How Much Longer Will NVIDIA and Microsoft Subsidize OpenAI and Anthropic?
Google does not require financial assistance.
I am stating the obvious that while Google (GOOGL), xAI and Meta (META) have substantial balance sheets (I am not including Microsoft (MSFT) in this group as the company has no real ambition of building a frontier LLM), OpenAI and Anthropic do not. Cash infusions from NVIDIA (NVDA) and Microsoft can only take OpenAI and Anthropic so far. Heck, even META had to tap the debt market to finance its CapEx initiatives.
I don’t know when, perhaps as early as the next model cycle in late 2026/ early 2027, OpenAI and Anthropic will find the LLM business cost prohibitive without enormous financial assistance. Perhaps at that juncture NVIDIA will move to take control of OpenAI or Anthropic. We’ll see how serious NVIDIA is about Gen AI then.
Personally, I believe that Anthropic would fit well with Google. Google can play this game all day. AI and data centers are its core business, always have been.
Here’s a fun exercise for the weekend: Arrive at what you believe is NVDA’s fair value based on your Revenue and cash flow outlook (or however you want to do it). Next, consolidate OpenAI’s financials. OpenAI will be at an ARR of $20 billion by calendar year-end 2025. For simplicity sake, call it $20 billion in 2025 revenue. OpenAI has a loss of $25 billion through September, I believe it will be a $40 billion loss for 2025 (assume net loss equals free cash flow loss). Next, add the $20 billion of revenue and $40 billion loss to NVIDIA’s figures. What is NVDA’s fair value under that scenario? My view is that OpenAI’s loss will be $50-60 billion in 2026 if you wish to carry your assumptions forward on perhaps $30-40 billion of revenue.