What are the AI Lab datacenter / compute commitments and what does it mean for hyperscalers and neoclouds?

With the AI Labs contracted to use a significant portion of the AI computing capacity being built, concerns are high of customer concentration risk and what the ramifications could be in a worst case condition. Today's note estimates OpenAI's annual contracted commitment as a proxy for all the AI Labs. We show that while there are substantial commitments they are layered over time and not all commitments are non-cancelable or have a specific time frame. While the capacity and the associated costs are growing so is their ability to leverage and pay. In other words, while concerns will continue, we believe the downside risks to Oracle and Microsoft and the other primary suppliers is low. The risks to the industry, we would argue, are not from the leading AI labs especially as they build out their platform and consumer / search businesses.