OpenAI's deals are looking a little frothy

Oh, yes, the softly spoken wizard of ChatGPT, Sam Altman has been busy. There was this $300 billion deal with the database and cloud company Oracle. Basically, OpenAI said it would $300 billion worth of computing power from Oracle. But how would OpenAI pay for that? It's unclear.

We'll also talk about Nvidia. It came in soon after saying it would invest up to $100 billion in OpenAI.

And I'm Waylon Wong. Today on the show open AI's deals, we look at the AI data center boom and how the world's most valuable startup is trying to win the AI race

According to the financial times, around 1.2% of America's economic output is going to Amazon, Microsoft, Meta and Google building data centers. That's roughly $1,000 for every American.

Gil Luria is the head of technology research at DA Davidson, an investment firm.

I can just see that in my alley IRL late at night. But more seriously, AI can be used for reviewing legal files, doing a lot of computer coding grunt work, or speeding up medical research. Every few weeks, the many AI models keep hitting new benchmarks.

Do you remember any more Yahoo MSN search?

And that puts OpenAI in a tough situation.

Gil says that Microsoft has that money. So does Amazon, Google, Apple, Meta and Elon musk.

And that brings us to all those weird seeming deals that OpenAI has been making. The $300 billion promise to Oracle, the $100 billion Nvidia is investing in OpenAI. And to think about whether these kinds of deals make sense. Guiloria says we have to make a distinction. With all the AI data center investment,

Why use one word when you can use three?

But seriously, the word bubble is kind of a loaded term in economic economics. It's a situation where the price of an asset is way above what it's really worth, and it's followed by a panic and a crash. But there's a debate over whether you can truly identify a bubble while it's happening, especially when the future's so unclear, like in technology. Galuria isn't using the B word, but he does think the companies might be pumping up more excitement than is warranted.

If Gil is right and the recent open AI deals are inflated.

Right. And it does raise the question about what could happen to the rest of the economy. These kinds of deals are not just limited to open AI meta xai anthropic. These are other companies raising money in atypical ways right now.

The glass half empty view is that AI won't be as transformative as promised and that this could bring down companies and investors in some kind of chain reaction. We'll just be left with these unused data centers humming all around the country to the chagrin of locals who are already pushing back at all this construction. It would vanquish the one clear bright spot in an economy suffering from slow jobs growth and tariff uncertainty.

We're not using the word bubble.

No, don't say recession.

Lots of railroad companies went under after the railroad booms and busts in the 1800s, yet we can still ride those tracks today. Exciting new technology can be a bumpy ride.