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Coffee Break: Will the Trump Admin Make OpenAI Its Lucky 31st Investment and Bailout Softbank?

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Earlier this month OpenAI CEO Sam Altman suggested that the US government take a 5% ownership stake in the spectacularly unprofitable tech company. Will the former leader in Large Language Model (LLM) generative AI join the other 30 companies that the Trump Regime has invested federal money in?

A Bold Proposal From Scam Altman

Regular readers might recall that not long ago, OpenAI and Amazon were involved in encouraging the Trump admin to crack down on rival Anthropic in a fairly nasty family blogging.

The Financial Times had the details on July 1 (archived):

OpenAI has discussed giving a 5 per cent stake to the US government as the $852bn AI start-up seeks to clear political obstacles by securing financial buy-in from the Trump administration.
…
The proposed arrangement would involve other US AI companies handing over a similar stake, although it is not clear if the other labs would be willing to do so.

Giving the government an ownership stake could help secure good relations with the administration and would mark an attempt to address political blowback by sharing the wealth generated by AI with the public.
…
OpenAI and its chief rival Anthropic have recently both had the release of their cutting-edge models held up by US scrutiny, while some Republicans and advisers to President Donald Trump favour much tighter regulation of the sector.
…
Altman and other OpenAI executives have suggested that each of America’s leading AI developers allot 5 per cent of their equity to a vehicle like the Alaska Permanent Fund, a sovereign fund that invests the state’s oil wealth into stocks and pays dividends to the state government and residents.
These companies might include Anthropic as well as Google, Meta and others, although it is not clear any of these groups would agree with OpenAI’s proposal.

You’ve got to hand it to Sam Altman, he’s got great comic timing.

Even Axios was a bit skeptical:

Investors tell Axios that the idea of giving a stake reads like a PR stunt aimed at making it seem as if the public could benefit from the AI boom just as the technology threatens their jobs.

Yes, but: The government’s 9.9% stake in Intel, taken last August, appears to have paid off.

Its shares are up nearly 400% since then, although it has also come amid a broad rally for chip stocks.

The Intel stake was acquired under the CHIPS Act. A deal with the AI labs would likely require an act of Congress.

It’s also unclear what a government stake would accomplish, other than giving the AI labs a closer relationship to what is currently one of their biggest hurdles: the government.

An investor in Anthropic and OpenAI tells Axios that the proposal reads more like a “political move” to gain favor with the administration than something that would actually create a shared benefit for the American public.

What they’re saying: A government stake would be a “troubling milestone” that hurts competition between the labs, ” David Sherman, AI and financial inclusion strategist at io.net, a decentralized cloud network, said via email.

It “gives one AI company a government stamp of approval whilst millions of developers, researchers and businesses are locked out by skyrocketing token prices and endless GPU queues,” he added, referencing the challenge in accessing AI at current costs or chips at current supply levels.

And why would the lames at Axios be skeptical about the leader in the “we’re building God” industry?

Apple Slaps OpenAI With a Suit

Could it be because the ever unfocused Sam Altman has talked mad trash about taking on Apple and launching an OpenAI phone?

Maybe it’s because in pursuit of that obviously dumb idea Altman’s been poaching Apple talent, per the FT (archived):

Apple claimed that the ChatGPT maker has used former and current Apple employees to steal hardware designs as the start-up prepares to launch its own AI-focused devices. It alleged that this was part of a pattern of misconduct normalised by OpenAI’s top leadership.

“Significant evidence has emerged suggesting individuals employed by OpenAI wrongfully took Apple’s secret and confidential information regarding our unreleased technologies, processes, and products,” Apple said.
…
The lawsuit marks a breakdown in the relationship between Apple and OpenAI as each encroaches on the other’s territory: Apple, with the launch of its new ChatGPT-like Siri in June, and OpenAI with its plan to take on the iPhone.

OpenAI signalled its plan to compete with Apple in the consumer device space when it acquired io, the studio led by Apple’s former design chief Jony Ive, for $6.4bn in May last year.

OpenAI has since aggressively poached employees from Apple, part of a broader trend of AI talent leaving the company.
While OpenAI in 2024 became Apple’s first big partner in the AI space, integrating ChatGPT into Siri, Apple has since partnered with Google for its newest features.

Competing with Apple might be Altman’s dumbest idea since Sora, or selling ads, or doing pr0n.

Somehow all this flailing around isn’t leading to the infinite pots of gold at the end of the AGI/ASI rainbow, no matter how many times Altman claims OpenAI is about to immanentize the eschaton.

OpenAI Blinked on Their IPO

Well it seems that OpenAI was supposed to dropping a $1 trillion IPO but then they didn’t.

