OpenAI Deals Test Hyperscaler Ambitions

Sam Altman may not have initially envisioned competing directly with Nvidia, but OpenAI’s ambitions have rapidly expanded, pushing the AI powerhouse into uncharted territory.

OpenAI’s initial premise hinged on the belief that superior algorithms, rather than robust infrastructure, would pave the way for artificial general intelligence (AGI). However, this perspective evolved as Altman recognized the critical role of computational power in achieving advanced AI capabilities and market dominance.

The recent unveiling of a significant partnership underscores OpenAI’s strategic shift towards chipmaking, intensifying competition with hyperscalers and established semiconductor players.

OpenAI’s collaboration with Broadcom aims to co-develop custom AI accelerators tailored specifically for its models. This move reflects a fundamental shift for a company that once prioritized algorithmic advancements over hardware capabilities.

“In 2017, our research indicated that scale was the key to unlocking performance,” Altman stated in a company podcast. “This wasn’t a preconceived notion but an empirical discovery that emerged from exploring alternative approaches.”

This acknowledgment of scale’s importance has dramatically reshaped OpenAI’s strategic direction.

The collaboration with Broadcom signifies an expansion of this logic, focusing on designing and implementing custom silicon optimized for OpenAI’s specific workloads. This strategic vertical integration allows for fine-tuning the silicon to the specific needs of OpenAI’s AI models, potentially yielding significant performance gains over general-purpose GPUs.

This strategic alliance grants OpenAI greater control over its technology stack, encompassing model training, infrastructure management, distribution channels, and the developer ecosystem necessary for transforming these models into enduring platforms.

Altman’s aggressive pursuit of strategic partnerships and product launches is constructing a comprehensive AI ecosystem, mirroring the approaches of Apple in smartphones and Microsoft in PCs, with infrastructure, hardware, and developers forming the core.

The collaboration with Broadcom centers on co-developing custom AI accelerators optimized for inference, uniquely tailored to OpenAI’s proprietary models. This contrasts with the broader reach of Nvidia and AMD chips.

Unlike Nvidia and AMD, which develop chips for a wider commercial audience, OpenAI’s custom silicon is designed for vertically integrated systems. This approach integrates compute, memory, and networking into full rack-level infrastructure, fostering a more streamlined and efficient AI processing environment. OpenAI anticipates deploying these systems beginning in late 2026.

The Broadcom deal mirrors Apple’s successful strategy with its M-series chips: controlling the silicon to enhance the overall user experience. However, OpenAI is going a step further by engineering every layer of the hardware stack, surpassing conventional chip-level control.

The Broadcom systems are built upon its Ethernet stack and optimized to accelerate OpenAI’s core workloads, providing the company with a tangible advantage intertwined with its software capabilities. This deep integration allows for fine-grained control over resource allocation and optimization, potentially leading to significant gains in performance and efficiency.

Simultaneously, OpenAI is venturing into consumer hardware, a bold move for a primarily model-driven enterprise.

The $6.4 billion acquisition of Jony Ive’s startup, io, signifies OpenAI’s ambition to go beyond powering AI experiences and to own them outright. This move brings a legendary Apple designer into the fold, potentially revolutionizing the design and user experience of AI-powered devices.

Ive and his team are exploring a novel class of AI-native devices that could reshape human-AI interaction, shifting away from traditional interfaces to more intuitive and immersive experiences.

Early concept designs reportedly involve screenless, wearable devices leveraging voice input and subtle haptics, positioning them as ambient companions rather than conventional gadgets. This approach aims to integrate seamlessly into users’ lives, providing AI assistance without being intrusive or disruptive.

OpenAI’s dual emphasis on custom silicon and emotionally resonant consumer hardware presents two additional avenues for exerting direct control over its ecosystem, potentially fostering greater innovation and differentiation.

OpenAI’s Stargate initiative integrates chips, data centers, and power into a cohesive framework that provides the physical infrastructure for AI advancement. This initiative has recently gained considerable momentum through several key agreements.

Over the past three weeks, this initiative has accelerated with several major deals:

• OpenAI and Nvidia have established a framework for deploying 10 gigawatts of Nvidia systems, backed by a potential $100 billion investment. This massive investment underscores the importance of GPU-based computing for AI training and inference workloads.
• AMD will supply OpenAI with multiple generations of its Instinct GPUs as part of a 6-gigawatt deal, with opportunities for OpenAI to acquire up to 10% of AMD if certain deployment milestones are met. This strategic partnership provides OpenAI with access to AMD’s advanced GPU technology for AI development and deployment.
• Broadcom’s custom inference chips and racks are scheduled for deployment in late 2026 as part of Stargate’s initial 10-gigawatt phase. This collaboration aims to optimize AI processing for OpenAI’s specific models, potentially yielding significant performance gains and cost efficiencies.

Collectively, these endeavors strengthen OpenAI’s objective of anchoring AI’s future to infrastructure under its direct control. By owning and managing the underlying infrastructure, OpenAI can exert greater influence over the direction and pace of AI innovation.

“We possess the capability to conceptualize the entire system, from transistor design to the token outputted by ChatGPT, enabling significant efficiency enhancements,” Altman noted. “This will result in superior performance, faster model training, and more cost-effective models overall.”

