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OpenAI declares 'code red' as Google catches up in AI race

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Re: OpenAI declares 'code red' as Google catches up in AI race

#741

Post by oersted »

danielodievich wrote: post #469

Last week there we had a customer request that landed in our support on a feature that I partially wrote and wrote a pile of public documentation on. Support engineer ran customer query through Claude (trained on our public and internal docs) and it very, very confidently made a bunch of stuff up in the response. It was quite plausible sounding and it would have been great if it worked that way, but it didn't. While…

Relying on the model’s own “memory” to answer factual queries is almost always a mistake. Fine-tuning is almost always a more complex, more expensive and less effective method to give a model access to a knowledge base.

However using the model as a multi-hop search robot, leveraging it’s general background knowledge to guide the research flow and interpret findings, works exceedingly well.

Training with RL to optimize research tool use and reasoning is the way forward, at least until we have proper Stateful LLMs that can effectively manage an internal memory (as in Neural Turing Machines, and such).

Re: OpenAI declares 'code red' as Google catches up in AI race

#742

Post by f311a »

kristianp wrote: post #696
jdoliner wrote: post #274

I've seen a rumor going around that OpenAI hasn't had a successful pre-training run since mid 2024. This seemed insane to me but if you give ChatGPT 5.1 a query about current events and instruct it not to use the internet it will tell you its knowledge cutoff is June 2024. Not sure if maybe that's just the smaller model or what. But I don't think it's a good sign to get that from any frontier model today, that's 18 m…

I doubt it's that important that their dataset of current events is up to date. At this stage, I believe private and synthetic data comprises a large fraction of pretraining. Web search substitutes for current event pretraining.

I tried OpenAI models for coding in Go, but they constantly say your syntax is not correct. Let me rewrite your whole file without `any`.`any` was introduced in 2022. It takes some time to adopt it in codebases, but they should not be doing stuff like that at the end of 2025.

Re: OpenAI declares 'code red' as Google catches up in AI race

#743

Post by spwa4 »

golfer wrote: post #102
spwa4 wrote: post #46

We are in a pretty amazing situation. If you're willing to go down 10% in benchmark scores, you easily 25% your costs. Now with Deepseek 3.2 another shot across the bow. But if the ML, if SOTA intelligence becomes basically a price war, won't that mean that Google (and OpenAI and Microsoft and any other big model) lose big? Especially Google, as the margin even Google cloud (famously a lot lower than Google's other b…

Google trains its own AI with TPU's, which are designed in house. Google doesn't have to pay retail rates for Nvidia GPUs, like other hyperscalers in the AI rat race. Therefore, Google trains its AI for cheaper than everyone else. I think everyone else "loses big" other than Google.

But ... I don't understand why this is supposedly such a big deal. Look into it, calculate, and a very different picture comes forward, nVidia reportedly makes about 70% margin on their sales (which is COGS, in other words nVidia still pays about $1400 for chips and memory to produce a $4500 RTX5090 card, and that cost is rising fast).

When you include research for current and future cards, that margin drops to 55-60%.

When you include everything on their cash flow statement it drops to about 50%.

And this is disregarding what Michael Burry pointed out: you really should subtract their stock dilution which is due to stock-based compensation, or about 0.2% of 4.6 trillion dollars per year. Michael Burry's point is of course that this makes for slightly negative shareholders' equity, ie. brings the margin to just under 0, which is mathematically true. But for this argument let's very generously say it eats about another 10% out of that margin. As opposed to the 50% it mathematically eats.

Google and Amazon will have to be less efficient than nVidia, because they're making up ground. Let's very generously say that's another 10%, maybe 20%.

So really, for Google making their own chips saves them at best 30% to 40% on the price, generously. And let's again ignore that Google's claim is that they're 30% to 50% less efficient than nVidia chips, which for large training runs translates directly to dollars.

So for Google, TPUs are just about revenue neutral. It probably allows them to have more chips, more compute than they'd otherwise have, but it doesn't save them money over buying nVidia chips. Frankly, this conclusion sounds "very Google" to me.

It's exactly the sort of thing I'd expect Google to do. VERY impressive technical accomplishment ... but can be criticized for being beside the point. It doesn't actually matter. As an engineer I applaud that they do it, please keep doing it, but it's not building a moat, not building revenue or profit, so the finance guy in me is screaming "WHY????????"

At best, for Google, TPUs mean certainty of supply, relative to nVidia (whereas supplier contracts could build certainty of supply down the chain)

Re: OpenAI declares 'code red' as Google catches up in AI race

#744

Post by rglullis »

HDThoreaun wrote: post #592
rglullis wrote: post #311

Earlier quoted context omitted.

