alt Hacker NewsOpenAI signs $38B cloud computing deal with Amazon
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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.
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?
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.
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.
Doesn’t this mean that some percentage of Microsoft’s investment is being given directly to their competitor? This feels like a bubble moment.
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 it
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.
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.
I don’t know but this feels more and more like jumping by stepping one’s own feet…
Millions of people run out of money? Govt: "Too bad, have fun being homeless"
A few billion dollar businesses run out of money due to negligence and greed? Govt:"THEY ARE JUST WITTLE GUYS WHO NEED HELP"
This looks quite concerning imo. We all know this is a bubble. When the transformer implosion happens, you can be sure that OpenAI will be ground zero. All these investors feeding OpenAI and all these adjacent companies exposing themselves to OpenAI will suffer huge losses. Everyone is chasing growth so hard that they are making questionable choices regarding returns from a far future that may never come. And let's be clear, the future that is going to pay this off is a future where this tech or a direct successor to this tech brings about a level of general learning skills and autonomy that should be pretty close to a third revolution. Anything else is massive loves for all of these companies.
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.
Reading between the lines of Trainium left out of the announcement says they tried it, weren’t impressed, and wanted NVidia chips instead.
"It's only when the tide goes out that you know who's been swimming naked." - Warren Buffett
This bubble is one for the history books !
These deal numbers have lost all meaning for me.
There’s been some buzz around the official opening of the Grand Egyptian Museum, which I visited last month. That project took 1.1 to 1.2B USD. Double its original budget estimate but still the museum looks fantastic and it feels, tangibly, like it’s worth a billion.
In contrast with all the money spent on AI, it just feels like monopoly money. Where’s the monument to its success? We could’ve built flying cars or been back to the moon with this much money.
Great, can I buy hallucinated products now?
How much is Amazon 'investing' in OpenAI for this deal?
We all know this is going to pop at some point but I personally think Amazon would be a good investment for the next 6 months or so. They just did layoffs, can ride the OpenAI hypetrain, and they beat recent earnings. If they beat next earnings with a lower headcount and mention "AI" a couple times, I think their stock price easily goes to $300.
Not financial advice, obviously, but that's my personal outlook. I've said it before: Alphabet is probably the safest play long term as they haven't been infected by any NVIDIA or OpenAI deals (yet)
I wouldn't be surprised if a few weeks later, Amazon was investing $38B in NVIDIA for new server processors... like nothing to see here folks, totally not a giant circular bubble...
At this point these announcements are more PR posturing than anything that makes financial sense for shareholders.
I do worry what the other side of this looks like when the circular feedback loop driving hype up eventually reverses and drives things down with amplifying effect.
Obviously the plan is to lock Anthropic and others out of AWS.
All financial analysis misses the point. They just need to buy enough time and compute to out-last the competition.
All bets are off if China find a way of reducing processing power by 50% or more.
If only killing off grok and Gemini was so easy...
LOL Sam Conman trying to ripe everybody in.
If it is a bubble, why are huge companies like Amazon and Microsoft feeding it? What do they get by doing this nonstop? All I hear is that this is a bubble on the internet, yet big companies are making these huge deals. Don't they see what we, the uspeasants, see with their highly paid finance departments?
At this point it is getting beyond parody
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Looks like someone knew about this on Thursday, gotta love those over efficient market trends.
All these stories should have the dollar amounts in quotes as they are farcical.
Only 38 billion dollars? I thought we are in the age of triple digit billion sums by now in the LLM space. What is that paltry change worth for, a couple seconds worth of OpenAI daily expenses?
https://archive.is/6DtPq