OpenAI, NVIDIA and Oracle are currently engaged in a careful dance that’s raised the valuation of all companies concerned, but Elon Musk believes that this situation might not be sustainable for too long.
Elon Musk has said that there’s a big question if the hardware buildout — and associated jumps in valuations — between OpenAI, NVIDIA and Oracle can last until money essentially becomes meaningless because of the advent of super-intelligent AI. “Big question is whether the infinite money glitch lasts until the infinite money AI genie arrives,” he posted on X.
Musk was reacting to a post by SemiAnalysis founder Dylan Patel, which showed how money was being transferred between NVIDIA, OpenAI and Oracle, which had caused the valuations of all associated companies to zoom. Patel had called it an “infinite money glitch”.
Patel seemed to be referring to how NVIDIA had just announced a $100 billion partnership with OpenAI, through which it would give OpenAI money to buy NVIDIA chips. OpenAI had also announced a cloud agreement with Oracle, through which OpenAI would rent Oracle’s datacenters to run its AI operations. These Oracle datacenters in turn would be powered by NVIDIA’s chips, which would mean that NVIDIA would essentially be able to sell GPUs for the money it had given OpenAI. The deals have been extremely lucrative for all companies, particularly Oracle — after its deal with OpenAI was announced, its stock jumped 40% in a single day, raising its market cap by nearly $300 billion. NVIDIA’s stock hasn’t jumped as much, but $100 billion of sales won’t hurt the company, and OpenAI will likely receive a much higher valuation in its coming rounds because of all the compute it now has access to.
All this seems a bit circular in nature, but it could well play out admirably if the demand for AI ends up being what these companies are projecting. If AI demand continues rising the way it has, these datacenters will be worth their weight in gold, and could enable these companies to make big profits from their investments. On the other hand, if the demand for AI plateaus off, all these companies could be left holding the bag. Musk seems to be saying that there’s also a third option — if super intelligent AI can make money itself obsolete, these investments could work out, because there would be no need to recover these vast sums of money in a post-money world. But given how Musk calls it an infinite money “genie” — and genies aren’t exactly found in the real world — he doesn’t seem to think that’s a particularly likely outcome. Which means that these companies are taking pretty major risks by committing so much capital into building datacenters to service demand for AI that currently doesn’t exist.