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OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

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Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#271

Post by joshuastuden »

romaniv wrote: post #248

The fact that people here are looking at these numbers and saying "this is fine" is absolutely bonkers. Basically, it's a company that's not sustainable for two separate reasons. The first one is that they have an extremely high overhead. SG&A of 55% is really bad. The seconds reason is that their R&D costs are truly astronomical. They could probably cut those costs to some extent, but they're not going to cut them t…

They're not really losing ground to Anthropic. 5.5 was a bit better than 4.8. Fable was good, and was a jump over 4.8, but only incremental over 5.5.

Anthropic is also likely losing money, right?

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#272

Post by paytonjjones »

bruce343434 wrote: post #249
bko wrote: post #243

Earlier quoted context omitted.

Let's put it this way, how much is 5% productivity bump worth to you? If you're in the US and you're making 100k a year, that's worth 5k or $416/m. So you can buy two of the most expensive plans on the frontier models. This focus on cost optimization is insane. Just use the frontier models. Even a marginal bump is worth whatever the hell they're charging, at least for now.

Everyone else will be 5% more productive. Then no one is "more" productive. So everyone has a higher output, but the same wages and hours worked. There was only a gap when usable AI first came out, some contractors could do the same quantity of work in less time and enjoy time off or do more jobs. Now the gap has closed or is closing. And using AI now is more about not being less productive than peers who do use it.

That's not how productivity works. It's not a zero-sum game.

If all construction workers can build houses 5% more efficiently, that's not the same as nothing changing. Depending on supply and demand, it means 5% more houses are built, or houses are 5% cheaper, or maybe 5% bigger, or some combination. Whether or not the construction workers all get a raise or 5% get fired (or both) depends on that supply and demand, but historically they often get a piece of the growing economic pie.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#273

Post by shimman »

bko wrote: post #243
apatheticonion wrote: post #209

Seeing that R&D costs are the lion's share, I wonder if we are at a point where the focus can shift to improving the cost of inference. Unless we are genuinely pushing to find AGI, at which point nothing matters, LLMs in their current form don't replace knowledge workers but are an effective force multiplier. How good is enough? For instance, I pay about $1-2 a month for DeepSeek. It's not as sophisticated as Claude,…

Let's put it this way, how much is 5% productivity bump worth to you? If you're in the US and you're making 100k a year, that's worth 5k or $416/m. So you can buy two of the most expensive plans on the frontier models. This focus on cost optimization is insane. Just use the frontier models. Even a marginal bump is worth whatever the hell they're charging, at least for now.

There is no evidence that these tools provide a 5% bump, if anything they are providing a 20% liability (pulling random numbers is fun).

Also where is the evidence that the workers have ever benefited from productivity bumps? The only thing that happens is surplus gets captured by the owners while workers are forced to do more.

Bad deal all around.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#274

Post by tenuousemphasis »

strken wrote: post #210
fearmerchant wrote: post #169

Earlier quoted context omitted.

It's more like once you figure out how to make a really good lamp then producing lots of lamps will be profitable. But the lamps are currently suboptimal so we'll be in the red until that time.

It's more like you have a business making engines, each generation of engine has eventually turned out to be profitable over its lifespan, but each generation has an exponentially increasing R&D cost and your customers will switch from the old engines to a competitor if they don't like the newest generation. You're stuck racing against your competitors with the distinct possibility that your R&D costs will outgrow th…

Except this is the first generation of engine manufacturers and nobody knows if it will actually be profitable yet.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#275

Post by id00 »

lokar wrote: post #270
chrisgd wrote: post #261

Earlier quoted context omitted.

This is the venture model now though. Spend until profitable. Uber did it. It seems OpenAI could do it as well given we seem to be in a 2 horse race for foundation models and having capital to get better pushes them further ahead. Gemini is number 3 in this race

Uber did not need this much money to cross the finish line, and faced less competition.

More importanly they have moat

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#276

Post by lokar »

CPLX wrote: post #256
romaniv wrote: post #248

The fact that people here are looking at these numbers and saying "this is fine" is absolutely bonkers. Basically, it's a company that's not sustainable for two separate reasons. The first one is that they have an extremely high overhead. SG&A of 55% is really bad. The seconds reason is that their R&D costs are truly astronomical. They could probably cut those costs to some extent, but they're not going to cut them t…

These companies are clearly calling things that are R&D that aren't R&D. If you're building a model that lasts a few months before it's no longer the most current one, and maybe a year before it's completely unusable by anybody, then that should just be COGS. Doing that, however, would betray the real problem with this business model.

Calling it capex with an appropriate depreciation schedule is more appropriate.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#277

Post by paytonjjones »

bombcar wrote: post #245
bko wrote: post #243

Earlier quoted context omitted.

Let's put it this way, how much is 5% productivity bump worth to you? If you're in the US and you're making 100k a year, that's worth 5k or $416/m. So you can buy two of the most expensive plans on the frontier models. This focus on cost optimization is insane. Just use the frontier models. Even a marginal bump is worth whatever the hell they're charging, at least for now.

The problem is it might be worth it to the company, but likely not to you - a 5% productivity bump likely results in $100k a year.

You really think there's zero correlation between productivity and wages? Sure, it's noisy and you might stay at $100k or even get fired. But I'd say the expected wage value of 5% higher productivity on a large sample is at least 3.5% or so.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#278

Post by joshuastuden »

thraway3837 wrote: post #264

Good analysis. But who cares? It takes a long time for companies to figure out how to become profitable. And I honestly believe that OpenAI/Anthropic etc. have done humanity a huge favor. The money they're burning is not yours or mine. They're institutional investor money. So, again, who cares? It will become profitable. Local models and local on-laptop inference will get good enough. This argument has been made for…

They haven't done humanity a favor at all. The innovation that these LLMs have produced has been small. A few fun math theorems where the answer was gleaned from a pattern in the training data. Great,.but it doesn't change the world one bit.

That latest drug for pancreatic cancer? Yeah, all human. After the trillions already spent, AI hasn't come up with any new medications, no new inventions to save lives... Nothing

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#279

Post by shimman »

JimTheMan wrote: post #188
fsuts wrote: post #175

”The company reports over 900 million weekly active users of ChatGPT, though only about 50 million of those are paid subscribers.” With so many free models available the ai companies are going to struggle to convert active free users to paid.

None of the free models offer anything even remotely close to the output you can get on a relatively inexpensive model. I think that AI is going to become just another utility people pay to stay relevant. Same as their internet, electricity or gas.

The free models are good enough for any work (very little) that benefits from LLMs.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#280

Post by layer8 »

dogecoinbase wrote: post #240
qntmfred wrote: post #223

Earlier quoted context omitted.

I'd be cool with that. YouTube premium is one of the best value subscriptions I have. Steering people toward paying instead of ads-by-default is a net good imo

I think we can all understand the ways in which embedded advertisement in LLMs will be fundamentally different than view-based advertisement.

Maybe this will fly in the US, but I don’t think it will in the EU and other places, with regard to laws making covert advertising illegal.

There’s also the difficulty of proving to the advertising clients that the advertising actually takes place (and how much of it), if it is covert.

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