Barchart’s Rob Isbitts titled his take “Why OpenAI’s Delayed IPO Filing May Have Just Been the Death Knell for AI Stocks in 2026” via Yahoo Finance:

…go back a few weeks to June 8, 2026. That’s when OpenAI announced it had confidentially filed its S-1 paperwork with the SEC. The hype machine was working overtime, with bankers floating an unprecedented public valuation target of up to $1 trillion.

But before we could even get to the next calendar month, the news has completely flipped. According to reports on June 25, OpenAI’s financial advisors are now blinking, actively urging the company to push its heavily anticipated IPO all the way back to 2027.
…
OpenAI’s private funding rounds have been an exercise in exponential asset inflation, jumping to an $850 billion-plus valuation in March 2026. Bankers presented CEO Sam Altman with a clear choice: lower the valuation expectations to get the listing cleared sooner, or delay the IPO until 2027 to protect the $1 trillion target. Altman reportedly declared that any reduction in that trillion-dollar figure was an absolute non-starter.

The underlying financial disclosures reveal a staggering operational situation: OpenAI posted an astronomical net loss of $38.5 billion for 2025 on $13.07 billion in revenue. Even with monthly revenue pacing at a resilient $2 billion earlier this year, the company is still projected to burn through roughly $14 billion in losses for 2026.

When you combine that cash burn with a massive $600 billion data center and infrastructure commitment stretching out to 2030, the hurdle for public investors becomes completely impossible to meet in a high-interest-rate environment. Public market allocators are no longer willing to subsidize massive losses just for the promise of top-line generative AI growth.

And when Scam Altman gets a mote in his eye, the money mark who has sunk $30 billion into OpenAI and pledged another $30 billion gets a face full of pepper spray.

So Softbank Got Maced

When the NYT reported that OpenAI would be delaying its IPO until 2027, Softbank’s share price dropped 12% in one day and dropped almost 20% by July 7, although it’s recovered some since.

Somehow Softbank CEO Masayoshi Son didn’t turn things around with his brilliant presentation at the company’s 46th annual meeting:

OpenAI has the potential to dwarf Softbank’s infamous $6.2 billion loss on WeWork, but heck, Mark Zuckerberg squandered 10x of that on the Metaverse, so I’m sure Masayoshi Son feels pressure to keep up. Heck, Son’s probably still kicking himself for missing out on Theranos.

But we shouldn’t be too hard on Masayoshi Son, he might have AI psychosis if his claims to spend 2 to 3 hours daily interacting with ChatGPT are true.

The C-Suite AI Psychosis Pandemic

Can’t prevent this one from spreading by masking up and working from home, per TechCrunch:

Tech executives, especially CEOs, are collectively suffering from delusions of AI grandeur. And at least one tech CEO has said as much out loud: Box founder Aaron Levie.

“CEOs are uniquely prone to AI psychosis because they’re sufficiently distant from the last mile of work that still has to happen to generate most value with AI,” Levie wrote on X.

CEOs “play with AI,” develop a prototype, or generate a contract, to use Levie’s examples, and then make the leap to believing agents can do the work.

But these top-level executives aren’t the people who have to review code, discover bugs, and identify calls to hallucinated libraries before software is deployed. They aren’t responsible for training AI models on a company’s idiosyncratic contract terms, nor do they have to spend days combing through contracts to find sneaky terms, as Levie indicates.

In other words, Levie’s theory posits, CEOs don’t really understand processes well enough to know what really can and can’t be automated. But that lack of knowledge doesn’t stop them from acting on their beliefs.

I’m not qualified to tell AI psychosis from ketamine poisoning and I’m certainly not going to tell a CEO when microdosing has become macrodosing so let’s get back to brass tacks.

Because not everyone is a sunny-side-up type who really believes that Sam Altman is building Artificial Super-Intelligence (ASI) like Son and credulous NPR readers.

And I can’t leave Masayoshi Son behind without at least mentioning another of his brilliant ideas: Roze.

AI Psychosis Diagnosis: Positive

The pink paper revealed what is possibly Softbank’s most dazzlingly brilliant plan in April (archive):

SoftBank is planning to create and list an AI and robotics company called Roze in the US that will be involved in building data centres as Masayoshi Son pushes to realise his massive AI ambitions.

Roze could be listed as early as this year, and executives at SoftBank are eyeing a valuation that could reach $100bn, according to people familiar with the matter.
…
Despite Son’s optimism, some inside SoftBank are sceptical about the valuation and the proposed timeline for an IPO, in part due to the geopolitical and economic uncertainties following US President Donald Trump’s strikes on Iran.
…
The valuation target could shift and is considered ambitious by some SoftBank executives since it relies on rapidly expanding its data centre businesses.
ABB Robotics, which SoftBank agreed to buy last year, could play a critical role once the deal closes, alongside some existing group assets, including land and infrastructure, according to one of the people familiar with the matter.
SoftBank is working fast on building its own data centres, including a large-scale project in Ohio, and people familiar with the matter say Son has big ambitions in the sector.