Regardless of whether OpenAI can fully realize every commitment, Stargate’s scale and velocity are actively reshaping the market, boosting the market capitalization of its partners and securing OpenAI’s position as the leading force in AI infrastructure. The combined effect of these initiatives is to solidify OpenAI’s position as a key player in the AI landscape.

None of OpenAI’s competitors seem capable of matching the pace or scale of its ambitions, further reinforcing its market leadership and creating a self-reinforcing cycle of innovation and investment.

OpenAI’s DevDay emphasized its dedication to empowering the developers who build upon its models. By providing developers with comprehensive tools and resources, OpenAI seeks to foster a vibrant ecosystem of AI-powered applications.

“OpenAI is striving to compete on multiple fronts: advanced models, user-facing chatbot, and enterprise API platform,” remarked Gil Luria, highlighting OpenAI’s diverse set of offerings and its ambition to challenge established players across the AI landscape.

DevDay was designed to assist businesses in integrating OpenAI models into their tools, offering enhanced capabilities and streamlined workflows. By making its AI technology more accessible and easier to integrate, OpenAI hopes to accelerate the adoption of AI across various industries.

“The presented tools were highly impressive, showcasing OpenAI’s remarkable ability to commercialize its products in a compelling and user-friendly manner,” Luria added. “However, they face an uphill battle against companies with considerably larger resources, at least for the time being.”

Luria identified Microsoft Azure, AWS, and Google Cloud as primary competitors, acknowledging the significant resources and established market presence of these tech giants. Despite these challenges, OpenAI continues to innovate and expand its offerings, positioning itself as a formidable player in the AI market.

Developer Day illustrated OpenAI’s aggressive adoption strategy.

The firm introduced AgentKit for developers, new API bundles for businesses, and an App Store providing direct distribution within ChatGPT, which now boasts 800 million weekly active users, according to OpenAI. By offering developers a comprehensive platform for building and deploying AI applications, OpenAI seeks to create a thriving ecosystem around its technology.

“It resembles Apple’s strategy: own the ecosystem and evolve into a platform,” observed Deedy Das. By creating a closed ecosystem, OpenAI can exert greater control over the user experience and foster greater loyalty among developers.

Previously, OpenAI was regarded by most companies as a tool within their technology stack. However, with new capabilities for publishing, monetizing, and deploying apps directly within ChatGPT, OpenAI seeks tighter integration and makes developer departure more challenging. By establishing a comprehensive platform for AI development and deployment, OpenAI hopes to become an indispensable part of the AI landscape.

Microsoft CEO Satya Nadella pursued similar strategies after succeeding Steve Ballmer. This involved building trust with developers by promoting open source initiatives and acquiring GitHub for $7.5 billion, signaling Microsoft’s renewed commitment to the developer community. By embracing open source and fostering a strong relationship with developers, Microsoft has been able to regain its position as a leading technology company.

GitHub subsequently became the platform for tools such as Copilot, reaffirming Microsoft’s central role in the contemporary developer stack. This strategic move allowed Microsoft to solidify its position as a key player in the modern software development landscape.

“OpenAI and all the big hyperscalers are going for vertical integration,” said Ben van Roo, CEO of Legion, a startup building secure agent frameworks for defense and intelligence use cases. By integrating all aspects of the AI development process, from models to infrastructure, these companies aim to create a more efficient and powerful AI ecosystem.

“Use our models and our compute, and build the next-gen agents and workflows with our tools. The market is massive. We’re talking about replaying SaaS, big systems of record, and literally part of the labor force,” said van Roo. The growth potential of AI is immense, with applications spanning across various industries and aspects of daily life.

Legion’s strategy is to remain model-agnostic and concentrate on secure, interoperable agentic workflows spanning multiple systems. The company is currently operating within classified Department of Defense environments and embedding across platforms like NetSuite and Salesforce. By focusing on security and interoperability, Legion aims to provide a robust and reliable platform for AI deployment in sensitive environments.

However, this transition also poses risks for model creators. With the rise of specialized agents and workflows built using smaller, targeted models, the dependence on massive LLMs like GPT-5 may diminish, potentially disrupting the status quo.

The tools and agents developed with leading LLMs have the potential to replace legacy software products from companies like Microsoft and Salesforce. By providing more efficient and intuitive solutions, AI-powered agents could disrupt traditional software markets.

That’s why OpenAI is racing to build the infrastructure around its models. It’s not just to make them more powerful, but harder to replace. By creating a comprehensive platform for AI development and deployment, OpenAI hopes to establish a moat around its technology and maintain its leadership in the AI market.

The actual wager is not that the optimal model will triumph, but that the entity with the most comprehensive developer loop will define the upcoming platform era. By fostering strong relationships with developers and providing them with the tools and resources they need to succeed, OpenAI aims to create a thriving ecosystem around its AI technology and shape the future of the AI landscape.

And that’s the vision for ChatGPT now: Not just a chatbot, but an operating system for AI. By transforming ChatGPT into a platform for building and deploying AI applications, OpenAI seeks to redefine the way people interact with AI and create a new era of AI-powered computing.