> They're not paying me to use it. Of course they are. > As long as the inference is not done at a loss. If making money on inference alone was possible, there would be a dozen different smaller providers who'd be taking the open weights models and offering that as service. But it seems that every provider is anchored at $20/month, so you can bet that none of them can go any lower.

The open models suck. AWS hosts them for less than closed models cost but no ones uses them, because they suck.

It's not the open models that suck, it's the infrastructure around them. None of current "open weights providers" have:

   - good tools for agentic workflows
   - no tools for context management
   - infrastructure for input token caching
These are solvable without having to pay anything to OpenAI/Anthropic/Google.

Re: OpenAI declares 'code red' as Google catches up in AI race

#745

Post by immibis »

mrweasel wrote: post #739
nodja wrote: post #449

Earlier quoted context omitted.

Pre-training is just training, it got the name because most models have a post-training stage so to differentiate people call it pre-training. Pre-training: You train on a vast amount of data, as varied and high quality as possible, this will determine the distribution the model can operate with, so LLMs are usually trained on a curated dataset of the whole internet, the output of the pre-training is usually called t…

If pre-training is just training, then how on earth can OpenAI not have "a successful pre-training run"? The word successful indicates that they tried, but failed. It might be me misunderstanding how this works, but I assumed that the training phase was fairly reproducible. You might get different results on each run, do to changes in the input, but not massively so. If OpenAI can't continuously and reliably train ne…

Maybe this has something to do with why they're declaring "code red".

Re: OpenAI declares 'code red' as Google catches up in AI race

#746

Post by redbell »

The current situation of OpenAI is difficult. At present time, even the giants (Meta, MS, Apple, AMZN) with deep pockets would find it extremely challenging to compete against Google in the AI race, let alone a VC-funded startup.

•Google has data, a lot of private data actually (YT, Gmail, Workspace, Search Queries.. you name it) •Google has a lot of money •Google has top-talented AI engineers (Eying on DeepMind & Demis Hassabis staff) •Google has a huge userbase

With $20B in ARR and hundreds of billions in funding, would OpenAI be able to make its own remontada as Google did? I'm not sure, but it would be a long challenging journey.

Re: OpenAI declares 'code red' as Google catches up in AI race

#747

Post by immibis »

an0malous wrote: post #176
cmiles8 wrote: post #136

The real code red here is less that Google just one-upped OpenAI but that they demonstrated there’s no moat to be had here. Absent a major breakthrough all the major providers are just going to keep leapfrogging each other in the most expensive race to the bottom of all time. Good for tech, but a horrible business and financial picture for these companies.

> for these companies They’re absolutely going to get bailed out and socialize the losses somehow. They might just get a huge government contract instead of an explicit bailout, but they’ll weasel out of this one way or another and these huge circular deals are to ensure that.

It will be the biggest bailout in history and financed entirely by money printing at a time when the stability of the dollar is already being questioned, right? Not good.

Re: OpenAI declares 'code red' as Google catches up in AI race

#748

Post by immibis »

johncolanduoni wrote: post #652
willis936 wrote: post #230

Earlier quoted context omitted.

This would trigger something that people in power would rather not trigger.

The shenanigans that set off the GFC were much more nakedly corrupt and didn’t have even a fig leaf of potential usefulness to anybody to justify them. The revolution failed to materialize then. If the AI bust isn’t worse for the median person than 2008, I don’t think people in power have anything to fear.

Why do we think it won't be worse? If you exclude the circular trading of AI companies from metrics, we're already in a pretty big recession, and that will only get worse if the AI companies collapse.

Re: OpenAI declares 'code red' as Google catches up in AI race

#749

Post by [deleted] »

simianparrot wrote: post #367
jdoliner wrote: post #274

I've seen a rumor going around that OpenAI hasn't had a successful pre-training run since mid 2024. This seemed insane to me but if you give ChatGPT 5.1 a query about current events and instruct it not to use the internet it will tell you its knowledge cutoff is June 2024. Not sure if maybe that's just the smaller model or what. But I don't think it's a good sign to get that from any frontier model today, that's 18 m…

Any data after that is contaminated with vast amount of AI slop. Is anyone training on anything newer..?

[deleted]

Re: OpenAI declares 'code red' as Google catches up in AI race

#750

Post by mvcosta91 »

redbell wrote: post #746

The current situation of OpenAI is difficult. At present time, even the giants (Meta, MS, Apple, AMZN) with deep pockets would find it extremely challenging to compete against Google in the AI race, let alone a VC-funded startup. •Google has data, a lot of private data actually (YT, Gmail, Workspace, Search Queries.. you name it) •Google has a lot of money •Google has top-talented AI engineers (Eying on DeepMind & De…

They also control their own hardware stack with TPUs.
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