The oft quoted, albeit semi-anonymous, X.com tech analyst/slop slinger, Ricardo rips this scheme to pieces:

Tasty quotes:

There’s no prototype, no data center, and not even a single cable has been laid.

But Masayoshi Son wants this thing public by the end of 2026 at a $100 billion valuation.

Only a handful of companies in history have ever debuted at that level, and every single one of them had billions in actual revenue when they went public. Roze has zero.

And here’s the thing…

SoftBank isn’t building Roze from scratch. They’re Frankensteining it from acquisitions they already own.

ABB Robotics, bought for $5.4 billion last year, gets folded in. Land assets, energy investments, infrastructure holdings, all bundled into ONE shiny new entity designed specifically to go public.

They’re repackaging assets they already own under a new name with an AI story slapped on top and trying to sell it to retail investors at a 20X markup.

And the timing tells you EXACTLY why this is happening:

SoftBank committed over $30 billion to OpenAI this year alone. Took out a $10 billion loan backed by their OpenAI stake just weeks ago.

Their balance sheet is so stretched that their own insiders are raising concerns about funding.

So Roze is a fundraising mechanism disguised as a company. The IPO exists to bring in outside capital so SoftBank can keep feeding its other AI bets without collapsing under its own weight.

SoftBank has literally run this EXACT play before. Every single time it ended in disaster.

2018: They pour $2 billion into Katerra, a construction tech startup promising to “transform” building. Same pitch as Roze, just swap “AI data centers” for “apartments.”

Katerra burned every dollar, exaggerated revenue to investors, and filed for bankruptcy. 8,000 employees lost jobs with no severance.

Son called it one of his biggest “regrets.”

A Masayoshi Son “regret” is unfortunately not quite as rare as a unicorn, even at a Silicon Valley ayahuasca party.

But speaking of cryptozoology…

Mommy Do AI Bears Really Exist? Will They Eat Our Portfolio?

Unsurprisingly, professional generative AI bear Ed Zitron was unsympathetic, titling his reply “Let AI Burn“:

Every single time you hear somebody discuss “bailout” or “too big to fail” or “sovereign wealth funds,” know that this is the industry, on some level, attempting to create the air that it cannot die, when in fact every one of these companies is just as weak and brittle as any other startup.

I also think that the media — and the world at large — is too ready to accept the prospect of a bailout after watching those who drove the world into a ditch in 2008 escape blame, and I must be clear: the AI industry is very different to the financial industry. It is inessential to the economy, and its relevance is only as large as the hype campaign that sits behind it. 

This is an industry of losers that has inflated only because of the joint manufactured consent of Silicon Valley, the mainstream media, and an enshittified stock market that rewards grifting and circular financing. OpenAI had $5.7 billion and Anthropic a little under $5 billion in the first quarter of this year — and those revenues mostly came from companies that were burning AI tokens at a horrendous rate because they’d just been forced to pay the actual cost of AI — and now everybody’s pulling back on that spend.

Generative AI will not bring us AGI, nor does it do much of what we associate with artificial intelligence. It is not autonomous. It is not “intelligent.” It does not have thoughts, or “knowledge,” and no matter how many layers of harnesses and scripts you put on top of it, it is still (per OpenAI) mathematically certain to hallucinate. I estimate that at least 70% of the entire AI industry’s revenues are made up of OpenAI and Anthropic’s compute spend, and as both companies are horrendously unprofitable, this means that the AI industry is, for the most part, venture capitalists funnelling money to hyperscalers so that they can funnel that money to NVIDIA or data center capex.

Everyone knows Ed’s just a hater, surely the geniuses at the all-slop AI Chronicle will weigh in a convincing rebuttal, after all, they’re the best bots in the biz:

That’s enough about AI, let’s wrap with a quick look at the 30 companies the Trump 2.0 regime has taken stakes in on behalf of the US government.

Does OpenAI Fit the Presidential/Public Portfolio?

The always helpful Council on Foreign Relations has launched a “U.S. Government Deal Tracker” to “show how the government is experimenting with new tools and financing structures to advance a range of strategic sectors, including critical minerals, energy, global logistics, manufacturing, telecommunications, and other technologies.”

Washington’s latest and boldest experiment in industrial policy is a renewed willingness to take equity stakes. Since January 2025, the U.S. government has announced investments worth $26.7 billion across thirty deals involving direct ownership, broadening a toolkit that has traditionally focused on grants, loans, and tax incentives. The Department of Commerce leads the way with seventeen announced deals, including taking a 10 percent stake in Intel. The Development Finance Corporation, the United States’ development bank, has pledged six equity transactions in critical minerals, energy, and infrastructure. The Department of Defense has disclosed seven deals, and the Department of Energy has participated in two.

