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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

#141

Post by worldsayshi »

Ginden wrote: post #132
password54321 wrote: post #49

Not sure why they put so much investment into videoSlop and imageSlop. Anthropic seems to be more focused at least.

Because almost everyone involved in AI race grew up in "winner takes it all" environments, typical for software, and they try really hard to make it reality. This means your model should do everything to just take 90% of market share, or at least 90% of specific niche. The problem is, they can't find the moat, despite searching very hard, whatever you bake into your AI, your competitors will be able to replicate in f…

> your competitors will be able to replicate in few months.

Will they really be able to replicate the quality while spending significantly less in compute investment? If not then the moat is still how much capital you can acquire for burning on training?

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

#142

Post by EA-3167 »

PeterHolzwarth wrote: post #121
pclmulqdq wrote: post #112

Earlier quoted context omitted.

It's easy to get product-market fit when you give away dollars for the price of pennies.

Yes, but that is the standard methodology for startups in their boost phase. Burn vast piles of cash to acquire users, then find out at the end if a profitable business can be made of it.

It’s also the standard methodology for a number of scams.

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

#143

Post by senshan »

agentifysh wrote: post #95

2008: US Banks pump stocks -> market correction -> taxpayer bailout 2026: US AI companies pump stocks -> market correction -> taxpayer bailout Mark my words. OpenAI will be bailed out by US taxpayers.

Not really. It was not about stocks. It was the collapse of insurance companies at the core of 2008 crisis.

The same can happen now on the side of private credit that gradually offloads its junk to insurance companies (again):

As a result, private credit is on the rise as an investment option to compensate for this slowdown in traditional LBO (Figure 2, panel 2), and PE companies are actively growing the private credit side of their business by influencing the companies they control to help finance these operations. Life insurers are among these companies. For instance, KKR’s acquisition of 60 percent of Global Atlantic (a US life insurer) in 2020 cost KKR approximately $3billion.

https://www.imf.org/en/Publications/global-financial-stabili...

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

#144

Post by hervature »

cameronh90 wrote: post #90
Avicebron wrote: post #44

On the radio they mentioned that the total global chocolate market is ~100B, I googled it when I was home and it seems to be about ~135B. Apparently that is ... all chocolate, everywhere.. OpenAI's valuation is about 500B. Maybe going up to like 835B. I'd love to see the rationale that OpenAI (not "AI" everywhere) is more valuable than chocolate globally. ... so crash early 2026?

Ignoring that those numbers aren't directly comparable, it did make me wonder, if I had to give up either "AI" or chocolate tomorrow, which would I pick? Even as an enormous chocolate lover (in all three senses) who eats chocolate several times a week, I'd probably choose AI instead. OpenAI has alternatives, but also I do spend more money on OpenAI than I do on chocolate currently.

I am just trying to help you write better. Your writing says "if I had to give up either AI or chocolate [...] I would probably choose AI". However, your language and intent seems to be that you would give up chocolate.

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

#145

Post by robkop »

HardCodedBias wrote: post #107

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 w…

Does that cost to serve multiple stay the same when conventional sites are forced to shovel ai into each request? e.g. the new google search

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

#146

Post by testing22321 »

senshan wrote: post #134
agentifysh wrote: post #103

Earlier quoted context omitted.

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.

> It's mathematically impossible what OpenAI is promising Citation is needed

Don’t that have to make more money in the next 10 years than any company ever has… and that is just to break even.

It’s going to crash, guaranteed

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

#147

Post by ares623 »

avalys wrote: post #139

AI is going to be a highly-competitive, extremely capital-intensive commodity market that ends up in a race to the bottom competing on cost and efficiency of delivering models that have all reached the same asymptotic performance in the sense of intelligence, reasoning, etc. The simple evidence for this is that everyone who has invested the same resources in AI has produced roughly the same result. OpenAI, Anthropic,…

Just in time for a Government guaranteed backstop.

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

#148

Post by [deleted] »

adriand wrote: post #30

This article doesn’t add anything to what we know already. It’s still an open question what happens with the labs this coming year, but I personally think Anthropic’s focus on coding represents the clearest path to subscriber-based success (typical SaaS) whereas OpenAI has a clear opportunity with advertising. Both of these paths could be very lucrative. Meanwhile I expect Google will continue to struggle with making…

[deleted]

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

#149

Post by bee_rider »

avalys wrote: post #139

AI is going to be a highly-competitive, extremely capital-intensive commodity market that ends up in a race to the bottom competing on cost and efficiency of delivering models that have all reached the same asymptotic performance in the sense of intelligence, reasoning, etc. The simple evidence for this is that everyone who has invested the same resources in AI has produced roughly the same result. OpenAI, Anthropic,…

Massive upfront costs and second place is just first loser. It’s like building fabs but your product is infinitely copyable. Seems pretty rough.

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

#150

Post by senshan »

testing22321 wrote: post #146
senshan wrote: post #134

Earlier quoted context omitted.

> It's mathematically impossible what OpenAI is promising Citation is needed

Don’t that have to make more money in the next 10 years than any company ever has… and that is just to break even. It’s going to crash, guaranteed

It is the term "mathematically impossible" that caught my attention. Since it is about the future promise of OpenAI, one could debate the likelihood or "statistically improbable", but "mathematically impossible" implies some calculation, proof and certainty. Hence my curiosity.
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