’s free cash on AI buildouts which is very concerning if the bubble pops, leaving Amazon holding the bag of invested capital not making returns.
Amazon is a bit late to the party on these headlines, and lots of unanswered questions about what’s really going on here.
by JCM9 - oAI is growing rapidly at over $1bn a month in revenues, maybe as much as $2bn if you read between the lines from Sam's interviews. Over 7 years will they see $38bn of revenue demand against inference? ABSOLUTELY. Is it an incredibly good trick to get access to that much infrastructure without having to run a datacenter while you pilot the fastest growth ever consumer tech company? I'd say it is. Others might disagreeby vessenes
- No, they don’t have the money at the bottom of their burning pit of other peoples cash.by gizajob
- Amazon is a bit late to the announcements party on this front so this comes across as a bit “hey guys, us too!”
Lots of questions on if this makes sense, and highly likely Amazon never gets $38B cash from OpenAI out of this.
by cmiles8 - >"hey guys, us too!"
In what context? This isn't fashion, being the 2nd mover has benefits which often outweigh the costs.
- i think this shows Amazon filling a need Microsoft couldn't. They probably tried, but decided to use Amazon cloud services after reviewing infrastructure needs.by mocha_nate
- What is the end goal? GPT-5 wasn't even a step up from o3.
ChatGPT has 800 million weekly users but only 10 million are paying.
- GPT 5 codex is definitely a step up from o3. I could use o3 still for chat, but prefer 5-thinking. Do you still use o3?by vessenes
- Doesn’t this mean that some percentage of Microsoft’s investment is being given directly to their competitor? This feels like a bubble moment.by fathermarz
- They sure seem to be writing a lot of cheques. Hope they all cash ok because if they don’t it’ll suck the entire tech industry down with itby Havoc
- Those cheques absolutely are going to bounce at some point and will bring the entire tech industry down. At least on the stock market.by gizajob
- And so the bubble grows.
I'd be happy if the industry/stock market proves me wrong, but I can't see this ending any other way than with a major crash that makes the dot-com boom seem like a minor blimp.
by Insanity - I really don't know with this. By that I mean all logic says that, yes this is absolutely a bubble. But the markets have been irrational for a very long time now, just look at Tesla stock and it wild valuations for years now as an example. This could go on for a lot longer than anyone would think reasonable.by PeaceTed
- I can't see a prediction like this as anything other than a description of what would be maximally emotionally satisfying for you personally.
- I lived through the first dot com bubble and bust and it was pretty nasty. I was working for a telecom company at the time. The building we were in were chocked full of bright eyed, bushy tailed startups who were pushing the edge on all kinds of things. Less than a year later, they were all gone.
We used to have lunch at the bar across the street and just about once or twice a week for several months, we'd walk in and there would be a table with about 15-20 people sitting around drinking and reminiscing about how they were going to change the world.
A lot of developers I know just completely left the industry and never came back.
If this crash exceeds that one? We're in for some seriously tough times.
- https://founderboat.com/interviews/2025-11-01-openai-sam-sat...
> A central theme of the discussion was the staggering demand for computational power. Gerstner highlighted OpenAI’s reported commitment of $1.4 trillion for compute over the next five years, questioning how a company with reported revenues of $13 billion could manage such an outlay.
> Altman pushed back forcefully. “First of all, we’re doing well more revenue than that. Second of all, Brad, if you want to sell your shares, I’ll find you a buyer,” he quipped. He expressed profound confidence in the company’s trajectory. “We do plan for revenue to grow steeply. Revenue is growing steeply. We are taking a forward bet that it’s going to continue to grow.”
This seems to be just the tip of the iceberg; what about the rest?
by chaosprint - Could they not at least increase their profits by simply replacing expensive technical staff with AI?by dude250711
- The main question I have with all of these deals: how much of the deal is OpenAI actually required to buy, versus how much of it is an option for OpenAI to buy? Because if you tot up all of these numbers, it's something like 10× current annual revenue that OpenAI is signing deals for, and if OpenAI is actually committing to all of that spend... there is a serious cash crunch looming. But if OpenAI is merely optioning to spend up to that much, and only has to commit to a tenth of those numbers, well, that's not as threatening to OpenAI as a going concern.by jcranmer
- It's actually more like 100x their current revenue; they stated last week[0] that they have spending commitments for $1.4T of compute.
