OpenAI has plans for an enormous $850 billion expansion, constructing data centers that will require as much energy as 17 nuclear facilities to fulfill the explosive demand for AI tools.
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Massive Energy Needs & Price Tag
CEO Sam Altman described the scale and pace as ambitious, yet potentially too slow given how rapidly AI adoption is growing.
Altman revealed to CNBC the massive scale of OpenAI's infrastructure plan, which matches the energy output of nine Hoover Dams and would power over 13 million American homes.
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The infrastructure projects involve partnerships with Oracle Corp. (NYSE: ORCL), NVIDIA Corp. (NASDAQ: NVDA) and SoftBank.
Each data center comes with a $50 billion price tag, with a cumulative spend of about $850 billion -- a figure that matches almost half the global investment in AI infrastructure, according to HSBC.
Altman acknowledged the concerns about such massive spending, but he rejected the idea it is excessive and insisted OpenAI's rapid progress is driving the necessity for supercomputing networks.
AI Bubble?
Some skeptics are warning about a potential financial bubble, as companies engaged with OpenAI have seen their valuations soar.
OpenAI CFO Sarah Friar emphasized that tech companies are joining forces to address a significant shortage of computing power, as the current infrastructure cannot satisfy the needs of modern AI systems.
Investors fear a circular financing situation, since these businesses invest in each other's projects and receive payments for hardware and services.
Friar sees the situation differently, arguing that coordinated, large-scale investment has always accompanied technological breakthroughs.
Oracle's commitment to AI is reflected in its new leadership, and Nvidia is contributing both capital and advanced chips to the effort.
Friar said that OpenAI will pay operational costs once the centers are running, while partners like Nvidia profit as equipment is deployed.
The current focus is on bringing new facilities online next year, with further expansion scheduled through the end of the decade.
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Photo: Meir Chaimowitz via Shutterstock.
