OpenAI's $1.4 trillion problem

Nvidia, Microsoft, Palantir, and other high-flying tech names have all tumbled this week, erasing roughly $400 billion in market value. They have OpenAI to thank for that.

At a Wall Street Journal Live event earlier this week, OpenAI CFO Sarah Friar floated the idea that the US government could “backstop” loans to help finance OpenAI's massive investments, saying that such support would “really drop the cost of the financing.”

The comment quickly drew political pushback. David Sacks, the Trump administration’s AI and crypto adviser, shot down the notion, saying, “There will be no federal bailout for AI.” Within hours, Friar walked back her remarks on LinkedIn, admitting she had “muddied the point” by using the word “backstop.” CEO Sam Altman then joined the cleanup effort in an X post, saying that, “Governments should not pick winners or losers, and that taxpayers should not bail out companies that make bad business decisions.”

The math isn’t mathing

OpenAI has made roughly $1.4 trillion worth of infrastructure commitments over the next 8 years—spanning partnerships with Nvidia, Oracle, and AMD. Just this week, it tacked on another $38 billion deal with Amazon’s AWS. On paper, those figures suggest global domination. In practice, they’ve raised a more uncomfortable question: How will OpenAI pay for it all?

Altman says the company is on track to generate more than $20 billion in annualized revenue this year and is expanding its revenue streams by monetizing its Sora app.

It all sounds promising, but that optimism is hard to square with reality: OpenAI lost $12 billion just last quarter, while carrying a $500 billion valuation that investors are suddenly struggling to justify. Citi projects just $163 billion in revenue by 2030, a fraction of what’s needed to cover its commitments, leaving investors to wonder if the biggest name in AI has over-promised and will under-deliver.

Markets hit the brakes

The fallout has spread beyond OpenAI, with investors losing faith in all things growth—from AI to bitcoin. Tech stocks have dragged the Nasdaq toward correction territory, while Bitcoin slipped below $100,000 twice this week. Analysts warn the sell-off may deepen, noting that weak market breadth and a negative RSI divergence point to a potential 10% correction—a sign that after months of AI-fueled optimism, reality is finally catching up to the hype.—SY