The purported $100 billion financing round is, in essence, a self-rescue "lifeline" that technology giants are compelled to provide to prevent the AI bubble from bursting. On February 4th, according to a report by The Information's senior journalist Ken Brown, OpenAI is in the process of raising a financing round of up to $100 billion. NVIDIA is reportedly considering a $30 billion investment, Amazon.com $20 billion, SoftBank $30 billion, and Microsoft is expected to contribute $10 billion. Given OpenAI's staggering $730 billion valuation, the rationale for these astute investors to eagerly pour money in is, from Brown's perspective, remarkably straightforward. Banks have lost faith in OpenAI, forcing the giants to step in directly. OpenAI previously employed a clever strategy: it avoided borrowing money itself, instead enabling partners like Oracle, CoreWeave, and Vantage Data Centers to leverage their own balance sheets to secure loans for building data centers, with OpenAI committing to future payments through contracts. This approach was akin to OpenAI "making promises," which its partners then used as collateral to secure bank loans. However, this strategy is now encountering significant market resistance. As Ken Brown points out: "Investors have shown that there is a limit to the loans they are willing to provide to companies that rely on OpenAI to pay their future bills." The debt market has now sobered up. Investors have realized that OpenAI is burning through cash too rapidly and may ultimately be unable to cover its rental obligations. Consequently, they have driven up the financing costs for companies like Oracle, even treating their bonds as "junk debt." The realization has dawned that if OpenAI's future cash flows cannot service these debts, the partner companies acting as "contractors" face a substantial risk of default. As the report states: "This strategy may no longer be viable, or it could become prohibitively expensive." The current ironic reality is that Oracle, in its scramble for funds, was even forced to announce plans to sell stock to make up the shortfall, amplifying market anxiety. Mike Talaga, Head of Credit Research at Janus Henderson, remarked bluntly: "The fact that Oracle was willing to dilute equity to raise funds came as a shock to the market." Faced with Oracle's massive AI infrastructure financing needs, Wall Street banks' balance sheets are nearing their limits. To mitigate risk exposure and free up capacity for continued lending, banks are rushing to "securitize" and sell off hundreds of billions of dollars in loans related to Oracle's data center projects to insurance companies and private credit funds. When banks stop lending to OpenAI's "contractors," the construction of OpenAI's data centers grinds to a halt. So why are the tech giants willing to act as the "backstop"? With external financing channels tightening, the tech giants can no longer remain idle. If data center construction halts, OpenAI cannot train its models; without model training, it has no need for NVIDIA's chips or Microsoft's cloud services. Thus, this $100 billion financing round has transformed into a form of "circular financing": Microsoft is providing funds to safeguard its $250 billion Azure cloud order. Microsoft holds approximately a 27% stake in OpenAI's public benefit corporation (PBC), and OpenAI has committed to purchasing around $250 billion worth of services from Microsoft Azure. Amazon.com's investment is essentially a trade for more cloud business, aimed at securing its $38 billion cloud contract. NVIDIA is contributing money so that OpenAI will have the funds to turn around and purchase its GPUs. This is a tactic to "lock in growth and prevent competition." This is a classic case of "I lend you money so you can buy my products." Secondly, providing cash directly to OpenAI reassures creditors within the supply chain. Once the giants' capital is injected, OpenAI gains the certainty of being "able to pay its bills," which should prevent further price hikes for supply chain financing in the debt market. For OpenAI, this buys a crucial time window: to allow its revenues and profits to "grow sufficiently to become self-sustaining," or at the very least, to reopen market financing channels. Thirdly, the tech giants are externalizing their capital expenditure pressure by labeling it as an "investment," thereby avoiding further deterioration of their own financial statements, which is essential for stabilizing their stock prices. Author Ken Brown emphasizes a practical benefit of the giants investing directly in OpenAI: this capital is not counted as their own capital expenditures, nor does it need to be raised through new debt (at least for now). At a time when AI capital spending is under intense market scrutiny, this difference in accounting and financing treatment can significantly alleviate short-term valuation pressure. This is a high-stakes game of musical chairs where no one can afford to lose. Why can't OpenAI be allowed to fail? Because the systemic risk is too great. A significant portion of the current stock prices of tech giants is comprised of an "AI premium." If OpenAI were to collapse due to an inability to pay its electricity bills or purchase chips, the entire investment thesis for the AI sector would crumble. Market founder Mark Montgomery likened this to a "game of musical chairs": "Unless OpenAI's [Sam] Altman can find more money to keep the balloon inflated, a crash could wipe out 50% to 80% of big tech companies' market capitalization." In plain terms, the giants don't necessarily believe OpenAI is worth $730 billion; rather, they recognize that if they don't spend this $100 billion to ensure stability, the resulting loss in their own market capitalization could be ten times that amount. Panos Papadopoulos, a partner at Marathon Venture Capital, commented: "If OpenAI reduces its committed spending to the hyperscale cloud providers, they lose $1 trillion in market cap. What's $10 billion among friends?" A similar "financing dance" is also evident in Elon Musk's dealings. The article notes that while SpaceX is projected to generate about $8 billion in EBITDA in 2025, xAI burned through approximately $9.5 billion in the first nine months of last year. Merging the two companies would effectively "hide" xAI's high burn rate within the larger cash flow shell of SpaceX—a logic highly analogous to "giants using cash to protect OpenAI's financing chain."
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