OpenAI races to quell concerns over its finances

OpenAI's top executives raced to contain growing alarm over the artificial intelligence company's financial situation Thursday after its chief financial officer suggested that the U.S. government could "backstop" the firm's funding deals.

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 Wednesday. OpenAI has embarked on a deal spree to build computing infrastructure to power AI development, and 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," Friar said at the conference in Napa, California, adding that it would be "the backstop, the guarantee that allows the financing to happen."


Her comments set off concern amid rising unease over whether an industrywide AI spending frenzy can be sustained. OpenAI, Meta, Google, Microsoft and other AI 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 centre providers and AI labs trading cash and stock back and forth with no immediate promise of a return on investment. It also remains unclear if AI products can generate large enough revenues to justify the costs of the infrastructure boom, leading to fears of a potentially dangerous bubble.

Late Wednesday, 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.

On Thursday morning, David Sacks, the White House's artificial intelligence and crypto czar, said the federal government had no intention of providing any kind of bailout to AI companies that flounder.

"The U.S. has at least 5 major frontier model companies," Sacks wrote on social media. "If one fails, others will take its place."

His post stoked the debate further. On Thursday afternoon, Sam Altman, OpenAI's chief executive, weighed in.

"We do not have or want government guarantees for OpenAI data centres," Altman posted on social media.