Is Sam Altman Making OpenAI ‘Too Big To Fail’?

**John Johnston** (0:00)
Hi everyone, JJ here. Welcome back. Well, is Sam Altman trying to make OpenAI too big to fail? And what kind of sign is that for the company? What's going on? Now, I want to listen in on this Prof G Markets episode here with Ed Elson and Scott Galloway discussing a couple of pieces of news that relate to this, and also to Meta in relation to AI. So I'll react to this. Let's get into it.

**Ed Elson** (0:28)
There were two strange updates in the AI world last week. First, OpenAI proposed giving the Trump administration a 5% stake in the company. That stake would be worth roughly $43 billion.
Sam Altman has reportedly argued that a government stake in the company would be the best way to share in the upside of AI with the public. And there's a vision for other AI companies to potentially join in essentially creating a sovereign wealth fund. And then in the second piece of news, Meta is reportedly becoming a cloud provider. The company is preparing to sell its excess AI computing capacity. That is a notable shift after spending billions to build out infrastructure that it previously said would be necessary for its own AI ambitions.

**John Johnston** (1:13)
Okay, so definitely two pieces of very interesting news there. Sam Altman, the 5% stake by the government. What does that mean? Does that mean he's lining up for a possible bailout to get the government involved, and so they will really help out. They will be behind OpenAI.
I mean, if it was wildly profitable, if he thinks it's going to be wildly profitable, why would he do that? Unless he thinks the company is going to be so big that the pitchforks might come for him if he doesn't get the public to share, the government to share in on it. So that's all speculation, different opinions there. Then this Meta news as well, that it implies that their AI strategy, doing it themselves isn't really working. We've seen this with SpaceX too, with XAI providing Anthropic the compute, and now we're seeing Meta doing the same thing. So this implies that really the only thing that's going on is with Anthropic and OpenAI. Are they using most of the compute? It does seem so.
And if so, is it a smaller, is this AI sector a lot smaller than we've been led to believe? And is Meta just giving up? I mean, the stock, Meta stock actually went up in the past day or two, it's gone up on that news. So, you know, maybe investors like that. Anyway, let's get more into what they're saying here about this.

**Ed Elson** (2:37)
Investors did welcome the news though, sending Meta shares up nearly 9%, but the reaction wasn't nearly as positive elsewhere. Shares of neocloud companies like CoreWeave and Nebius fell roughly 12% on the news.
The market was very worried that Zuckerberg was investing all of this money into these data centers, but hadn't laid out a plan for how he was going to monetize those data centers. Well, now he's given us the answer, and he's basically just going to do what AWS did and what the cloud providers do. We just rent out the chips and sell it to enterprises.

**John Johnston** (3:13)
I think that's a good news or bad news for the company. The market obviously thinks it's good news. Meta isn't going to have their own AI, really. Is that what this means? Remember when Zuck went into the metaverse, piling billions into the metaverse, and that just went away. Investors didn't like that. Maybe they don't like the AI thing too.
I mean, if you are an investor, you can make up your own decision on that.

**Ed Elson** (3:37)
There is a lot of debate over whether this is actually bullish or bearish, because what we also know is that the plan was to use all of that compute to build their own AI products.
Now they are saying, no, we are not going to do that anymore. We are going to sell it to someone else, and someone else is going to build the AI products, which begs this question, who is going to build the AI products?

**John Johnston** (3:59)
This is what SpaceX did too, XAI.
They announced that they have got Anthropic as a client after Elon was talking up Grok and how great that was going to be, and also space-based data centers, and it's still to come, so presumably they've got free capacity there with the data centers that Elon's built, that XAI has built there, and so they need clients for that. I mean, what does that say about the actual demand for AI? We're being told that it's insatiable, this insatiable demand, but is it really only OpenAI and Anthropic mostly? I mean, Gemini too, with Google, which I do use.