Analysts’ warning about the possible collapse of the global economy intensified with OpenAI investments

Despite a $500 billion valuation, OpenAI, maker of the ChatGPT chatbot, is losing capital at an alarming rate and its current revenue does not meet its huge financial obligations.

According to an AFP report, OpenAI is ordering hundreds of billions of dollars worth of artificial intelligence chips; An action that causes serious concerns in the conditions of decreasing investor confidence. These chips include contracts with Nvidia, AMD and Broadcom companies, which, according to AFP estimates, will consume as much electricity as 20 standard nuclear reactors.

These orders come at a time when the global semiconductor market is facing a shortage of supply and an increase in demand, and competition among technology companies for processing resources has intensified. Analysts believe that such investments will not only put additional pressure on the energy infrastructure, but can also upset the balance of the chip market.

Gil Luria, CEO of financial advisory firm DA Davidson, has stated that OpenAI will need to earn hundreds of billions of dollars to compensate for these recent acquisitions. Also, according to the analysis of the Financial Times, the company’s financial obligations have exceeded one trillion dollars.

In addition to these commitments, operational costs, development of new artificial intelligence models, maintenance of data centers and payments to hardware partners have also placed a heavy financial burden on OpenAI. Some analysts have warned that this level of spending without a clear return on investment could lead to a liquidity crisis.

With this amount of investment, the exact figure of the debts has become almost irrelevant, because the probability of repaying even a part of it seems very poor. Despite its $500 billion valuation, OpenAI’s annual revenue is only about $13 billion, most of which comes from ChatGPT subscriptions.

In short, a huge amount of capital is at stake, to the extent that a significant portion of the US economy is now dependent on the performance of the AI ​​industry. “Sam Altman has the power to crash the global economy for a decade or take us to the promised land,” Bernstein Research analyst Stacy Rasgon wrote in a note to investors. At the moment, we don’t know which one is waiting for us.” However, what exactly the “promised land” looks like and for whom it is, remains a blind spot in analyzes such as Rasgan’s report.

Some technology critics have warned that the huge gap between the costs of artificial intelligence and the income generated by it is not a sign of irrationality of investors, but rather a bold bet on a technology that can completely eliminate human labor, thereby giving full control of production to the owners of capital, and removing the last point of friction in the current unstable economic system.

In the meantime, some researchers in the field of labor and economics have emphasized that the removal of human power from the production cycle not only has wide social consequences, but can also increase the class gap in an unprecedented way. They believe that a mere focus on productivity and profitability, without considering the human consequences, will lead to an unsustainable future.

This is not so hidden. Some of America‘s most powerful CEOs have openly expressed their excitement about replacing human labor with artificial intelligence, or threatened employees with replacement. For example, Hans Vestberg, the CEO of Verizon, stated in an interview with the Wall Street Journal that the company’s human resources situation is “very, very good” and explained that he meant the continuous reduction of the number of employees.

If these managers get their way, the big question will be: In an economy where having a job is essential to living, what are other people going to do when there are none left?

Malcolm Harris, a writer and technology journalist in Silicon Valley, recently posed this question: “The thing I have to ask people about AI is why do venture capitalists feel the need to invest specifically in AI to the exclusion of everything else?”