Microsoft and OpenAI share a vision for AI's future, but with different execution speeds. While OpenAI is moving aggressively to secure massive computing resources, Microsoft appears to be taking a slightly more measured approach.
According to investor documents reviewed by The Information, OpenAI plans to source about 75% of its computing power from the "Stargate" data center project by 2030. This joint venture with SoftBank and Oracle would effectively replace Microsoft as OpenAI's primary infrastructure partner.
The scale of this ambition is striking - OpenAI aims to build data centers with 8 gigawatts of total capacity, putting it on par with the entire data center operations of major cloud providers.
This shift doesn't mean reduced spending with Microsoft, however. Current contracts show OpenAI's Microsoft expenditure increasing from $13 billion this year to $28 billion in 2028, with potential for further growth if Microsoft provides additional capacity, according to The Information. And since Microsoft is a major investor, when OpenAI makes money, Microsoft does too.
Ambitious growth comes with massive cash burn
OpenAI projects its revenue will more than triple from $3.7 billion this year to $12.5 billion, targeting $28 billion by 2026. SoftBank companies are expected to drive one-third of this year's growth through OpenAI product usage.
The company's cash burn is also accelerating dramatically - from about $2 billion last year to nearly $7 billion this year, peaking at around $20 billion in 2027. Profitability isn't expected until the end of the decade.
These expenses largely stem from computing investments. OpenAI plans to spend over $320 billion on AI model training and operations between 2025 and 2030, with half allocated to training. Operating costs are projected to exceed training costs after 2030.
To fund these initiatives, OpenAI is preparing a $40 billion financing round, with SoftBank potentially contributing $30 billion. This would value OpenAI at $260 billion, with the first $10 billion targeted by March's end. The entire Stargate project's investment is estimated at $500 billion.
Microsoft CEO urges caution
Microsoft CEO Satya Nadella is taking a more measured approach to computing investments. He predicts a surplus of computing power by 2027/2028 that could drive prices down, saying he'll be "happy to lease" when the market softens. Rather than building speculative capacity, Microsoft is sticking to a structured expansion plan with an $80 billion data center expansion budget for fiscal year 2025.
OpenAI seems to be betting against this caution. The company recently reported over 400 million weekly active users - an 8% increase in recent weeks alone. API usage has reportedly grown fivefold since introducing o3-mini, the company said. GPT-4.5 will reportedly be released in the coming days, with GPT-5 planned for around May.
Concerned about keeping pace with competitors, OpenAI started working with Oracle for additional computing power in summer 2024. By October, CEO Sam Altman reportedly worried that Microsoft couldn't deliver servers fast enough to match Elon Musk's xAI, which just released its Grok 3 model.
Musk isn't standing still either. His Memphis data center already houses 200,000 Nvidia chips and keeps growing. A second facility under construction in Atlanta has 12,000 GPUs installed so far.
