Tangled

Open AI did not reach its internal goal of 1 billion weekly active users by 2025, and missed revenue targets for Chat GPT. The goals were very aggressive, and also its valuation. But more importantly, its commitments were even more aggressive. Capital commitments to data centers. Now Open AI will not provide exclusivity to Microsoft on certain licenses, and Microsoft will not share revenue with Open AI. Now take a look at the chart below: what happens if Open AI cannot meet its capital commitments? Perhaps NVDA will not sell as many chips as planned. And what my does that mean for Oracle? Or Intel? Or Coreweave, where big companies outsource their data center capacity? What does it mean for the AI loans that private credit and the Investment grade investors have bought? Are equity valuations justified? Google, Amazon, Meta and Microsoft report earnings today. On another note, the FOMC meets today to set monetary policy. No change in rates is expected.

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