Sam Altman, the chief executive of OpenAI, reportedly engaged in discussions regarding an investment in or a collaboration with a rocket company. These conversations positioned him to potentially compete directly with Elon Musk's SpaceX.
Altman initiated contact with at least one rocket manufacturer, Stoke Space, during the summer, with discussions intensifying in the fall. Sources familiar with these negotiations indicated that one proposal involved OpenAI making substantial investments in the company, ultimately aiming for majority ownership. The projected total investment would have amounted to billions of dollars.
However, individuals connected to OpenAI have stated that these discussions have now ceased. The termination of these talks coincides with significant challenges faced by Altman and his company. These challenges stem from securing computing contracts valued in the hundreds of billions of dollars without a clear explanation of how OpenAI intends to finance these substantial expenses.
OpenAI recently declared a "code red" situation to improve ChatGPT, following a decline in users to Google's Gemini chatbot. This emergency measure has led the company to postpone the launch of other projects, including advertising features, and to temporarily reassign employees to focus on resolving issues with the chatbot.
Altman's Vision for Space-Based Data Centers
Sam Altman has long considered the possibility of establishing data centers in space. He believes that the escalating demand for computing power required to operate artificial intelligence systems may eventually lead to such immense energy consumption that space becomes a more viable and environmentally sound alternative. Proponents of this concept suggest that orbital data centers could harness solar energy for their operations.
Stoke Space was founded by former employees of Jeff Bezos' Blue Origin. The company is focused on developing reusable rocket technology, a goal that SpaceX is also pursuing. Several prominent figures in the technology sector, including Jeff Bezos, Elon Musk, and Sundar Pichai of Google, have previously discussed the potential for constructing AI computing facilities in space.
While the practical application of this concept remains unproven, Google and the satellite company Planet Labs have agreed to launch two experimental satellites equipped with Google AI chips in 2027. Altman himself expressed his thoughts on the future of data centers, suggesting on a podcast that "maybe we build a big Dyson sphere around the solar system and say, 'Hey, it actually makes no sense to put these on Earth.'"
The discussions about rocket company investments began during a period of significant excitement surrounding AI. In September and October, Altman announced several agreements for chips and data centers with companies such as Oracle, Nvidia, and Advanced Micro Devices. Initially, investors reacted positively to these announcements, with Oracle and Nvidia stock prices experiencing notable increases following Altman's promises of substantial expansion in computing infrastructure. However, market sentiment has since shifted negatively regarding large AI spending plans. Oracle shares have declined by approximately 19% over the past month, and Nvidia's stock has fallen by roughly 13%.
An executive at Nvidia recently stated that the company's $100 billion agreement with OpenAI is still pending finalization.
Heightened Competition with Elon Musk
A potential partnership with Stoke Space would have intensified Altman's competitive stance against Elon Musk. This is particularly relevant given SpaceX's prominent position in rocket launches and Musk's involvement in the AI company xAI. Furthermore, Altman recently launched Merge Labs, a brain-computer interface company that directly competes with Musk's Neuralink. OpenAI is also developing a social network that could potentially rival X (formerly Twitter).
Securing a deal with Stoke would have provided Altman access to Nova, a rocket the company is currently developing. The development of new rockets is a complex process, fraught with technical challenges and regulatory hurdles, often requiring up to a decade to bring to fruition, making new entrants to the field extremely difficult. Several companies, including Blue Origin, Rocket Lab, and Stoke, are actively seeking to challenge SpaceX's dominance in the launch market.
Altman himself pondered the prospect of establishing a rocket company in a podcast interview in June. He articulated a vision where "I hope that eventually humanity is consuming way more energy than we could ever be generating on Earth."