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Did Abu Dhabi Just Deliver A Santa Rally: OpenAI To Raise $100BN From Sovereign Wealth Funds

Tyler Durden's Photo
by Tyler Durden
Friday, Dec 19, 2025 - 12:40 AM

While the broader stock market has meandered both higher and lower in the subsequent two months, the Mag 7 trade peaked on Oct 31 and has been drifting sideways - and lower - ever since.

What happened on that date? That was the day of the infamous All Things podcast, in which Brad Gerstner (an OpenAi investor) pointed out that the emperor is, indeed, naked and asked Sam Altman how a company with $13BN in revenue can afford $1.4 Trillion in commitments. Altman's non-reply? “Happy to find a buyer for your shares.” Translation: No answer... and how could Sam possibly answer: after all there is no way on earth that OpenAI could ever grow into its future obligations absent a miracle, an act of God... or uncle Sam.

A few days later, Altman delivered a far more troubling answer, and one which connected the mathematical dots for everyone, when it was reported that OpenAI was seeking a government guarantee, which would help "attract the enormous investment needed for AI computing and infrastructure." But far more concerning was the other implication of the report: without a government guarantee, there was no way that OpenAI could satisfy the $1.4 trillion in commitments, which also meant that the entire AI bubble, which was built on circular deals where rehypothecated promises for capex investments among the hyperscalers were contingent on some nebulous future revenue stream, was about to burst.

Also, with OpenAI tacitly conceding the need for a government guarantee, the entire AI sector came under immediate and immense scrutiny, and as a result of analysts finally doing elementary math (which we had done months earlier) and realizing that the AI cycle would need trillions in debt, suddenly the weakest credits in the space like CoreWeave and Oracle (see "Oracle Is First AI Domino To Fall After Barclays Downgrades Its Debt To Sell") saw not only their bond (and stock) prices tumble, but their odds of bankruptcy in just 5 years soar, pushing their CDS to record wides.

And yet maybe the market, in its passion to punish the weakest AI links, had gone too far: we suggested as much last night when we showed just how much ORCL CDS has underperformed the company's stock. After all, was it truly realistic that Oracle, one of the biggest tech giants in the world, would go bankrupt in the next 5 years?

Well, if the company continued to lever up massively and invest its cash into dead end capex projects, while OpenAi and its peers failed to provide Oracle with the much needed cash the company needed to keep growing its market share and fund its growth (via capex), the answer apparently was a resounding yes. 

Unless... there was a miracle.

Well, late on Thursday a miracle may have finally arrived. Because in a time when it was increasingly unclear how OpenAI et al, would generate the required revenue to pay their hyperscaler partners for the data centers they needed to impress the world with their chatbot wares, while stable sources of private credit such as Blue Owl had suddenly closed shop when it comes to Oracle, a government guarantee appears to have finally emerged.

Only it wasn't the US (at least not yet), but rather the emirate of Abu Dhabi that may have not only averted the bursting of the AI bubble, but also delivered the 2025 Christmas Rally in the last possible moment.

According to the WSJ, OpenAI - desperate to secure funding for its cash incinerating years which are expected to conclude around 2030 during which time more than $200 billion will be spent - is aiming to raise as much as $100 billion as it seeks to pay for ambitious growth plans in a market that has cooled recently on the artificial-intelligence boom.

The fundraising round could value the company at as much as $830 billion, if it raises the full amount it is targeting. Of course, the implied enterprise value is meaningless: it's just a number; what is all too real, however, is the actual amount of cash Sam Altman would get (in exchange for a sizable chunk of equity, confirming just how problematic using far cheaper debt capital raising has become for OpenAI). And that's a doozy: $100 billion should be more than enough to provide OpenAI with the cash it needs to bridge the period until it is profitable all the while rolling out increasingly more lifelike AI models (especially now that Google's Gemini 3 has taken the lead from OpenAI). More importantly, the cash invested into OpenAI, and promptly spent on compute, will fund such clients as Oracle, Core Weave and others as it percolates across the entire budding AI industry.

Here, the WSJ adds the usual disclaimer, that the startup aims to complete the round by the end of the first quarter at the earliest, and that terms of the deal could still change; it is also unclear whether there will be sufficient investor demand to reach the goal.

The round will present one of the biggest tests the company has faced since the public market’s exuberance for AI spending waned. Chief Executive Sam Altman has already scoured the world to build the pool of OpenAI’s investors and the company is now weighing a potential initial public offering, The Wall Street Journal previously reported.

Of course, Sam Altman had already found some gullible investors to throw good money after bad, most notably Masa Son's SoftBank, which agreed to invest $30 billion in OpenAI earlier this year and last month sold its Nvidia stake for $5.8 billion to fund the OpenAI bet. OpenAI is expected to secure the remaining $22.5 billion in planned financing from SoftBank by the end of the year. 

But that's not nearly enough: after all, recall that we are talking a whopping $1.4 trillion in commitments in the next five years. 

So who is the next most gullible source of capital after SoftBank these days? Why Gulf cash of course. 

Which brings us to the source of the government guarantee: as we said, it's not the US (just yet); instead it is the United Arab Emirates. 

As the WSJ reports, OpenAI is expected to recruit sovereign-wealth funds to invest in the financing, given the scale. The company has previously secured funding from United Arab Emirates-based MGX; it will likely get even more funding from the UAE because considering how much money has already been sunk into OpenAI, UAE companies don't really have a choice to not keep investing - and risk the collapse of Altman's venture. They have to keep throwing good money after bad; such is the curse of the Too Big To Fail, which was banks in 2008... and now it's AI firms. 

The company has faced skepticism over computing deals it has forged that are worth hundreds of billions of dollars and issued a “code red” to beat back a growing threat from Google. While OpenAI is set to burn more than $200 billion in cash through 2030, Google has low levels of debt and robust profits, which could make it easier to invest further in AI. 

And since OpenAI is private, the market has instead turned its attention to such OpenAI partners as Oracle and CoreWeave, who have seen their market values plunge in recent months as shareholders soured on the possibility of capital shortfalls and bold plans for data-center build-outs that appear to face financing headwinds.

But now, the looming $100 billion equity investment from the likes of UAE sovereign wealth funds has changed all that, and with OpenAI set to prefund 2 years (or more) of growth (while materially diluting existing investors) not only are OpenAI's chances to emerge as the ultimate AI victory suddenly much higher, but so are the odds of Oracle and CoreWeave to survive the next few years without filing for bankruptcy. 

Which is why not only has ORCL stock soared after hours...

... but why we expect that tomorrow ORCL CDS will plunge from its 16 year high of ~156bps, since not only will OpenAI have billions in cash to spend around on the likes of Oracle, but the cost of holding on to the negative carrying ORCL CDS will suddenly seem excessive, and we expect a short covering frenzy across all AI-linked credit default swaps.

And now that the biggest risk factor for AI is suddenly no longer a near-term concern - courtesy of all that Abu Dhabi housing bubble cash which just has to be reinvested somewhere - it is possible that the UAE may have just delivered a broad market rally just in time for Santa. 

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