Greetings,

This week, our reporters Anissa Gardizy and Sri Muppidi broke a fascinating story that shows how the biggest players in AI are having to get creative to finance their ambitions. The piece reveals that OpenAI and Nvidia are discussing an unusual partnership in which OpenAI would lease Nvidia's AI chips rather than buying them outright.

The staggering cost of building out the data center infrastructure needed for AI is a serious hurdle for companies, even those with significant backing. This potential deal points to a new business model for selling high-priced equipment to startups that may not be able to afford it otherwise.

Why it caught my eye:

• This leasing arrangement could lower OpenAI's server chip costs by 10% to 15% compared to purchasing them.
• Leasing the hardware also frees OpenAI from the risk of the chips becoming outdated sooner than expected.
• Nvidia said Monday it would provide up to $100 billion in funding to OpenAI, making it easier for OpenAI to pay for the servers and networking equipment.

This article delves into the implications of such concentrated power in a rapidly evolving and high-stakes field like AI. A must read for anyone who is interested in how the future of AI will be funded.

Best,

Jessica Lessin
Founder & Editor-in-Chief

In OpenAI Megadeal, Nvidia Discusses a New Business Model: Chip Leasing

OpenAI and Nvidia are discussing an unusual way to structure their new artificial intelligence data center partnership, under which OpenAI would lease Nvidia's AI chips rather than buying them, according to two people who spoke to executives at the companies about it.

The discussion shows how Nvidia is considering new business models to sell its products to customers that are less proven and would struggle to buy the chips on their own, compared to large cloud providers like Google and Microsoft that make up a majority of the chip firm's revenue today.

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