Or, well, they stated that the TCO of the compute they have commitments for is $1.4T, which is a somewhat strange phrasing. I assume it's due to it being a mix of self-owned vs. rental compute, and what they mean is the TCO to OpenAI rather than the TCO to the owner of the compute.
by jsnell - This does all smell a bit like when WeWork was buying up seemingly every available office for rent. When it came time to actually pay for said offices… oops.by JCM9
- OpenAI is generating $13B a year in revenue. Let’s be generous and say $20B. They’ve signed commitments to spend something like $1.4 trillion on compute. An asset that to date has proven to have a hyper-depreciation cycle.
Someone has to come up with $1.4 trillion in actual cash, fast, or this whole thing comes crashing down. Why? At the end of all this circular financing and deals are folks that actually want real cash (eg electricity utilities that aren’t going to accept OpenAI shares for payment).
If the above doesn’t freak you about a bit at how bonkers this whole thing has become then you need a reality check. “Selling ads” on ChatGPT ain’t gonna close that hole.
by JCM9 - We had impossible financial projections written up just like this for Uber and WeWork. They’re still here. The MBAs will probably win this too.
- This circular game is wholly dependent on OpenAI's ability to access public funds via IPO.by mv4
- The obvious answer is that they are going to IPOby jgbuddy
- If OpenAI continues on their current revenue growth trajectory, they should be larger than AWS by 2027. Burning 2x revenue to grow that fast is not really a concern beyond your continued ability to attract financing. Given the trajectory of inference cost, it unlikely that they would fail to reach profitability.
The big question would be how much of this revenue is unjustifiably circular, and how much of it is extractable - but those are questions for when the growth slows. Im certain every supplier has ways to back out of these commitments if the finances look shaky.
by lumost - You're probably right about how disconnected the spending vs. revenue is, but I've also seen the entire USA's public debt go so high that it requires nearly $1 trillion per year just to service the interest payments [1]. That sounds ludicrous to me too, and yet somehow the economy is booming.
There are two important points by Keynes that are relevant:
1. The market can remain irrational longer than you can remain solvent. Even if you're betting on a crash, it will probably happen after you get margin called and lose all your money. You can be absolutely right about where this is headed, but keep your personal investments away from this.
2. The value of a company isn't determined by any sound fundamentals. It's determined by how much you can get a sucker to pay (aka Keynes' castles in the air theory). Until we run out of suckers OpenAI will be able to keep getting cash infusions to pay whoever actually demands cash instead of stock. And as long as there are suckers that are CEOs of big tech companies they are going to be getting really big cash infusions.
[1] https://www.pgpf.org/programs-and-projects/fiscal-policy/mon...
by parsimo2010 - The $1.4T commitment is spread over multiple years. Let's assume 4 -- then that's $350B/year. Coincidentally, Google had $350B in revenue in 2024 (and projected to be ~$400B in 2025).
It's certainly possible to imagine OpenAI eventually generating far more revenue than Google, even without anything close to AGI. For example, if they were to improve productivity of 10% of the economy by 10% and capture a third of that value for themselves, that would be more than enough. Alternatively, displacing Google as the go-to place for search and selling ads against that would likely generate at least Google levels of revenue. Or some combination of both.
Is this guaranteed to happen? Of course not. But it's not in "bonkers" territory either.
by jonas21 - “OpenAI CEO Sam Altman sounded exasperated when Altimeter Capital founder—and OpenAI shareholder—Brad Gerstner asked him the question that Gerstner said was ‘hanging over the market’: how a company generating $13 billion in revenue this year would pay for the $1.4 trillion in computing capacity that Altman has said the company is on the hook for.
‘Brad, if you want to sell shares, I’ll find you a buyer…I just—enough,’ Altman said on Gerstner’s podcast.”
https://www.theinformation.com/articles/ilya-saw-mira-murati...
- > Someone has to come up with $1.4 trillion in actual cash, fast, or this whole thing comes crashing down.
These deals aren't for 100% payment up front. The deals also include stock, not just cash. So, no, they do not need to come up with $1.4 trillion in cash quickly.
This AWS deal is spread over 7 years. That's $5.4 billion per year, though I assume it's ramping up over time.
> At the end of all this circular financing and deals are folks that actually want real cash (eg electricity utilities that aren’t going to accept OpenAI shares for payment).
Amazon's cash on hand is on the order of $100 billion. They also have constant revenue coming in. They will not have any problem accepting OpenAI shares and then paying electricity bills with cash.
These deals are also being done in the open with publicly traded companies. Investors can see the balance sheets and react accordingly in the stock price.
by Aurornis