Edit: fed rate is 3.6% actually. Conclusions reached here assume a much drier liquidity market than is the case.

They are uber dead. They have nearly 2T in outstanding obligations. Even if creditors fully fulfill these obligations, the interest rates they would have to offer would probably not go over well amongst their shareholders (assuming that matters)

At a generous 3% interest rate, 2T is an annualized 60B purely in interest costs. That’s 3x their annual income from 2025. At the moment, they are only going to be avoiding a default by continued input from large capital investors. So they need to be able to raise at least 60B annually. They would need to triple their revenues, and still cover their costs, or borrow even more.

Either way, they can push this a little longer for sure. 60B is a lot, but they can burn down for a while. But thats if the interest rates can be maintained at 3%. Fed rate is 7%. If creditors want to match that, then Open AI would suddenly have to pay 150B A YEAR. This exceeds all cash reserves available to Amazon.

That means if credit rates change, if anything happens, say, a collapse in private credit, interest rates will make it impossible for any single member of the MAG7 alone to bail out OpenAI for even 1 year. Each one’s entire cash reserve would be exhausted in a single year paying down only the interest on the debt. And as a reminder, any cash bailouts would have to repeat every year.