BUBBLES POP: OpenAI Races to Quell Concerns Over Its Finances.
Sarah Friar, OpenAI’s chief financial officer, faced widespread online pushback after she raised the prospect of government aid for the company at a Wall Street Journal technology conference on Wednesday. OpenAI has embarked on a deal spree to build computing infrastructure to power A.I. development, and Ms. Friar said the company wanted to find creative ways to finance its ambitious — and expensive — plans.
“This is where we’re looking for an ecosystem of banks, private equity, maybe even governmental, the ways governments can come to bear,” Ms. Friar said at the conference in Napa, Calif., adding that it would be “the backstop, the guarantee that allows the financing to happen.”
The last thing the AI industry needs is more money shoveled into it.
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Her comments set off concern amid rising unease over whether an industrywide A.I. spending frenzy can be sustained. OpenAI, Meta, Google, Microsoft and other A.I. companies are pouring billions of dollars into building data centers and related infrastructure to power the development of the technology, with some of the companies increasingly turning to creative financing deals to fund the expansions.
Critics have said many of these deals are circular chains of financing, with chipmakers, data center providers and A.I. labs trading cash and stock back and forth with no immediate promise of a return on investment. It also remains unclear if A.I. products can generate large enough revenues to justify the costs of the infrastructure boom, leading to fears of a potentially dangerous bubble.
Late Wednesday, Ms. Friar said in a LinkedIn post that using the word “backstop” had “muddied the point.”
“I was making the point that American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part,” she wrote.
And the government “playing its part” wouldn’t be a backstop, how exactly?