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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

#171

Post by llmslave2 »

inerte wrote: post #19
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.

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?

I have no idea why you're being downvoted because you're right. The entire point of taxation is to spread the cost among everyone, and since everyone doesn't utilise every government service every tax payer ends up paying for stuff they don't use. That like, the whole point...

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

#172

Post by GaryBluto »

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.

Sure. Same for healthcare and education right? If you don't have a child or need medical attention, why should you pay for them?

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

#173

Post by gerdesj »

bee_rider wrote: post #149
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.

What exactly is "second" place? No-one really knows what first place looks like. Everyone is certain that it will cost an arm, a leg and most of your organs.

For me, I think that, the possible winners will be close to fully funded up front and the losers will be trying to turn debt into profit and fail.

The rest of us self hoster types are hoping for a massive glut of GPUs and RAM to be dumped in a global fire sale. We are patient and have all those free offerings to play with for now to keep us going and even the subs are so far somewhat reasonable but we will flee in droves as soon as you try to ratchet up the price.

It's a bit unfortunate but we are waiting for a lot of large meme companies to die. Soz!

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

#174

Post by nateb2022 »

glial wrote: post #124
wg0 wrote: post #115

Earlier quoted context omitted.

Anti Gravity is a flop. I mean it uses Gemini under the hood. But you cannot use it with an API key. If you're on a workspace account, you can't have normal individual plan. You have to have the team plan with $100/month or nothing. Google's product management tier is beyond me.

OK, but Gmail, Google Maps, Google Docs, and Google Search etc are ubiquitous. `Google' has even become a verb. Google might take a shotgun approach, but it certainly does create widely used products.

I will add that there's also Gemini in Chrome. With Chrome being the largest browser by market share, that's a powerful de facto default.

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

#175

Post by GaryBluto »

cambrianentropy wrote: post #16
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.

As we all know, throwing money at a problem solves it completely. Remember how Live Aid saved Ethiopia from starvation and it never had any problems again?

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

#176

Post by dktp »

password54321 wrote: post #49

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

OpenAI is (was?) extremely good at making things that go viral. The successful ones for sure boost subscriber count meaningfully

Studio Ghibli, Sora app. Go viral, juice numbers then turn the knobs down on copyrighted material. Atlas I believe was a less successful than they would've hoped for.

And because of too frequent version bumps that are sometimes released as an answer to Google's launch, rather than a meaningful improvement - I believe they're also having harder time going viral that way

Overall OpenAI throws stuff at the wall and see what sticks. Most of it doesn't and gets (semi) abandoned. But some of it does and it makes for better consumer product than Gemini

It seems to have worked well so far, though I'm sceptical it will be enough for long

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

#177

Post by osiris970 »

yojo wrote: post #65
mvkel wrote: post #27

The fact is nobody has any idea what OpenAI's cash burn is. Measuring how much they're raising is not an adequate proxy. For all we know, they could be accumulating capital to weather an AI winter. It's also worth noting that OpenAI has not trained a new model since gpt4o (all subsequent models are routing systems and prompt chains built on top of 4), so the idea of OpenAI being stuck in some kind of runaway training…

They have not successfully trained a new model since 4o. That doesn’t mean they haven’t burned a pile of cash trying. I know sama says they aren’t trying to train new models, but he’s also a known liar and would definitely try to spin systemic failure.

Gpt-5.2 was new pretrain run i believe

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

#178

Post by nateb2022 »

fooblaster wrote: post #170
nateb2022 wrote: post #168

Earlier quoted context omitted.

I have yet to be convinced the broader population has an appetite for AI produced cinematography or videos. Independence from Nvidia is no more of a liability than dependence on electricity rates; it's not as if it's in Nvidia's interest to see one of its large customers fail. And pretty much any of the other Mag7 companies are capable of developing in-house TPUs + are already independently profitable, so Google isn'…

If you think they are going to catch up with Google's software and hardware ecosystem on their first chip, you may be underestimating how hard this is. Google is on TPU v7. meta has already tried with MTIA v1 and v2. those haven't been deployed at scale for inference.

I don't think many of them will want to, though. I think as long as Nvidia/AMD/other hardware providers offer inference hardware at prices decent enough to not justify building a chip in-house, most companies won't. Some of them will probably experiment, although that will look more like a small team of researchers + a moderate budget rather than a burn-the-ships we're going to use only our own hardware approach.

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

#179

Post by Seattle3503 »

nateb2022 wrote: post #168
fooblaster wrote: post #160

Earlier quoted context omitted.

There is a pretty big moat for Google: extreme amounts of video data on their existing services and absolutely no dependence on Nvidia and it's 90% margin.

I have yet to be convinced the broader population has an appetite for AI produced cinematography or videos. Independence from Nvidia is no more of a liability than dependence on electricity rates; it's not as if it's in Nvidia's interest to see one of its large customers fail. And pretty much any of the other Mag7 companies are capable of developing in-house TPUs + are already independently profitable, so Google isn'…

The video data is probably good for training models, including text models.

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

#180

Post by somewhereoutth »

doctorpangloss wrote: post #158
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…

it's a simple problem really. what is actually scarce? a spot on the iOS home screen? yes. infrastructure to serve LLM requests? no. good LLM answers? no. the economist can't tell the difference between scarcity and real scarcity. it is extremely rare to buy a spot on the iOS home screen, and the price for that is only going up - think of the trend of values of tiktok, whatsapp and instagram. that's actually scarce.…

depends if they can monetize that spot. So either ads or subscription. It is as yet unclear whether ads/subscription can generate sufficient revenue to cover costs and return a profit. Perhaps 'enough ads' will be too much for users to bear, perhaps 'enough subscription' will be too much for users to afford.
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