Public statement! Altman plans to establish a rocket company to compete with Musk’s SpaceX
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OpenAI CEO Sam Altman has explored acquiring or partnering to establish a rocket company, directly competing with Musk's SpaceX.
On Thursday, according to the Wall Street Journal citing sources familiar with the matter, Altman approached at least one rocket manufacturer—Stoke Space—this summer to discuss accelerating progress in the fall. The proposals included a series of equity investments by OpenAI in the company, eventually resulting in a controlling stake, with total investments reaching several billion dollars. However, people close to OpenAI said the talks are no longer active.
Altman has long shown interest in the possibility of building data centers in space, believing that the immense computing resources needed by AI systems might eventually demand so much power that space becomes a better option. This move would further escalate his competition with Musk in rocket launches and the AI sector.
This comes as OpenAI faces market headwinds. The company has signed computing deals worth hundreds of billions of dollars, but has not publicly explained how these projects will be funded, while ChatGPT is losing market share.
Details of Rocket Company Negotiations Surface
According to the Wall Street Journal, Altman approached Stoke Space last summer. The company was founded by former Blue Origin employees under Jeff Bezos and is developing a fully reusable rocket, which is also the goal SpaceX is striving to achieve.
One of the negotiation proposals was for OpenAI to make a series of equity investments in Stoke, eventually gaining a controlling stake. Over time, the total investment would reach several billion dollars. Sources state that discussions intensified in autumn, but those close to OpenAI say the negotiations are currently no longer active.
Striking a deal with Stoke would give Altman a stake in the Nova rocket the company is developing. However, building a new rocket is full of technical and regulatory challenges and usually takes a decade, making it difficult to start a new company from scratch. Currently, several launch companies including Blue Origin, Rocket Lab, and Stoke are trying to challenge SpaceX’s position.
Grand Vision for Space Data Centers
Altman has repeatedly spoken publicly about the possibility of establishing a rocket company and developing data centers in space. He believes that the computing resource needs to power AI systems are so massive that, in the end, the environmental impact may make space a better choice. Supporters of orbital data centers claim this would allow companies to use solar power to supply them.
“I do kind of suspect that, over time, the world’s going to be saturated with data centers in many places,” Altman said recently on a podcast with Theo Von. “Maybe we’ll build a massive Dyson sphere around the solar system and say, ‘Hey, it doesn’t actually make sense to have these things on Earth.’”
This concept has not yet been validated, but Google under Alphabet and satellite operator Planet Labs have reached an agreement to launch two prototype satellites carrying Google AI chips in 2027. Tech CEOs including Bezos, Musk, and Google’s Sundar Pichai have all praised the prospects of building AI computing clusters in space.
OpenAI Faces Payment Pressure
Discussions of potential rocket investments began to coalesce just as enthusiasm for AI reached a peak. Altman announced a series of chip and data center deals last September and October, with partners including Oracle, Nvidia, Advanced Micro Devices, and others.
Investors initially reacted positively to these announcements, with Oracle and Nvidia stocks climbing rapidly in the weeks after, but the market subsequently turned pessimistic on expansionist AI ambitions: Oracle’s share price has fallen about 19% in the past month, and Nvidia’s has dropped about 13%. Nvidia’s chief financial officer said this week that the $100 billion deal between his company and OpenAI has not yet been finalized.
OpenAI has signed nearly $600 billion in new compute commitments in just the last few months, raising questions about how it will pay for development projects. The company is expected to achieve $13 billion in revenue this year, but is also facing pressure from Anthropic, whose sales to programmers and enterprise customers are growing rapidly.
On Monday, OpenAI announced it was entering a "red alert" status to improve ChatGPT after the product began losing market share to Google’s Gemini chatbot. As a result, OpenAI is postponing the launch of other products, including advertising operations, and encouraging employees to temporarily shift roles to focus on the chatbot.
A "Full-Blown Competition" with Musk
The proposed partnership with Stoke would make Altman’s competition with Musk even more direct. SpaceX dominates the rocket launch sector, while Musk also operates rival AI startup xAI. Altman has recently founded brain-machine interface company Merge Labs, competing with Musk’s Neuralink, and OpenAI is building a social network that may compete with X.
Altman is a seasoned venture capitalist and previously managed startup incubator Y Combinator, which invested in Stoke. According to previous Wall Street Journal reports, he oversees a large and opaque portfolio involving more than 400 companies. His personal investments are less frequent than before, but he is unafraid to use OpenAI’s balance sheet for ambitious projects. For example, earlier this year, he pledged OpenAI and SoftBank would invest $18 billion in a new data center company called Stargate.
On his brother’s podcast last June, Altman rhetorically asked, “Should I start a rocket company? I hope that eventually humanity will consume far more energy than we could possibly produce on Earth.”
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