AI: Dazzling 'Boomerang' Deals to Scale AI. RTZ #854

This week saw one of the largest and most ‘dazzling’and circular, AI vendor/customer deals to date thus far in this AI Tech Wave. I’m of course talking about Nvidia’s $100 billion in OpenAI as part of its unprecedented AI data center buildout.

It is an intricate deal, linking the two biggest LLM AI players closer than ever together. All as OpenAI gets more independent from Microsoft for AI Infrastructure, with recent mega-deals with Oracle, CoreWeave and others. The deal. is still evolving, with the ability for OpenAI to lease Nvidia’s next gen AI GPUs rather than buying them outgiht. That decreases the upfront cash burden on OpenAI, and leverages their ability to buy more with less.

For some observers, the deal is another higher point in the long flow of seemingly circular, or ‘round-robin’ deals, where vendors and customers are increasingly leveraging investments into revenue generating customer orders.

We’ve seen this in other tech waves of the past, as I wrote about in my “AI: Boomerang Deals“ piece over two years ago.

And the trend is acceleraing depsite the high customer concentrations, and ‘Frenemies’ nature of the relationships where the best customers are also investing in building their own chips independent of Nvidia.

And the broader motivation is of course the accelerating race to AI AGI and Superintelligence, with all the major companies and founders believing they have no choice but to accelerate the investments.

OpenAI’s Sam Altman explains his acclerating urgency in yet another one of his AI Essays, in “Abundant Intelligence”:

“Growth in the use of AI services has been astonishing; we expect it to be even more astonishing going forward.”

”As AI gets smarter, access to AI will be a fundamental driver of the economy, and maybe eventually something we consider a fundamental human right. Almost everyone will want more AI working on their behalf.”

”To be able to deliver what the world needs—for inference compute to run these models, and for training compute to keep making them better and better—we are putting the groundwork in place to be able to significantly expand our ambitions for building out AI infrastructure.”

”If AI stays on the trajectory that we think it will, then amazing things will be possible. Maybe with 10 gigawatts of compute, AI can figure out how to cure cancer. Or with 10 gigawatts of compute, AI can figure out how to provide customized tutoring to every student on earth. If we are limited by compute, we’ll have to choose which one to prioritize; no one wants to make that choice, so let’s go build.”

”Our vision is simple: we want to create a factory that can produce a gigawatt of new AI infrastructure every week. The execution of this will be extremely difficult; it will take us years to get to this milestone and it will require innovation at every level of the stack, from chips to power to building to robotics. But we have been hard at work on this and believe it is possible. In our opinion, it will be the coolest and most important infrastructure project ever. We are particularly excited to build a lot of this in the US; right now, other countries are building things like chips fabs and new energy production much faster than we are, and we want to help turn that tide.”

“Over the next couple of months, we’ll be talking about some of our plans and the partners we are working with to make this a reality. Later this year, we’ll talk about how we are financing it; given how increasing compute is the literal key to increasing revenue, we have some interesting new ideas.”

I’ve written about Sam and other AI Founders’ essays n why they feel so strongly about Scaling AI.

Axios has a good summary of the key points of these and others essays worth perusing in “Shield your eyes: A Guide to AI’s many dazzling futures”:

“The makers of AI keep pushing the art of utopian forecasting to new levels of hyperbole.”

“Why it matters: Technology revolutions always come with promises of wondrous change, but the AI industry has set such impossibly high targets for itself that it’s bound to face a sobering reset, sooner or later.”

“Driving the news: The latest outburst of AI utopianism has Elon Musk predicting, “I think that we might have AI smarter than any single human at anything as soon as next year.”

• “Speaking at a forum earlier this month hosted by the “All-In” podcast, Musk added that by the 2030s, “probably AI is smarter than all humans.”

“Musk is known to overpromise. But when it comes to predictions of inconceivably wonderful AI advances, he is joined by nearly every CEO or leader in the AI industry.”

“Here’s a brief guide to AI’s notable utopian manifestos over the past two years — with stats and ratings.”

The whole piece is worth reading to compare and contrast the key visions to truly scaled AI. And keep making sense of the ever increasing sums being deployed globally in this AI Tech Wave globally.

They’re all running the AI Scaling marathon in their own way. With strategies honed to their strengths and weaknesses. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)