Crossed wires: big deal, big risk and perhaps big trouble brewing

A series of connected deals between OpenAl, Nvidia and Oracle will be the biggest commercial deal in history, if it all pans out.

- By Steven Boykey Sidley

The problem with large numbers (dollars, gigawatts, speed, size, etc) is that they often stare uncomprehendingly back at you from the page until a comparison to something else can be made to give them context — perhaps something simpler or smaller to give the numbers relative colour.

So, bearing this in mind, consider these two statistics, which, even when contextualised, fall into the WTF category.

The first, which I came across in a blog called The Power Law, compares a recent deal in the world of AI with the Manhattan Project, the US-funded World War 2 project to develop the atom bomb. At the time, this was the largest and most expensive scientific project ever undertaken, and it lasted from 1941 to 1945. The total spend in today’s dollars was about $37-billion.

Over the past few weeks, a series of connected deals were announced between OpenAI (mother of ChatGPT), Nvidia (AI chips) and Oracle (cloud infrastructure). When unpacked (and here's the rub), it is worth about $400-billion — almost 10 times the size of the Manhattan Project. This will be the biggest commercial deal in history, if it all pans out (which we will get to).

The deal itself is a bit of a head-scratcher, at least at first reading. It looks like sleight of hand, a piece of magic — it’s not, but it is a vertiginous high-wire act.

It goes like this: Nvidia (the largest company in the world with a market cap of $4.5-trillion — another big number — is investing $100-billion in OpenAI equity. This is small potatoes for Nvidia.

For OpenAI, a company worth $500-billion, it is substantial — it is 20% of its value.