Snippets from ClosedAI – by Schumpeter in the Economist – followed byt ChatGPT’s take on it:
- OpenAI to buy perhaps $10bn-worth of custom AI chips from Broadcom. Adding $200bn to Broadcom’s market value..
- OpenAI revealed that Nvidia, Broadcom’s larger rival, would invest up to $100bn in it over several years while selling it graphics-processing
units (gpus) worth that amount. Adding $160bn to Nvidia’s market value… - OpenAI may take a stake in amd, which would sell it silicon worth an estimated $90bn or so between 2026 and 2030. Adding $60bn to amd’s market value…
- OpenAI also agreed to buy $300bn in computing power from Oracle. Adding $250bn to Oracle’s market value..
- OpenAI plugged popular apps such as Booking.com, Spotify and Zillow into Chatgpt, letting users search for hotels, songs and flats via the chatbot
- OpenAI gave Hollywood a jump scare with Sora 2, its new video-generating app.
All announced during last month. Along the way it became the world’s most valuable startup, rocketing past SpaceX, after raising $6.6bn at a price tag of $500bn.
- The ubiquity of Mr Altman and his startup, plus its convoluted links to other AIfirms, is raising eyebrows. An awful lot seems to hinge on a firm forecast to lose $10bn this year on revenues of little more than that amount.
- D.A. Davidson, a broker, calls Openai “the biggest case yet of Silicon Valley’s vaunted ‘fake it ’till you make it’ ethos”.
- To understand the model-maker’s centrality to the whole ai enterprise, consider a thought experiment. What if Openai went bust?
- The immediate casualties of Closedai would be the shareholders. Since its founding ten years ago the startup has raised a total of $35bn from 149 investors. Most would smart but survive; 45 of them also back Anthropic, Openai’s model-making rival, according
to data from PitchBook, a deal-tracker. - The impact on Openai’s counterparties would be more mixed. Oracle’s $300bn in contractual commitments from Openai would evaporate—so would the related shareholder gains. amd, which certain analysts now think will be supplying Oracle with most of the gpus
required to fulfil the contract, may also see sales drop. - For other chipmakers the result may be close to a wash. Companies other than Openai are lining up to get their hands on ai chips. Nvidia’s three largest customers, which accounted for 34% of sales last year, are believed to be Microsoft, Amazon and Meta.
Broadcom sells lots of chips to Alphabet, Google’s $3trn parent company and Openai’s other big competitor in model-building. - In all, then, key-firm risk looks manageable. Unless, that is, Openai were to fail not as a result of its own shortcomings but because the technology itself proved less transformational than promised. But that is another thought experiment. ■
ChatGPT’s take:
“That Schumpeter piece from The Economist absolutely nails the scale—and fragility—of the OpenAI-centered AI economy right now. Let’s unpack it bluntly:
🚀 The “ClosedAI” Hypothesis
The article’s title riff — “ClosedAI” — isn’t just clever; it’s a warning. OpenAI’s gravitational pull across the entire AI supply chain has reached absurd proportions. In a single month:
- It committed $700 billion+ in future purchases (chips, compute, integration deals).
- It added nearly $700 billion in market cap across four major suppliers (Broadcom, Nvidia, AMD, Oracle).
- It raised $6.6 billion at a $500 billion valuation — despite projected $10 billion losses on roughly the same in revenue.
That’s not a normal startup. That’s an ecosystem-defining financial construct propped up by hype, network effects, and the assumption that AI is inevitable and OpenAI = AI.
🧩 The Interlocking Game
Each player’s value bump shows how the market is now treating OpenAI as the clearinghouse of AI demand:
- Nvidia: sells GPUs, “invests” in OpenAI, benefits from inflated future orders.
- Broadcom / AMD: same story, different logo.
- Oracle: monetizes the compute-as-a-service side, now trading as if OpenAI’s 10-year spend were guaranteed.
These are circular bets: OpenAI’s suppliers invest in it, pump its valuation, then see their own valuations soar in return. It’s reflexivity on steroids—a George Soros dream loop.
🧨 The Systemic Risk
Schumpeter’s thought experiment — What if OpenAI went bust? — exposes how deep the interdependence runs.
- The immediate implosion would hit Oracle, AMD, and Broadcom the hardest.
- Microsoft, Amazon, Meta, Google would absorb demand; chips would still sell, compute would still be consumed.
- The real collapse would be confidence — in AI’s near-term profitability, and in the “AGI = next internet” story that’s inflating every balance sheet in sight.
So yes, “key-firm risk looks manageable” only if AI keeps delivering exponential returns. If the hype outpaces real economic transformation, this entire pyramid is dangerously leveraged.
🧠 The Strategic Meta-Lesson
The ClosedAI scenario reinforces three truths:
- Concentration risk is massive — one company’s narrative drives trillion-dollar valuations.
- Vertical integration via contracts (chips → compute → models → apps) is turning AI into a quasi-monopoly stack.
- The EU Trust Infrastructure logic — decentralising capability, verifiable credentials, and open interoperability — becomes the obvious antidote. Europe can’t compete by matching capex; it must compete by enabling trustworthy, plural
AI ecosystems that don’t hinge on one “Altman oracle.”
🔮 Bottom Line
OpenAI isn’t (yet) a Ponzi. But it’s skating close to what you’d call reflexive valuation engineering — the same feedback loop that blew up the dot-com bubble and crypto hype cycles.
If the technology delivers, they look visionary.
If not, this is the most expensive game of “fake it till you make it” in history.”
