Sam Altman cleared up some misunderstandings from the social media echo chamber on Thursday. While doing so, the OpenAI CEO seemed to announce a potentially huge new business for the startup.
“We are also looking at ways to more directly sell compute capacity to other companies (and people); we are pretty sure the world is going to need a lot of ‘AI cloud’, and we are excited to offer this,” Altman wrote on X.
This suggests OpenAI may be looking to become a cloud provider in its own right. That would put the AI startup into direct competition with cloud giants Microsoft Azure, Amazon Web Services, and Google Cloud Platform.
I’ve never seen OpenAI talk so clearly about building a business like this. I asked spokespeople at the startup for comment and any clarifications, but didn’t hear back by publication time.
OpenAI CFO Sarah Friar may have hinted at something like this back in September. In a warning shot over future competition, she said cloud providers have been “learning on our dime,” and she wants to ensure OpenAI isn’t giving away its AI know-how to these tech giants.
How will OpenAI pay?
While Altman’s comments on Thursday were designed to correct misunderstandings, he also addressed a much more important question hanging over the entire market: How will OpenAI pay for more than $1 trillion in AI infrastructure deals it’s signed lately?
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One potential way would be to become a major cloud provider. At scale, these businesses are unprecedented money machines. If you’re going to spend over $1 trillion on AI chips, networking gear, and huge data centers, one way to get a relatively quick return on that is by renting out these computing resources to other companies.
This is why investors are (relatively!) less concerned about Microsoft, Amazon, and Google right now. They already have huge cloud business models that generate returns on their infrastructure spending.
If you don’t have a cloud business, the future looks murkier. Take Meta, for example. While it’s also spending billions of dollars on data centers and technical gear, it doesn’t have a cloud service, and therefore lacks a clear way to achieve a quick return on this heavy investment. This is part of the reason Meta shares slumped recently. Meta CEO Mark Zuckerberg doesn’t have a clear enough answer (yet?) for how all this infrastructure investment will pay off.
OpenAI is arguably in a tighter spot than Meta right now. Building a serious cloud business could assuage some investor concern over AI’s return on investment.
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