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OpenAI’s Cash Burn Projected to Hit $115B by 2029 Amid Chip, Data Center Push

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OpenAI has revised its financial outlook sharply upward, projecting it will burn through $115 billion by 2029, according to The Information. The new figure is about $80 billion higher than its earlier estimate, reflecting the surging costs of powering ChatGPT and other AI models.

The report says OpenAI expects to lose over $8 billion in 2024 alone, roughly $1.5 billion more than forecast earlier this year. The company anticipates that annual burn will balloon to $17 billion next year, rising to $35 billion in 2027 and $45 billion in 2028.

To rein in costs, OpenAI is pursuing vertical integration—developing its own AI server chips and data center infrastructure. Its first in-house chip, being developed in partnership with Broadcom, is expected in 2025 and will be used internally. On the infrastructure side, OpenAI has struck major agreements, including:

  • A $4.5 GW data center expansion with Oracle announced in July.

  • The Stargate project, a planned $500 billion, 10 GW buildout backed by SoftBank.

  • Expanded computing capacity through Google Cloud.

The staggering burn rate underscores the immense capital intensity of generative AI, where costs for cloud computing, GPUs, and electricity are skyrocketing. At the same time, it highlights OpenAI’s strategy to reduce reliance on external providers like Nvidia and Amazon Web Services by building a proprietary AI stack—from chips to data centers.

SoftBank Acquires Foxconn’s Ohio EV Plant to Support Stargate AI Infrastructure Project

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SoftBank Group Corp (9984.T) is purchasing Foxconn Technology Group’s (2317.TW) electric vehicle manufacturing plant in Ohio to further its ambitious Stargate project aimed at building extensive AI data center infrastructure across the United States, Bloomberg News reported on Friday. The Stargate initiative, unveiled by U.S. President Donald Trump in January, represents a private sector investment potentially reaching $500 billion, with backing from SoftBank, OpenAI, and Oracle (ORCL.N).

SoftBank reportedly faced challenges in its financial planning for Stargate and sought Foxconn’s involvement to facilitate the development of data centers and related infrastructure, leading to the acquisition. The Ohio facility is expected to be repurposed as a data center site. Reuters could not independently confirm the report; SoftBank declined to comment, and Foxconn did not immediately respond.

The Stargate Project aims to generate over 100,000 jobs across the U.S., aligning with national goals to boost AI infrastructure and domestic technological capacity.

SoftBank Group Swings to Profit in Q1 as AI Investments Drive Gains; Stargate Data Centre Project Faces Delays

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SoftBank Group reported a net profit of $2.87 billion for the first quarter, fueled by strong valuations in its Vision Fund portfolio, particularly in AI-related investments. The Japanese technology investor’s turnaround from a loss a year ago is timely as it embarks on a large spending spree focused on artificial intelligence companies.

However, the company’s ambitious $500 billion Stargate project to develop U.S. data centres is delayed due to extended negotiations and site selection, SoftBank CFO Yoshimitsu Goto said. Despite the slower-than-expected pace, SoftBank is advancing with several identified sites and remains committed to building out the data centres over four years.

SoftBank’s Vision Funds now hold $45 billion in late-stage companies poised for IPOs, up from $36 billion in March, partly reflecting the recent $7.5 billion Vision Fund 2 investment in OpenAI. The Vision Fund posted a Q1 investment gain of about $4.94 billion, with South Korean e-commerce firm Coupang’s share price surge accounting for half of that gain.

SoftBank leads a $40 billion funding round for OpenAI, with $22.5 billion due by year-end. Founder Masayoshi Son aims to position SoftBank as a key “organiser of the industry” through strategic AI investments and the Stargate initiative.

SoftBank has also raised $7.8 billion recently by partially selling its stake in T-Mobile. However, the Vision Funds’ overall realized gains remain modest—only about $5 billion out of $172.2 billion committed capital as of June’s end—highlighting challenges in monetizing investments.