Buy Hold Rant
Is there an AI bubble? $800B in purchase commitments by OpenAI
11/4/2025, 8:09:24 PM
Economic Summary
- OpenAI is expected to generate approximately $12–13 billion in revenue this year, up from about $4 billion last year, indicating very rapid monetization of AI products and services with implications for both top-line growth and capital needs.
- Reported purchase commitments involving OpenAI total roughly $800 billion with partners such as Microsoft (MSFT), NVIDIA (NVDA), AMD (AMD), Oracle (ORCL), and Broadcom (AVGO) concentrated over about five years, implying enormous near-term infrastructure spending and vendor dependency.
- The scale and duration of these commitments raise bubble concerns: if demand softens or contracts are renegotiated, both OpenAI and its vendor ecosystem could face significant downside and stranded capacity.
Bullish
- OpenAI's revenue is growing ~3x to ~$12–13B, showing strong demand for AI services.
- Large vendor commitments indicate substantial enterprise adoption and long-term infrastructure demand.
Bearish
- OpenAI's roughly $800B of multi-year purchase commitments create massive financial and execution risk.
- Rapid revenue growth could mask an AI bubble and unsustainable long-term spending.
- Vendors (MSFT, NVDA, AMD, ORCL, AVGO) face concentrated demand risk if OpenAI or customers scale back.
Bullish tickers
OPENAIMSFTNVDAAMDORCLAVGO
Bearish tickers
OPENAIMSFTNVDAAMDORCLAVGO
OPENAI
Bullish
Revenue growth from ~$4B to ~$12–13B this year shows strong product-market fit and high monetization potential.
Bearish
Has roughly $800B in multi-year purchase commitments, creating execution, liquidity, and bubble risk if growth slows.
MSFT
Bullish
Strategic partner benefiting from OpenAI demand and large committed contracts.
Bearish
Material exposure to OpenAI commitments could lead to overpayment or write-downs if AI spending retracts.
NVDA
Bullish
High GPU demand from OpenAI drives durable revenue growth for NVDA.
Bearish
Exposure to concentrated AI spending may cause volatility if OpenAI reduces orders.
AMD
Bullish
Supplier to AI workloads, positioned to benefit from increased infrastructure purchases.
Bearish
Similar concentration risk and potential order volatility tied to OpenAI commitments.
ORCL
Bullish
Cloud and infrastructure partnership with OpenAI could accelerate enterprise AI adoption.
Bearish
May face underutilized capacity if committed deployments with OpenAI don't materialize.
AVGO
Bullish
Likely to gain from infrastructure deals and increased component demand tied to AI deployments.
Bearish
Large commitments could be renegotiated, leaving Broadcom with excess supply risk.