OpenAI’s (OPENAI) updated capital expenditures for artificial intelligence infrastructure appear positive for hyperscalers Microsoft (MSFT) and Oracle (ORCL), according to BNP Paribas Equity Research.
It was reported OpenAI plans to spend a total of $600B on computing power by 2030. OpenAI CEO Sam Altman said back in October the ChatGPT maker plans to spend as much as $1.4T on infrastructure by 2033.
“In our view, the revisions aren’t necessarily reflective of a more disciplined OpenAI,” said BNP Paribas analyst Stefan Slowinksi in an investor note. “Rather, the updated forecasts appear broadly consistent with the previously announced $1.4T of infrastructure commitments through 2033, with the capital outlays still clearly back-end weighted beyond 2030. With OpenAI potentially aiming to spend $200bn+ annually on compute by 2030, our sense-check calculation suggests OpenAI’s original $1.4 trillion figure remains possible.”
This update paints a mostly positive picture for OpenAI’s primary backer, Microsoft (MSFT), and OpenAI’s primary infrastructure partner, Oracle (ORCL).
“With a more defined cash burn outlook and OpenAI’s $100bn+ capital raise closing soon (with another $80bn likely required thereafter to reach FCF breakeven), we believe this reduces the OpenAI counterparty risk for MSFT/ORCL over the near term,” Slowinksi noted. “OpenAI’s updated revenue outlook ($280bn target for 2030, with the lift from the previous $200bn coming mainly from enterprise biz) also implies Microsoft should capture an additional $12bn in revenue share by FY30 (+4% vs. Cons), assuming OpenAI can achieve its targets. However, while OpenAI also plans to significantly increase its near-term compute budget, it’s unclear whether MSFT/ORCL will directly benefit from this incremental spend, especially with Amazon (AMZN) reportedly involved in the current capital raise.”