Tomasz Tunguz wrote on x.com
2025-11-04 06:40:25
OpenAI has committed to spending $1.15 trillion on hardware & cloud infrastructure between 2025 & 2035.1 The spending breaks down across seven major vendors: Broadcom ($350B), Oracle ($300B), Microsoft ($250B), Nvidia ($100B), AMD ($90B), Amazon AWS ($38B), & CoreWeave ($22B). Using some assumptions, we can generate a basic spending plan through contract completion. Across these vendors, estimated annual compute spending grows from $6B in 2025 to $173B in 2029, reaching $295B in 2030. We built a constrained allocation model with the boundary conditions defined in the appendix below, but this is just a guess. The actual growth rates are 124% (2027→2028), 54% (2028→2029), & 70% (2029→2030). Coincidentally, OpenAI announced today they would hit $100B in 2027, earlier than expected. This gives us another data point to help us understand the business’ trajectory. OpenAI projects a 48% gross profit margin in 2025, improving to 70% by 2029.5 If we assume all infrastructure spending flows through cost of goods sold (COGS), we can calculate the implied revenue needed to support these spending levels at OpenAI’s target margins. The calculation assumes linear margin improvement from 48% (2025) to 70% (2029), then holds at 70% for 2030-2032. Revenue is calculated as: Spending / (1 - Gross Margin). These implied revenue figures suggest OpenAI would need to grow from ~$10B in 2024 revenue to $577B by 2029, roughly the size of Google’s revenue in the same year (assuming Google grows from $350B in 2024 at ~12% annually). If nothing else, the estimated annual spending & commitments convey an absolutely enormous level of potential & ambition. For the full analysis see : tomtunguz.com/openai-hardwar …