OpenAI executives have been facing many questions about how they plan to pay for their $1.4 trillion in data center build-outs and usage commitments. This concern arises because their revenue, while growing quickly, is currently at a $20 billion annual run rate. CEO Sam Altman addressed this topic in a post on X.
Altman’s comments came after OpenAI CFO Sarah Friar made statements that she later walked back. Speaking at a Wall Street Journal event, Friar said she wanted the US government to “backstop” her company’s infrastructure loans. She explained this would make the company’s loans cheaper and ensure it could always use the latest and best chips. A backstopped loan is one where the government guarantees it, meaning taxpayers would cover the bill if the company defaults. Lenders typically offer better terms for such low-risk loans.
Friar noted that using older chips, which the compute-constrained OpenAI must do, makes financing more affordable. However, the company’s goal is to run its state-of-the-art models on the newest chips. When asked how to pay for this constant need for new chips, she said the company is looking for an “ecosystem” of help from banks, private equity firms, and, she hoped, the government. She elaborated that a government backstop or guarantee would lower the cost of financing and allow the company to take on more debt.
She also implied that such talks, particularly with the U.S. government, were already underway, stating that the government has been forward-leaning and understands that AI is almost a national strategic asset.
After a clip of her discussing the federal backstop was published and many X users criticized the idea, Friar quickly walked back her comments. She clarified on LinkedIn that OpenAI is not seeking a government backstop for its infrastructure commitments and acknowledged that her use of the word “backstop” had muddied her point.
On Thursday, David Sacks, who is former President Trump’s AI Czar and a major Silicon Valley venture capitalist, weighed in on the matter. He wrote on X that the US has no plans to bail out any AI company. He stated there will be no federal bailout for AI, noting that the U.S. has at least five major frontier model companies and if one fails, others will take its place. He added that the government’s role should be to make permitting and power generation easier. He also forgave Friar for clarifying her stance.
In the wake of this, Altman wrote a lengthy post on X echoing Sacks’ sentiments. He stated that OpenAI does not have or want government guarantees for its data centers. He expressed a belief that governments should not pick winners and losers and that taxpayers should not bail out companies that make bad business decisions or lose in the market.
He did clarify that backstopped loans have been discussed, but not for his company. He mentioned that the one area where loan guarantees were discussed was to support the buildout of semiconductor fabrication plants in the US, where OpenAI and other companies responded to the government’s call, though they did not formally apply.
It is hard to fault Friar for floating the idea, as such a guarantee would indeed make her financing job easier, even if the idea of a taxpayer-funded bailout is considered ridiculous by some.
Having now heard a public rejection from a key figure, Friar and Altman can expect more questions about how they will pay for their massive buildout. Altman seems prepared for these questions. He noted that the company expects to end this year above a $20 billion annualized revenue run rate and grow to hundreds of billions by 2030. With commitments of about $1.4 trillion over the next eight years, he expressed confidence in the company’s prospects, especially its enterprise offerings, new consumer devices, and robotics.