OpenAI’s fund raising boom slows amid mounting debt | Technology News

Source Domain: www.aljazeera.com

OpenAI has been the darling of investors, having raised more than $168bn so far. But with still no profitable business model in sight, big tech investors like Nvidia and Microsoft are starting to slow down.

On Wednesday, Nvidia CEO Jensen Huang said the company is set to invest another $30bn into OpenAI but said it “might be the last time” the company will invest in the Sam Altman-led AI giant till it goes public.

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Separately, Huang said that a previously touted $100bn investment in infrastructure is “not in the cards”.

However, the investment Nvidia is moving forward with is still sizable, and experts warn that it is a big risk to take.

“Thirty billion dollars is about an eighth of their [Nvidia] annual revenue. It’s about 50 percent of their quarterly revenue that they just announced. It’s significant,” Aleksandar Tomic, associate dean for strategy, innovation and technology at Boston College, told Al Jazeera.

Nvidia’s latest quarterly earnings beat forecasts, and the world’s most valuable company expects first-quarter sales of $78bn, according to data compiled by LSEG. Revenue for the fourth quarter topped more than $68bn, up 73 percent compared to the same period last year, topping analyst expectations.

Yet the stock tumbled more than 9 percent that week on the heels of its earnings as investors are wary if Nvidia’s massive investments in AI companies like OpenAI – currently valued at $730bn – will pay off.

“I don’t think anyone knows how to properly value anything surrounding AI. We’re still waiting to see how these companies will monetise what they produce and where customers will actually find value. Is it subscriptions? That segment doesn’t seem large enough to justify the valuations we’re seeing,” says Tomic.

“It’s very difficult to assign a clear value to any of this. The potential is enormous, but it’s like the internet in the late ’90s. The promise is there, even if…

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