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📣 OpenAI moves away from Microsoft

📣 OpenAI moves away from Microsoft

Financial markets feel the jitters

Techonomy Barista
February 23, 2025

Your top stories today:

OpenAI’s shift from Microsoft to SoftBank for funding.
Financial markets feel the jitters, finally.
Why AI spending is sky rocketing.
Rivian sees profit but EV policy risks threaten growth.
Trumps tariff’s increases risks of trade war.

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🔥 Top Stories

1. OpenAI's billion-dollar shift: SoftBank takes control 💰

Source: The Information

⏳ The deets in 30 seconds

OpenAI shifts from Microsoft to SoftBank for AI infrastructure.
- SoftBank leads $40B funding, contributing $30B of it.
- Stargate to handle 75% of compute by 2030.
Expects to 3X revenue—$3.7B (2024) to $12.5B in 2025 & $28B by 2026.
User growth explodes—400M weekly users, up 85% since August.

OpenAI cash burn.
Source: The Information

Cash burn soars—from $2B in 2023 to $7B in 2024, peaking at $20B in 2027 before profit.
- AI costs to hit $320B by 2030 with compute and training taking the lions share.
- 8GW data centers by 2030. Stargate expansion rivals cloud giants.

💡 How it impacts you

Better AI tools: SoftBank funding fuels faster AI growth.
ChatGPT’s grip tightens: $28B revenue by 2026 means bigger AI influence.
Premium AI pricing: Training costs keep AI expensive.
New Big Tech battle: OpenAI pivots from Microsoft to SoftBank.
More AI hubs in the U.S.: Stargate drives massive AI expansion.

🔮 Industry prediction

AI infrastructure is the new oil. OpenAI’s pivot sparks a power race for compute dominance.

Who's Moving:

🏃‍♀️ Leading: OpenAI, SoftBank, Oracle
🚶‍♂️ Following: Microsoft, Nvidia, Amazon
⌛ Waiting: Google, Meta, Anthropic

What's Next:

Now: OpenAI secures $40B, bets big on Stargate.
6 Months: More Stargate deals. Microsoft tension rises.
1 Year: New AI models. Google DeepMind, Anthropic step up.

⚡ The bottom line

OpenAI ditches Microsoft for SoftBank—a blockbuster AI shakeup that rewrites the power map of compute.

2. 📊 Hard-to-shock markets finally feel the jitters

Source: Bloomberg

⏳ The deets in 30 seconds:

Weak US economic data sent markets tumbling on Friday, wiping out weekly gains.
- S&P 500 dropped 1.7%, its biggest loss of 2024.
- Bond yields fell to 4.43%.
Consumer sentiment dipped as long-term inflation expectations hit a 29-year high.
Existing home sales declined for the first time since September.
Despite a strong labor market, inflation concerns are derailing Fed rate cut hopes.
Investors had been pouring record cash into ETFs and junk bonds before Friday’s shock.

💡 How it impacts you:

Stock market risk: Increased volatility could lead to more pullbacks.
Bond yields falling: Safer assets are in demand, affecting returns.
Housing slowdown: Higher mortgage rates may cool home prices.
Inflation fears rising: Potential for prolonged high prices and slower Fed cuts.
Market sentiment shift: Investors may turn cautious after record inflows.

🔮 Industry prediction:

Markets have been riding the Fast & Furious momentum, but a plot twist is coming—volatility is back, and even risk-hungry investors might start looking for an off-ramp.

Key Players:

🎯 Moving Markets: Institutional investors, hedge funds
⚡ Making Moves: Retail investors, pension funds
👥 Worth Watching: Crypto traders, emerging market funds

Timeline:

Q1: Increased volatility as inflation data shakes confidence
Q2: Fed decisions dictate market direction
2H: Potential rate adjustments determine long-term risk appetite

⚡ The bottom line:

Markets were cruising on economic resilience, but Friday’s data threw a wrench in the gears—expect more speed bumps ahead.

3. Why AI spending isn’t slowing down 🤖

Money spent by Big Tech quarterly for property and equipment to support AI.
Source: WSJ

📝 Background

Despite temporary investor skepticism, AI spending continues at breakneck speed, fueled by big tech, venture capital, and governments. For example, we covered OpenAI’s ambitions in our story above.

The shift from conventional large language models to resource-intensive reasoning models is driving unprecedented demand for microchips, electricity, and data centers.

🔑 Key Developments

AI is moving from standard language models to reasoning models, needing exponentially more power and processing.
- OpenAI’s o1 reasoning model set off a competitive race, followed by DeepSeek’s R1 and xAI’s Grok 3.
DeepSeek R1 slashed training costs but increased demand for reasoning models, reinforcing need for high-end computing infrastructure.
Google, Microsoft, and Meta plan to spend $215B on AI data centers in 2025, a 45% YoY increase.
Reasoning models consume up to 100X more computing power due to extensive internal processing and prolonged decision-making cycles.
AI usage is shifting from training to inference, with businesses demanding more computing resources to operate AI-driven services.
Experts predict 1,000X efficiency improvements in AI microchips over the next decade, yet demand may increase by a trillion-fold as AI permeates everyday life.

💡 Implications

Data center expansion: The infrastructure race will intensify, driving investments in power grids, cooling solutions, and high-density server farms.
Chip wars escalate: Nvidia, AMD, and new AI-specific chipmakers will battle for dominance in high-performance inference chips.
Rising energy consumption: AI's power demand will skyrocket, increasing pressure on renewable energy adoption.
AI-powered automation: Businesses will integrate reasoning models into customer service, research, and content generation, accelerating job shifts.
Cost balancing act: Despite efficiencies, higher AI usage could offset savings, keeping operational costs high.

🎳 Conclusion

AI's next wave is resource-hungry and inescapable. The race for smarter reasoning models ensures that spending on AI infrastructure, chips, and energy will only intensify, reshaping industries and economies for years to come.

4. Rivian hits first profit but EV policy risks threaten growth 🚗

Source: Good Car Bad Car

⏳ The deets in 30 seconds:

Rivian posted its first-ever quarterly gross profit of $170M, smashing Wall Street’s $32M expectation.
- Stock jumped 3%+ in after-hours trading on investor optimism.
2025 sales forecast: 46,000-51,000 units, below analysts’ 54,800 estimate.
CEO warns tariff hikes and EV tax credit changes could raise costs & impact demand.
Regulatory credits added $260M in Q4 revenue, vital to Rivian’s financial health.
Trump’s proposed EV policy rollbacks & tariffs could reshape the market landscape.

💡 How it impacts you:

Higher EV prices could be coming if tariffs increase Rivian’s costs.
EV incentives might shrink, making adoption less attractive for buyers.
Regulatory credits are a lifeline for Rivian—policy changes could affect profitability.
Competition heats up as legacy automakers adjust to evolving policies.

🔮 Industry prediction:

EV policy uncertainty is about to shake up the industry like a surprise season finale—expect higher prices, shifting incentives, and a reshuffling of market leaders.

Who's Moving:

🏃‍♀️ Leading: Tesla, BYD, Hyundai
🚶‍♂️ Following: Rivian, Lucid, Ford
⌛ Waiting: GM, Volkswagen, Toyota

What's Next:

Now: Investors react to Rivian’s first profit and policy uncertainty looms.
6 Months: EV makers brace for potential tariff and incentive shifts.
1 Year: Market dynamics shift based on regulatory decisions, impacting pricing and competition.

⚡ The bottom line:

Rivian finally turns a profit, but looming EV policy shifts could decide whether it accelerates or stalls in the race against Tesla and legacy automakers.