Last month, OpenAI announced a $500 billion commitment to its Stargate project, designed to facilitate the construction of data centers across the United States for its sophisticated advances. This directly impacted its multi-billion partnership with Microsoft, losing its exclusive cloud provider status.
While Microsoft's partnership with OpenAI has seemingly become more complicated, it holds the “right of first refusal.” As such, Microsoft remains the first option to host OpenAI workloads in its cloud infrastructure and services. The services will only be outsourced to other vendors if Microsoft can't meet the requirements.
However, a new report by The Information suggests a rift forming between Microsoft and OpenAI, further indicating that the latter may be drifting away from Microsoft and leaning more on SoftBank for its computing needs.
As you may know, OpenAI's $500 billion bet on Stargate is based on private investments from OpenAI, SoftBank, Oracle, and MGX, with SoftBank having the largest stake in the project.
The Information's report details that OpenAI's drift from Microsoft won't happen overnight. Instead, OpenAI's dependency on Microsoft's data centers for computing power is likely to get more intense as its advances in AI become more sophisticated.
Per the outlet's estimations, the ChatGPT maker's overall costs will assume a dramatic uptick, with projections of up to $20 billion in cash by 2027. As you may know, OpenAI was on the verge of bankruptcy, with projections of making a $5 billion loss within 12 months.
However, the AI firm was saved from the cusps of bankruptcy through a round of funding. Key investors, including Microsoft, NVIDIA, and Thrive Capital, raised $6.6 billion, pushing the company's market valuation well beyond $157 billion.
OpenAI is reportedly in talks to raise $40 billion through another round of funding, pushing its market capitalization to approximately $340 billion.
SoftBank is slated to lead the funding round with a stake of between $15 billion and $25 billion in the ChatGPT maker. Interestingly, this would dethrone Microsoft as OpenAI's largest investor, passing on the crown to SoftBank.
Elsewhere, OpenAI co-founder and Tesla CEO Elon Musk jokingly offered to acquire OpenAI for $97.4 billion, seemingly opening Pandora's box and leading to a back-and-forth with OpenAI CEO Sam Altman. Interestingly, Musk's acquisition offer was well beyond OpenAI's market value, potentially indicating that he wasn't serious about his offer.
Altman quickly rubbished Musk's offer, indicating OpenAI wasn't on sale, neither was its mission. The executive brushed off Musk's offer as one of his usual gambits. “I wish he would just compete by building a better product," added Altman.
Following OpenAI's Stargate announcement, there have been a lot of predictions about its partnership's trajectory with Microsoft. For instance, Salesforce CEO Marc Benioff suggests that Microsoft won't use OpenAI's technology across its tech stack in the future. It'll be interesting to see how things unfold as the AI bubble turns into a tangled web.
