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OpenAI's H1 2025: $4.3B in income, $13.5B in loss

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Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#261

Post by api »

deadbabe wrote: post #253
nojs wrote: post #231

I think people are massively underestimating the money they will come from ads in the future. They generated $4.3B in revenue without any advertising program to monetise their 700 million weekly active users, most of whom use the free product. Google earns essentially all of its revenue from ads, $264B in 2024. ChatGPT has more consumer trust than Google at this point, and numerous ways of inserting sponsored results…

In 10 years most serious users of AI will be using local LLMs on insanely powerful devices, with no ads. API based services will have limited horizon.

Some will but you’re underestimating the burning desire to avoid IT and sysadmin work. Look at how much companies overspend on cloud just to not have to do IT work. They’d rather pay 10X-100X more to not have to admin stuff.

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#262

Post by SeanAnderson »

ares623 wrote: post #230
SeanAnderson wrote: post #110

I dunno. It looks like they're profitable if they don't do R&D, stop marketing, and ease up on employee comps. That's not the worst place to be. Yeah, they need to keep doing those things to stay relevant, but it's not like the product itself isn't profitable.

So if they stop doing what got them there they’ll be profitable? If I stop buying grocery and paying electricity bills I can finish up my mortgage in no time.

I can see why you'd make that analogy, but that wasn't quite what I was trying to say. I just meant that not all expenses are created equal.

Plenty of companies have high burn rates due to high R&D costs. It can make them look unprofitable on paper, but it's a tactic used to scale quicker, get economies of scale, higher leverage in negotiating, etc. It's not a requirement that they invest in R&D indefinitely. In contrast, if a company is paying a heavy amount of interest on loans (think: WeWork), it's not nearly as practical for them to cut away at their spending to find profitability.

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#263

Post by deadbabe »

api wrote: post #261
deadbabe wrote: post #253

Earlier quoted context omitted.

In 10 years most serious users of AI will be using local LLMs on insanely powerful devices, with no ads. API based services will have limited horizon.

Some will but you’re underestimating the burning desire to avoid IT and sysadmin work. Look at how much companies overspend on cloud just to not have to do IT work. They’d rather pay 10X-100X more to not have to admin stuff.

I’m talking about prepackaged offline local only on device LLMs.

What you are describing though will almost certainly happen even sooner once AI tech stablizes and investing in powerful hardware no longer means you will become quickly out of date.

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#264

Post by mcswell »

wood_spirit wrote: post #89
stephc_int13 wrote: post #75

Everyone is trying to compare AI companies with something that happened in the past, but I don't think we can predict much from that. GPUs are not railroads or fiber optics. The cost structure of ChatGPT and other LLM based services is entirely different than web, they are very expensive to build but also cost a lot to serve. Companies like Meta, Microsoft, Amazon, Google would all survive if their massive investment…

Unlike railroads and fibre, all the best compute in 2025 will be lacklustre in 2027. It won’t retain much value in the same way as the infrastructure of previous bubbles did?

"...all the best compute in 2025 will be lacklustre in 2027": How does the compute (I assume you mean on PCs) of 2025 compare with the compute of 2023?

Oh wait, the computer I'm typing this on was manufactured in 2020...

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#265

Post by bee_rider »

stephc_int13 wrote: post #75

Everyone is trying to compare AI companies with something that happened in the past, but I don't think we can predict much from that. GPUs are not railroads or fiber optics. The cost structure of ChatGPT and other LLM based services is entirely different than web, they are very expensive to build but also cost a lot to serve. Companies like Meta, Microsoft, Amazon, Google would all survive if their massive investment…

The past/present company they remind me of the most is semiconductor fabs. Significant generation-to-generation R&D investment, significant hardware and infrastructure investment, quite winner-takes-all on the high end, obsoleted in a couple years at most.

The main differences are these models are early in their development curve so the jumps are much bigger, and they are entirely digital so they get “shipped” much faster, and open weights seem to be possible. None of those factors seem to make it a more attractive business to be in.

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#266

Post by jplusequalt »

SeanAnderson wrote: post #110

I dunno. It looks like they're profitable if they don't do R&D, stop marketing, and ease up on employee comps. That's not the worst place to be. Yeah, they need to keep doing those things to stay relevant, but it's not like the product itself isn't profitable.

So they're profitable if they put themselves at a disadvantage against Google, Meta, etc.?

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#267

Post by SeanAnderson »

jplusequalt wrote: post #266
SeanAnderson wrote: post #110

I dunno. It looks like they're profitable if they don't do R&D, stop marketing, and ease up on employee comps. That's not the worst place to be. Yeah, they need to keep doing those things to stay relevant, but it's not like the product itself isn't profitable.

So they're profitable if they put themselves at a disadvantage against Google, Meta, etc.?

Yes... but there were concerns previously that inference was so costly that the subscriptions/API billing weren't covering basic operating expenses. That's clearly not the case. People are willing to pay them enough that they can afford to run the models. That's a really positive sign.

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#269

Post by brianwawok »

mcswell wrote: post #264
wood_spirit wrote: post #89

Earlier quoted context omitted.

Unlike railroads and fibre, all the best compute in 2025 will be lacklustre in 2027. It won’t retain much value in the same way as the infrastructure of previous bubbles did?

"...all the best compute in 2025 will be lacklustre in 2027": How does the compute (I assume you mean on PCs) of 2025 compare with the compute of 2023? Oh wait, the computer I'm typing this on was manufactured in 2020...

Neato. How’s that 1999 era laptop? Because 25 year old trains are still running and 25 year old train track is still almost new. It’s not the same and you know it.

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#270

Post by _e8at »

zdragnar wrote: post #244
nojs wrote: post #231

I think people are massively underestimating the money they will come from ads in the future. They generated $4.3B in revenue without any advertising program to monetise their 700 million weekly active users, most of whom use the free product. Google earns essentially all of its revenue from ads, $264B in 2024. ChatGPT has more consumer trust than Google at this point, and numerous ways of inserting sponsored results…

What is OpenAI's moat? There's plenty of competitors running their own models and tools. Sure, they have the ChatGPT name, but I don't see them massively out-competing the entire market unless the future model changes drastically improve over the 3->4->5 trajectory.

It's Sam.

From what I understand he was the only one crazy enough to demand hundreds of GPUs for months to get ChatGPT going. Which at the time sounded crazy.

So yeah Sam is the guy with the guts and vision to stay ahead.

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