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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

#281

Post by coherentpony »

chrisgd wrote: post #261
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…

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’s situation was different, though. The reason Uber were bleeding money is because they purposefully made all their rides cheap to undercut the taxi businesses. People used Uber because it was cheaper than renting a taxi.

Now you can’t really find taxis anywhere, even at airports it’s a lot more difficult than it used to be.

Once the taxi business was disrupted enough, Uber’s pricing skyrocketed and customers had basically no other options for competition on pricing.

OpenAI basically created a new market. There is no AI chatbot incumbent to disrupt and swallow.

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

#282

Post by free_bip »

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.

You're saying this like I would see that 5k in my bank account. If I'm 5% more productive that probably wouldn't even make it into annual review, let alone pay.

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

#283

Post by nojito »

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…

You're over inflating the S which is expected to increase as now they are "going to market" G&A is within expectations.

Revenue is still growing faster than costs and gross margins have continued to improve.

The real question is when they can start spending less on R&D and still compete.

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

#284

Post by Gooblebrai »

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,…

> Unless we are genuinely pushing to find AGI, at which point nothing matters

I think the third coming out Jesus Christ in closer than AGI. Seriously, I dread how much of Silicon Valley is wrapped in this narrative of AGI and Singularity.

How can all these "rationalists" fail to see that this is what religion looks like: Faith and promises of heaven and hell.

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

#285

Post by bizzletk »

jmalicki wrote: post #213
marcosdumay wrote: post #197

So... 50% operational costs and about $100 spent on sales for each paying customer. If they manage to keep those customers for several years without more sales, that bit looks like a normal "high-touch" business. They shouldn't look like a "high-touch" business, but their unitary numbers look way better than I expected. They just need to grow some 10 times to star making a profit... Maybe 100 to cover the opportunity…

The win for something like OpenAI isn't getting a ton of customers to pay $10-100/mo. It's getting businesses to pay $2k/mo or more per professional employee, like a lot of Anthropic customers. Anthropic is ahead of them there, but that is how they win.

Wouldn't the real story be to get government contracts? Those are more immune to public fickleness and market competition and usually have truly ludicrous margins.

If they're the only ones who ̶a̶r̶e̶ ̶w̶i̶l̶l̶i̶n̶g̶ ̶t̶o̶ ̶b̶e̶ ̶t̶h̶e̶ ̶e̶n̶g̶i̶n̶e̶ ̶f̶o̶r̶ ̶a̶u̶t̶o̶n̶o̶m̶o̶u̶s̶ ̶k̶i̶l̶l̶b̶o̶t̶s̶ can draw a reciprocation dingle-arm to reduce soinosoidal repleneration, then "I'm sure the government will buy it" [0]

[0] https://youtu.be/Ac7G7xOG2Ag?t=89

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

#286

Post by ignoramous »

bhelkey wrote: post #242
ignoramous wrote: post #214

Earlier quoted context omitted.

> Should these companies be valued the same By who? Public money is looking for dividends (profits) not growth?

If indeed the public is looking for dividends, why is Amazon, a company that has never paid a dividend, such a valuable company? Amazon has ~10 Billion outstanding shares and the current market price for one of those shares is ~$240. If folks only care about dividends, why would anyone buy an Amazon share at that price?

> why is Amazon, a company that has never paid a dividend, such a valuable company?

You'd hope every publicly-traded long term minded company operates the same way Amazon does. Reinvestment of money they themselves earn in "growth" and still retain a trickle in profits.

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

#287

Post by pastel8739 »

coherentpony wrote: post #281
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’s situation was different, though. The reason Uber were bleeding money is because they purposefully made all their rides cheap to undercut the taxi businesses. People used Uber because it was cheaper than renting a taxi. Now you can’t really find taxis anywhere, even at airports it’s a lot more difficult than it used to be. Once the taxi business was disrupted enough, Uber’s pricing skyrocketed and customers had…

People use AI because it is cheaper than paying humans to think. Soon you won’t really be able to find human thinkers.

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

#288

Post by mikgp »

ignoramous wrote: post #211
marcosdumay wrote: post #197

So... 50% operational costs and about $100 spent on sales for each paying customer. If they manage to keep those customers for several years without more sales, that bit looks like a normal "high-touch" business. They shouldn't look like a "high-touch" business, but their unitary numbers look way better than I expected. They just need to grow some 10 times to star making a profit... Maybe 100 to cover the opportunity…

> just a matter of finding 5 billion people willing to pay US prices This is how you know ads are inevitable. YouTube is probably a good indicator of how BigLabs will operate for free users.

What is the mental model folks have that “just do ads” is easy, like only two companies have figured out how to make money from ads and I imagine they won’t take the competition lying down.

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

#290

Post by djeastm »

natas wrote: post #143

Napkin maths. Alphabet: ~$4.5T value / ~$403B revenue ≈ 11× revenue Microsoft: ~$2.9T value / ~$282B revenue ≈ 10× revenue OpenAI: ~$850B value / ~$13B revenue ≈ 65× revenue Can someone explains that logic?

Growth versus blue chip (do we even use that term anymore?)
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