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How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

nytimes.com

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Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#141

Post by enraged_camel »

delis-thumbs-7e wrote: post #49
Flockster wrote: post #4

Okay, that article is a little bit shallow. I just summarises the headlines of the last weeks of circular deals. But is there also a more in depth article that sheds a little more light onto what this actually means? From a financial perspective?

Ed Zitron has been shouting into the void about this for quite some time: https://www.wheresyoured.at/the-case-against-generative-ai/ He also has a podcast called Better Offline, which is slightly too ad heavy for my taste. Nevertheless, with my meagre understanding of the large corporate finances I was not able to find any errors in his core argument regardless of his somewhat sensationalist style of writing.

Ed Zitron sucks because he constantly spitballs on easy to confirm topics and keeps being wrong in ways that should be trivial to check and fix. Case in point:

https://bsky.app/profile/notalawyer.bsky.social/post/3ltkami...

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#143

Post by staticautomatic »

slashdev wrote: post #122
_heimdall wrote: post #111

Earlier quoted context omitted.

I think that, at best, that description boils down to Nvidia, Oracle, etc inventing fake wealth to build something and OpenAI building their own fake wealth by getting to use that new compute effectively for free. There are physical products involved, but the situation otherwise feels very similar to ads prior to dotcom.

The same way the stock market invents a trillion dollars of fake wealth on a strong up day? That's capital markets working as intended. It's not necessarily doomed to end in a fiery crash, although corrections along the way are a natural part of the process. It seems very bubbly to me, but not dotcom level bubbly. Not yet anyway. Maybe we're in 1998 right now.

I sell you a cat for $1B and you sell me a dog for $1B and now we’re both billionaires! Whether the capital markets “want” that or not it’s still silly.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#145

Post by randomNumber7 »

guywithahat wrote: post #140
nova22033 wrote: post #117

Related https://www.theregister.com/2025/10/29/microsoft_earnings_q1... Microsoft seemingly just revealed that OpenAI lost $11.5B last quarter

It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…

The winner takes it all, so it is reasonable to bet big to be the one.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#146

Post by brazukadev »

sergiotapia wrote: post #25
adaisadais wrote: post #21

I’ve been listening to “The Smartest Guys In The Room” (the definitive book on Enron and their scandal) and one of the ways Enron continued to grow and grow is by setting up a really complicated system of moving debt onto equities off of their balance sheet. While it was sorta legal (at the time) it was not ethical and led to a massive collapse of the #1 company at the time. Makes you wonder if AI is in such a bubble…

When the AI bubble pops, what will happen to the software engineering jobs?

free AI credits will be a thing of the past, "productivity" (real or not) will dive and real software engineering will become a moat again.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#147

Post by brazukadev »

chermi wrote: post #138
throwaway106382 wrote: post #26

Isn't paying a company to dig a hole who then pays you the same amount to fill said hole illegal?

Yes, but what does that have to do with this situation? The hole served no purpose. The companies are using the GPUs.

99% of code I generated using genAI served no purpose at the end of the day

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#148

Post by forgetfulness »

afavour wrote: post #77
sergiotapia wrote: post #25

Earlier quoted context omitted.

When the AI bubble pops, what will happen to the software engineering jobs?

There will be a bunch of layoffs and slowly they'll rehire back to pre-hysteria levels. I think the world is still going to need software engineers no matter what but companies will slow down on new features etc in an economic crunch.

The ripple effect will be felt hard, as American engineers are squeezed between offshoring and more engineers with Big Tech resumes being released into the market, and returnees go push back wages in their home countries in turn

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#150

Post by rapind »

slashdev wrote: post #122
_heimdall wrote: post #111

Earlier quoted context omitted.

I think that, at best, that description boils down to Nvidia, Oracle, etc inventing fake wealth to build something and OpenAI building their own fake wealth by getting to use that new compute effectively for free. There are physical products involved, but the situation otherwise feels very similar to ads prior to dotcom.

The same way the stock market invents a trillion dollars of fake wealth on a strong up day? That's capital markets working as intended. It's not necessarily doomed to end in a fiery crash, although corrections along the way are a natural part of the process. It seems very bubbly to me, but not dotcom level bubbly. Not yet anyway. Maybe we're in 1998 right now.

I think it's worse. The US market feels like a casino to me right now and grift is at an all time high. We're not getting good economic data, it's super unpredictable, and private equity is a disaster waiting to happen IMO. For sure there are smart people able to make money on the gamble, but it's not my jam.

I don't tend to benefit from my predictions as things always take longer to unfold than I think they will, but I'm beyond bearish at present. I'd rather play blackjack.

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