CFR’s U.S. Government Deal Tracker is designed to shed light on the growing number of public investments into private companies. Drawing on open sources, the tracker presents information on deals announced since January 2025 that entail equity and quasi-equity stakes. It records key details for each deal, including the terms agreed to, the agencies and authorities involved, the participation of the private sector and foreign partners, and milestones for monitoring progress.

There’s some cool pie charts and family blog too:

CSIS was months ahead of CFR in looking at the Trump Regime’s novel public investment strategy, some key notes:

…the Trump administration is acquiring a strategic portfolio of investments in companies directly related to national security, spanning minerals, nuclear energy, and semiconductors, among other sectors. These equity positions aim to support key U.S. firms and thus reduce U.S. dependence on China, help reshore critical manufacturing and provide reputational and financial support for innovative domestic firms. At the same time, equity held by the government when not sufficiently constrained can also pose risks, potentially including the politicization of corporate decisionmaking.

“Politicization of corporate decisionmaking?”

You don’t say.

That’s exactly what the CFR’s Sebastian Mallaby warned about on a recent episode of Prof G Markets, he also shares some thoughts about the massive distress Sam Altman’s bad decision-making and lack of focus has put OpenAI in and what angle Scam might be working with this “5% for the public” con:

Relevant quotes (edited AI transcript):

Sebastian Mallaby: When you have a very high valuation, a down round is super painful.

(OpenAI was) valued in the last round at $852 billion dollars and in the secondary market they’re trading for a lot less than that.

If they were to just say ‘okay we accept we’re really worth $600 billion,’ the hit to everybody’s equity options inside open AI would be horrible and they would lose people and the hit to investors who had believed in open AI would be bad and they would get pissed off and the whole momentum machine that Sam Altman has built would really go through a convulsion.

Now, it might be what you have to do to make this thing sustainable because but but my point is once you ratchet all the way up to this very high valuation, it’s difficult to climb down.

That is why I think he says ‘why doesn’t the government have 5%.?’

Because a strategy to get out of this box that he’s in is for Altman to give 5% to the government and then the government will say ‘Right you know OpenAI is too important to fail now because we own 5% or 10% or something’ and they’ll do what they did with Intel which they took a 10% stake in last year.

Next thing you know Commerce Secretary (Howard) Lutnik is like calling other tech companies in The Valley saying ‘You’re going to do a deal with Intel.’ ‘You’re going to bring Intel in as a partner on your next project.’ Blah blah blah and so you’ve got the US government, a Trumpy US government, strong-armming other companies into giving business once they’re in your corner.

So that I think that is what Sam Altman’s strategy is here is to kind of recruit the investment banker to whom you can’t say no — the US government — which seems like he’s basically just trying to take some sort of workaround shortcut around capitalism.

Well, who doesn’t enjoy a good workaround? It certainly makes a hard screw job a lot more pleasant for everyone.

So far the verdict is that the Trump regime’s investment in Intel is paying off, so we should all be on the lookout for Milo Minderbinder to come around and pass out all of our shares any day now.

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3 comments

  1. ambrit

    What are the odds that one of the first tasks that so-called AI will be put to under the Uncle Sam 5% Regime will be ‘Predictive Policing?’ Someone, or something has to tell the ICE Goons who to round up and or harass.
    This could lead to a new version of the computing acronym, GIGO. Government In Garbage Out. We could also flip this one on its head. Garbage In Government Out. [For some definition of Government.]
    Stay safe. Give Farraday pouches for Christmas. Your friends and family will thank you.

    Reply ↓
  2. t

    This will all be fine when the US OMB’s proposed rule for Regulation for Federal Financial Assistance is the law of the land and they can shovel every penny of scientific research monies into these AI goofs.

    Reply ↓
  3. thoughtfulperson

    From the Ed Zitron quote: “AI industry is very different to the financial industry. It is inessential to the economy, and its relevance is only as large as the hype campaign that sits behind it.”

    In other words Zitron does not think a TBTF type bailout is likely. I differ. AI may be garbage but even if it is the myth is it works “well enough” for surveillance, cia database crunching, controlling drone swarms, targeting and other super critical (to Billionaires) national security issues. Billionaires are all in. As we’ve seen with certain states in West Asia when the Billionaires are all in they pretty much get what they want. Thus just as aid to Isreal will soon be part of the 1.5 trillion Pentagon budget, the AI bailouts are coming. It will be in the form the department of war contracts? Or stock deals? Direct cash infusion? Probably all of the above and more. And as we are in late stage empire here in the u.s., you can bet the cleptocrats (of both parties) will cash in big time.

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