Sam Altman came close to billion-dollar rocket startup to challenge Musk's SpaceX

Sam Altman, the head of OpenAI, reportedly held talks about buying into or teaming up with a rocket company, putting him on a path to go head-to-head with Elon Musk’s SpaceX.

So what exactly did Altman propose to the rocket company? Altman contacted at least one rocket builder, Stoke Space, during the summer months, with conversations becoming more serious in the fall.

Sources who know about these discussions told Wall Street Journal that one idea on the table involved OpenAI putting money into the company through several investments until it owned most of the business. The total amount would have reached billions of dollars.

However, people close to OpenAI say these conversations have stopped.

The reason why the talks have ended is pretty clear. The timing comes as Altman and his company face tough challenges after signing computing contracts worth hundreds of billions of dollars without clearly explaining how the startup plans to cover the massive costs.

As reported by Cryptopolitan, this Monday, OpenAI announced a “code red” situation to make ChatGPT better after losing users to Google’s Gemini chatbot. Because of this emergency, the company is pushing back the launch of other projects, including advertising features, and asking workers to switch teams temporarily to focus on fixing the chatbot.

Why does Sam Altman want data centers in space?

Altman has thought about putting data centers in space for a while now. He believes the growing need for computing power to run artificial intelligence systems might eventually need so much energy that environmental problems would make space the smarter choice. Supporters of this idea say data centers in orbit could use the sun’s power to run their operations.

Stoke Space was started by people who used to work at Jeff Bezos’ Blue Origin. The company is trying to build a rocket that can be used again and again, which is also what SpaceX is working on. Several technology leaders, including Bezos, Musk, and Google’s Sundar Pichai, have talked about the possibility of building AI computing centers in space.

Nobody has proven this idea works yet. That said, Google and a satellite company called Planet Labs made a deal to launch two test satellites carrying Google AI chips in 2027.

“I do guess that a lot of the world gets covered in data centers over time,” Altman said on a recent podcast with Theo Von. “Like, maybe we build a big Dyson sphere around the solar system and say, ‘Hey, it actually makes no sense to put these on Earth.'”

The rocket investment talks started when the market was very excited about AI. Altman announced several deals for chips and data centers in September and October with companies like Oracle, Nvidia, Advanced Micro Devices, and others.

Investors liked these announcements at first. Oracle and Nvidia stock prices went up quickly in the weeks following the news, where Altman promised a huge expansion of computing facilities. But as Cryptopolitan has reported since then,  the market has since turned negative on big AI spending plans. Oracle shares dropped about 19% in the past month, while Nvidia fell roughly 13%.

An executive at Nvidia said this week that the company’s $100 billion agreement with OpenAI still needs to be finalized.

Intensifying competition with Elon Musk

The potential Stoke partnership would have put Altman in stronger competition with Musk, considering SpaceX’s leading role in launching rockets and Musk’s competing AI company xAI. Altman also recently launched Merge Labs, a brain-computer company that competes with Musk’s Neuralink. OpenAI is also creating a social network that could rival X.

A deal with Stoke would have given Altman access to Nova, a rocket the company is developing. Making a new rocket involves difficult technical problems and regulatory hurdles and can take ten years, making it hard to start fresh. Several launch companies are trying to challenge SpaceX, including Blue Origin, Rocket Lab, and Stoke.

“Should I build a rocket company?” Altman asked in a June podcast with his brother.

“I hope that eventually humanity is consuming way more energy than we could ever be generating on Earth,” he said.

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