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OpenAI's cash burn will be one of the big bubble questions of 2026

economist.com

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Re: OpenAI's cash burn will be one of the big bubble questions of 2026

#11

Post by echelon »

andsoitis wrote: post #5

In a parallel universe, governments invest in the compute/datacenters (read: infra), and let model makers compete on the same playing field.

That's malinvestment. Too much overhead, disconnected from long term demand. The government doesn't have expertise, isn't lean and nimble. What if it all just blows over? (It won't? But who knows?)

Everything is happening exactly as it should. If the "bubble" "pops", that's just the economic laws doing what they naturally do.

The government has better things to do. Geopolitics, trade, transportation, resources, public health, consumer safety, jobs, economy, defense, regulatory activities, etc.

Re: OpenAI's cash burn will be one of the big bubble questions of 2026

#12

Post by aucisson_masque »

andsoitis wrote: post #5

In a parallel universe, governments invest in the compute/datacenters (read: infra), and let model makers compete on the same playing field.

I’d rather stay far away from this parallel universe.

Why would you want my money to be used to build datacenter that won’t benefit me ? I might use a LLM once a month, many people never use it.

Let the one who use it pay for it.

Re: OpenAI's cash burn will be one of the big bubble questions of 2026

#13

Post by candiddevmike »

websiteapi wrote: post #7
andsoitis wrote: post #5

In a parallel universe, governments invest in the compute/datacenters (read: infra), and let model makers compete on the same playing field.

why would they do that? not to mention governments are already doing that indirectly by taking equity stakes in some of the companies.

Same reason they should own access lines: everyone needs rackspace/access, it should be treated like a public service to avoid rent seeing. Having a data center in every city where all of the local lines terminate into could open the doors to a lot of interesting use cases, really help with local resiliency/decentralization efforts, and provide a great alternative to cloud providers that doesn't break the bank.

Re: OpenAI's cash burn will be one of the big bubble questions of 2026

#14

Post by simonw »

laweijfmvo wrote: post #4

why does the article used words like burn and incinerate, implying that OpenAI is somehow making money disappear or something? They’re spending it; someone is profiting here, even if it’s not OpenAI. Is it all Nvidia?

Your burn is the money you spend that exceeds the money you earn, see also "burn rate".

Re: OpenAI's cash burn will be one of the big bubble questions of 2026

#15

Post by wat10000 »

laweijfmvo wrote: post #4

why does the article used words like burn and incinerate, implying that OpenAI is somehow making money disappear or something? They’re spending it; someone is profiting here, even if it’s not OpenAI. Is it all Nvidia?

“Burn rate” is a standard financial term for how much money a startup is losing. If you have $1 cash on hand and a burn rate of $2 a year, then you have six months before you either need to get profitable, raise more money, or shut down.

Re: OpenAI's cash burn will be one of the big bubble questions of 2026

#16

Post by cambrianentropy »

andsoitis wrote: post #5

In a parallel universe, governments invest in the compute/datacenters (read: infra), and let model makers compete on the same playing field.

In a completely alternate dimension, a quarter of the capital being invested in AI literally just goes towards making sure everyone has quality food and water.

Re: OpenAI's cash burn will be one of the big bubble questions of 2026

#17

Post by 3eb7988a1663 »

simonw wrote: post #9
andsoitis wrote: post #5

In a parallel universe, governments invest in the compute/datacenters (read: infra), and let model makers compete on the same playing field.

If that did happen, how would the government then issue those resources? OpenAI ask for 1m GPUs for a month, Anthropic ask for 2m, the government data center only has 500,000, and a new startup wants 750,000 as well. Do you hand them out to the most convincing pitch? Hopefully not to the biggest donor to your campaign. Now the most successful AI lab is the one that's best at pitching the government for additional res…

National HPC labs have been over subscribed for decades with extensive queueing/time sharing allocation systems.

It would still likely devolve into most-money-wins, but it is not an insurmountable political obstacle to arrange some sort of sharing.

Edit: I meant to say over subscribed, not over provisioned. There are far more jobs in the queue than can be handled at once

Re: OpenAI's cash burn will be one of the big bubble questions of 2026

#18

Post by bdangubic »

popalchemist wrote: post #8
laweijfmvo wrote: post #4

why does the article used words like burn and incinerate, implying that OpenAI is somehow making money disappear or something? They’re spending it; someone is profiting here, even if it’s not OpenAI. Is it all Nvidia?

Because typically one expect a return on investment with that level of spending. Not only have they run at a loss for years, their spending is expected to increase, with no path to profitability in sight.

not that I disagree but would it be fair to say though that we have seen this before where it turned out OK? say Uber? Amazon?

Re: OpenAI's cash burn will be one of the big bubble questions of 2026

#19

Post by inerte »

aucisson_masque wrote: post #12
andsoitis wrote: post #5

In a parallel universe, governments invest in the compute/datacenters (read: infra), and let model makers compete on the same playing field.

I’d rather stay far away from this parallel universe. Why would you want my money to be used to build datacenter that won’t benefit me ? I might use a LLM once a month, many people never use it. Let the one who use it pay for it.

That's like every government initiative. Same as healthcare? School? I mean if you don't have children why do you pay taxes... and roads if you don't drive? I mean the examples are so many... why do you bring this argument that if it doesn't benefit you directly right now today, it shouldn't be done?
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