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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

#101

Post by reverserdev »

zdragnar wrote: post #45
inerte wrote: post #19

Earlier quoted context omitted.

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?

There are arguments aplenty that schooling and a minimum amount of healthcare are public goods, as are roads built on public land (the government owns most roads after all). What is the justification for considering data centers capable of running LLMs to be a public good? There are many counter examples of things many people use but are still private. Clothing stores, restaurants and grocery stores, farms, home appl…

Libraries with books are likely considered public goods right?

Why not an LLM datacenter if it also offers information? You could say it's the public library of the future maybe.

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

#102

Post by fdr »

3eb7988a1663 wrote: post #22
aucisson_masque wrote: post #12

Earlier quoted context omitted.

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.

You are already paying for several national lab HPC centers. These are used for government/university research - no idea if commercial interests can rent time on them. The big ones are running weather, astronomy simulations, nuclear explosions, biological sequencing, and so on.

The biggest run classified nuclear stockpile loads, at least in the US. They cost about half a billion apiece. And are 30 (carefully cooled and cabled) megawatts. https://en.wikipedia.org/wiki/El_Capitan_(supercomputer)

No chance they're going to take risks to share that hardware with anyone given what it does.

The scaled down version of El Capitan is used for non-classified workloads, some of which are proprietary, like drug simulation. It is called Tuolumne. Not long ago, it was nevertheless still a top ten supercomputer.

Like OP, I also don't see why a government supercomputer does it better than hyperscalers, coreweave, neoclouds, et al, who have put in a ton of capital as even compared to government. For loads where institutional continuity is extremely important, like weather -- and maybe one day, a public LLM model or three -- maybe. But we're not there yet, and there's so much competition in LLM infrastructure that it's quite likely some of these entrants will be bag holders, not a world of juicy margins at all...rather, playing chicken with negative gross margins.

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

#103

Post by agentifysh »

gip wrote: post #31

There is no doubt that OpenAI is taking a lot of risks by betting that AI adoption will translate into revenues in the very short term. And that could really happen imo (with a low probability sure, but worth the risk for VCs? Probably).

It's mathematically impossible what OpenAI is promising. They know it. The goal is to be too big to fail and get bailed out by US taxpayers who have been groomed into viewing AI as a cold war style arms race that America cannot lose.

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

#104

Post by piskov »

candiddevmike wrote: post #93
piskov wrote: post #76

Earlier quoted context omitted.

Because as with the internet 99% of the usage won’t be for education, work, personal development, what have you. It will be for effing kitten videos and memes.

If only 99% of the Internet was kitten videos and memes

Well, it sure as hell not all 3blue1brown, crr0ww, Feynman, and alike

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

#105

Post by agentifysh »

_ache_ wrote: post #62
esel2k wrote: post #42

Earlier quoted context omitted.

Where does google struggle to make products people don’t want to use? Is it a personal opinion?

Bart was a flop. Google search is losing market share to other LLM providers. Gemini adoption is low, people around me prefer OpenAI because it is good enough and known. But on the contrary, Nano Banana is very good, so I don't know. And in the end, I'm pretty confident Google will be the AI race winner, because they got the engineers, they tech background and the money. Unless Google Adsense die, they can continue t…

what are you talking about Gemini adoption has tripled in a few months alone and have around 18% of marketshare and its accelerating.

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

#106

Post by lexicality »

slashdave wrote: post #75
lexicality wrote: post #36

Earlier quoted context omitted.

I suspect most of it is going to utilities for power, water and racking. That being said, if I was Sam Altman I'd also be stocking up on yachts, mansions and gold plated toilets while the books are still private. If there's $10bn a year in outgoings no one's going to notice a million here and there.

How many gold toilets do you need? I mean, I don't even own one.

Tragically I don't make CEO money so I also don't have one but I presume you'd want to have at least one per mansion and another one in the office. Maybe a separate one for special occasions.

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

#107

Post by HardCodedBias »

OpenAI has #5 traffic levels globally. Their product-market fit is undeniable. The question is monetization.

Their cost to serve each request is roughly 3 orders of magnitude higher than conventional web sites.

While it is clear people see value in the product, we only know they see value at today’s subsidized prices. It is possible that inference prices will continue their rapid decline. Or it is possible that OAI will need to raise prices and consumers will be willing to pay more for the value.

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

#108

Post by jeffbee »

acoustics wrote: post #96
jeffbee wrote: post #88

For what I use them for, the LLM market has become a two player game, and the players are Anthropic and Google. So I find it quite interesting that OpenAI is still the default assumption of the leader.

ChatGPT dominates the consumer market (though Nano Banana is singlehandedly breathing some life into consumer Gemini). A small anecdote: when ChatGPT went down a few months ago, a lot of young people (especially students) just waited for it to come back up. They didn't even think about using an alternative.

That's pretty nuts. With the models changing so much and so often, you have to switch it up sometimes just to see what the other company is offering.

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

#109

Post by dom96 »

acoustics wrote: post #96
jeffbee wrote: post #88

For what I use them for, the LLM market has become a two player game, and the players are Anthropic and Google. So I find it quite interesting that OpenAI is still the default assumption of the leader.

ChatGPT dominates the consumer market (though Nano Banana is singlehandedly breathing some life into consumer Gemini). A small anecdote: when ChatGPT went down a few months ago, a lot of young people (especially students) just waited for it to come back up. They didn't even think about using an alternative.

When ChatGPT starts injecting ads or forcing payment or doing anything else that annoys its userbase then the young people won't have a problem looking for alternatives

This "moat" that OpenAI has is really weak

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

#110

Post by nutjob2 »

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?

> They’re spending it

That's what the words mean in this context.

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