OpenAI has gone wild with compute deals this year, committing to spend far more than its balance sheet can currently sustain. So who takes the fall if it can’t pay? It won’t be Altman.
Read the full story on Forbes: https://www.forbes.com/sites/rashishrivastava/2025/11/07/why-sam-altman-wont-be-on-the-hook-for-openais-massive-spending-spree/
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00:00Today on Forbes, why Sam Altman won't be on the hook for OpenAI's massive spending spree.
00:08Over the last few months, OpenAI CEO Sam Altman has been on a tear of deal-making,
00:14announcing multi-billion dollar agreements with the biggest tech companies in the world.
00:19There's Oracle, NVIDIA, Microsoft, AMD, Broadcom, and most recently, Amazon.
00:26He's committed to spending a grand sum total of $1.4 trillion on data centers in the coming years.
00:34An eyebrow-raising figure for a company which claims its annual revenue is projected to reach $20 billion this year.
00:41This begs an all-important question for the entire tech industry, whose fate is now tied to OpenAI.
00:47What happens if he can't pay?
00:49At an event this past week, OpenAI CFO Sarah Fryer seemed to suggest that the government could act as a
00:57quote, backstop for the company's commitments, comments she later walked back.
01:03And in a long-winded post on X, Altman addressed the question of what happens to OpenAI if its web of deals falls apart.
01:10He said, quote,
01:12If we screw up and can't fix it, we should fail, and other companies will continue on doing good work and servicing customers.
01:20He added, quote,
01:21We of course could be wrong, and the market, not the government, will deal with it if we are.
01:28The odds don't look great right now.
01:30In a recent blog post, Tomas Tungus, a general partner at Theory Ventures, wrote that in order to come through on its compute commitments,
01:39OpenAI's revenue would have to grow to an estimated $577 billion by 2029, roughly the size of Google's revenue that same year.
01:48That's a roughly 2,900% jump from its current projections for 2025.
01:54But OpenAI has options.
01:56D.A. Davidson analyst Gil Luria said that one likely scenario is that the AI company pays for and utilizes only a portion of the compute it has booked.
02:07In that case, companies like Oracle, Amazon, Microsoft, CoreWeave, and others will most likely renegotiate the contracts
02:14and ensure they get at least some amount of business from OpenAI, especially if the alternative is getting none at all.
02:22Luria told Forbes, quote,
02:24They don't want OpenAI to go bankrupt, so their incentive is to renegotiate.
02:30Renegotiating contracts isn't uncommon in the data center world.
02:34These contracts are extremely complex and often spread out over a span of years.
02:39Some parties can even further extend timelines in case companies aren't able to meet commitments.
02:44Clients like OpenAI are typically billed on the basis of usage.
02:48Data center expert Daniel Golding said that the, quote,
02:52Big numbers being announced are often larger than what's actually committed under contract,
02:57largely due to variables like share price, data center construction cost, and GPU price.
03:02For instance, OpenAI has committed to buy up to 6 gigawatts of AMD's chips,
03:08estimated to be worth around $90 billion,
03:11in exchange for about 10% of AMD shares, no cash on either side.
03:15But that hinges on performance milestones for OpenAI's technology and commercial business,
03:21as well as AMD's share price.
03:24The contracts often have some capital-I ifs.
03:28Thanks to constraints on power supply and chip availability,
03:31there's a possibility that some of these infrastructure providers
03:34aren't able to deliver in time,
03:36another opportunity for OpenAI to weasel out of paying some of the top-line number.
03:41OpenAI's $22.4 billion in total contracts with CoreWeave, for instance,
03:47can be terminated by either party at any time, quote,
03:50for cause, legal speak for things like delays.
03:55Experts note Chief Dealmaker Altman doesn't have anything to lose.
03:59He has repeatedly claimed he does not have a stake in the company
04:02and won't have a stake even after OpenAI has restructured
04:05to become a public benefit corporation.
04:07Ophir Eldar, a corporate governance professor at the UC Berkeley School of Law,
04:12said, quote,
04:13He has the upside, in a sense, in terms of influence, if it all succeeds.
04:18He's taking all this commitment,
04:20knowing that he's not going to actually face any consequences
04:22because he doesn't have a financial stake.
04:26That's not good corporate governance,
04:28according to Joellen Posner,
04:29a professor of management and entrepreneurship
04:32at Santa Clara University's Levy School of Business.
04:35She said, quote,
04:37We allow leaders that we see as being super pioneering
04:39to behave idiosyncratically,
04:41and when things move in the opposite direction
04:43and somebody has to pay,
04:45it's unclear that they're the ones that are going to have to pay.
04:50For full coverage, check out Rashi Srivastava,
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