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How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

nytimes.com

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Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#351

Post by guywithahat »

bigwheels wrote: post #242
guywithahat wrote: post #140

Earlier quoted context omitted.

It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…

> this feels a little like the WeWork CEO flying couches to offices in private jets Fascinating! I unearthed the TL;DR for anyone else interested: * WeWork purchased a $60 million Gulfstream G650ER private jet for Neumann's use. * The G650ER was customized with two bedrooms and a conference table. * Neumann used the jet extensively for global travel, meetings, and family trips. * The jet was also used to transport it…

The couch fascinate me the most because it's almost justifiable. Like offices need furniture and grand openings should be nice; however the cost could never be recovered and the company was way too big to be doing things that don't scale.

In a similar vein, LLM's/AI are clearly impressive technologies that can be done profitably. Spending billions on a model however may not be economically feasible. It's a great example of runaway spending, whereas the weed thing feels more along the lines of a drug problem to me.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#352

Post by brokencode »

mentalgear wrote: post #322
brokencode wrote: post #255

Earlier quoted context omitted.

Yeah, except you can keep on squeezing these lemons for a long time before they run out of juice. Even if the model training part becomes less worthwhile, you can still use the data centers for serving API calls from customers. The models are already useful for many applications, and they are being integrated into more business and consumer products every day. Adoption is what will turn the flywheel into a rocket.

Well, the thing is that that kind of hardware chips quickly decrease in value. It's not like the billions spend in past bubbles like the 2000s where internet infrastructure was build (copper, fibre) or even during 1950s where transport infrastructure (roads) were build.

Data centers are massive infrastructural investments similar to roads and rails. They are not just a bunch of chips duct taped together, but large buildings with huge power and networking requirements.

Power companies are even constructing or recommissioning power plants specifically to meet the needs of these data centers.

All of these investments have significant benefits over a long period of time. You can keep on upgrading GPUs as needed once you have the data center built.

They are clearly quite profitable as well, even if the chips inside are quickly depreciating assets. AWS and Azure make massive profits for Amazon and Microsoft.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#353

Post by sidewndr46 »

Arkhaine_kupo wrote: post #61
zemvpferreira wrote: post #44

Earlier quoted context omitted.

There’s one key difference in my opinion: pre-.com deals were buying revenue with equity and nothing else. It was growth for growth’s sake. All that scale delivered mostly nothing. OpenAI applies the same strategy, but they’re using their equity to buy compute that is critical to improving their core technology. It’s circular, but more like a flywheel and less like a merry-go-round. I have some faith it could go anot…

> they’re using their equity to buy compute that is critical to improving their core technology But we know that growth in the models is not exponential, its much closer to logarithmic. So they spend =equity to get >results. The ad spend was a merry go round, this is a flywheel where the turning grinds its gears until its a smooth burr. The math of the rising stock prices only begins to make sense if there is a possi…

There's at least one contributor here on HN that believes growth in models is strictly exponential: https://www.julian.ac/blog/2025/09/27/failing-to-understand-...

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#354

Post by _DeadFred_ »

wmeredith wrote: post #104
trollbridge wrote: post #76

Earlier quoted context omitted.

Odd how they are simultaneously having large layoffs even as reporting record revenues. The question is where the profits are.

Amazon - 14,000 layoffs; significant Microsoft - 14,000 (multiple rounds); significant Meta - 600 layoffs; insignificant for company size Google - "Several hundred layoffs"; insignificant for a company size Apple - No layoffs Source: https://techcrunch.com/2025/10/24/tech-layoffs-2025-list/

Google's Youtube unit is doing soft layoffs.

https://news.ycombinator.com/item?id=45766368

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#355

Post by treis »

_aavaa_ wrote: post #319
treis wrote: post #302

Earlier quoted context omitted.

It's not windows mobile because OpenAI was first and is the clear leader in the market. Windows mobile was late to the party and missed their window. Palm is closer but it's a different world. It's established that Internet advertising companies are worth trillions. It's only in retrospect that what Palm could have been is obvious. Barring something very unexpected OpenAI is coming out on top. They're prepaying for a…

Windows mobile by the time it looked like the iPhone was late to the party. But windows had been releasing a mobile os for a long time before that. Microsoft was first, they just didn’t make as good of a product as Apple despite their money. OpenAI is also first, but it is absolutely not a given that they are the Apple in this situation. Microsoft too had money to bury the competition, they even staged a fake funeral…

Yep. It would have to be something that dramatic to render all the technology and infrastructure OpenAI has obsolete. But if it's anything like massive data training on a huge number of GPUs then OpenAI is one of the winners.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#356

Post by khimaros »

bwfan123 wrote: post #83
belter wrote: post #58

Earlier quoted context omitted.

> Everything seems to indicate that once the models are trained, they are extremely profitable Some data would reinforce your case. Do you have it? Here is my data point: "You Have No Idea How Screwed OpenAI Actually Is" - https://wlockett.medium.com/you-have-no-idea-how-screwed-ope...

This is behind a paywall. Is there a free link you can share ?

https://archive.is/fnzB4

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#357

Post by logicprog »

belter wrote: post #58
vmg12 wrote: post #37

Here is a charitable perspective on what's happening: - Nvidia has too much cash because of massive profits and has nowhere to reinvest them internally. - Nvidia instead invests in other companies that use their gpus by providing them deals that must be spent on nvidia products. - This accelerates the growth of these companies, drives further lock in to nvidia's platform, and gives nvidia an equity stake in these com…

> Everything seems to indicate that once the models are trained, they are extremely profitable Some data would reinforce your case. Do you have it? Here is my data point: "You Have No Idea How Screwed OpenAI Actually Is" - https://wlockett.medium.com/you-have-no-idea-how-screwed-ope...

I can't read your hyperbolically titled paywalled medium post, so idk if it has data I'm not aware of or is just rehashing the same stats about OpenAI & co currently losing money (mostly due to training and free users) but here's a non paywalled blog post that I personally found convincing: https://www.snellman.net/blog/archive/2025-06-02-llms-are-ch...

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#358

Post by noosphr »

embedding-shape wrote: post #315
noosphr wrote: post #301

Earlier quoted context omitted.

State of the art doesn't mean frontier.

I've always taken that term literally, basically "top of the top". If you're not getting the best responses from that LLM, then it's not "top of the top" anymore, regardless of size. Then something could be "SOTA in it's class" I suppose, but personally that's less interesting and also not what the parent commentator claimed, which was basically "anyone with money can get SOTA models up and running". Edit: Wikipedia…

A sota decoder model is a bigger deal than yet another trillion parameter encoder only model trained on benchmarks.

I don't get why you think that the only way that you can beat the big guys is by having more parameters than them.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#360

Post by red-iron-pine »

treis wrote: post #188
koolba wrote: post #107

Earlier quoted context omitted.

There’s about 5M software devs in the US so even at $1000/year/person spend, that’s only $5B of revenue to go around. Theres plenty of other uses cases but focusing on pure tech usage, it’s hard to see how the net present value of that equates to multiple trillions of dollars across the ecosystem.

It's the first new way of interacting with computers since the iPhone. It's going to be massively valuable and OpenAI is essentially guaranteed to be one of the players.

I'm waiting for my Google Glass smart glasses to be useful for anything other then annihilating the privacy of everyone around me

Blackberry was a big deal for a while, too

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