Azeem Azhar

It has this relationship with Microsoft that involves licensing the technology.

It involves distribution on Azure, which is Microsoft's cloud platform.

And OpenAI has to share right now 20% of its gross revenues with Microsoft.

through to 2030.

Now, OpenAI has indicated they want to push that down to about 10% by the end of this decade.

So you have this very complicated, complicated, but a little bit unique setup that has with it a bunch of risks.

You know, what if that relationship really doesn't work out?

If we think about that benchmark discussion, you know, you put your money somewhere else.

To match NASDAQ over five years, that 17% return,

coming in at $500 billion would imply you'd need a trillion dollars at the end of 2030.

But that's just to match a longstanding stock index.

As I argued, you need to add a risk premium to all of this.

So call it 25%, so an 8% risk premium on that.

At 25%,

OpenAI would need to turn into a company of a scale of $1.5 trillion by 2030.

Now, that's a big, big company that is somewhere between Tesla, Broadcom, and Meta platforms, all established companies in the case of Meta and Broadcom, with really substantial revenues and quite low multiples.

So my gut reaction to all of this was, there's no way this could be the case, right?

That was what I was thinking while I was on my phone, walking home, did some mental maths, and I thought, hey, there's no way they can get there.

But when I sat down with Excel and a pencil and paper and went back over my own model of open AI, I started to think through whether that gut reaction was right.

And so here's a bull case, just presenting a little bit of maths.