Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

economist.com

Post reply on HN
Print view View original

371–380 of 777 posts

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

#371

Post by parentheses »

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,…

This is different because now the cats out of the bag: AI is big money!

I don't expect AGI or Super intelligence to take that long but I do think it'll happen in private labs now. There's an AI business model (pay per token) that folks can use also.

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

#372

Post by bjt »

why-o-why wrote: post #355
xivzgrev wrote: post #283

Earlier quoted context omitted.

Not to mention security. I'd trust Google more not to have a data breach than open AI / whomever. Email accounts are hugely valuable but I haven't seen a Google data breach in the 20+ years I've been using them. This matters because I don't want my chats out there in public. Also integration with other services. I just had Gemini summarize the contents of a Google Drive folder and it was effortless & effective

Is Google even required to inform you of a data breach?

They're subject to California law, so yeah.

https://oag.ca.gov/privacy/databreach/reporting

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

#373

Post by __MatrixMan__ »

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,…

I think we'll find that that asymptote only holds for cases where the end user is not really an active participant in creating the next model:

- take your data

- make a model

- sell it back to you

Eventually all of the available data will have been squeezed for all it's worth the only way to differentiate oneself as an AI company will be to propel your users to new heights so that there's new stuff to learn. That growth will be slower, but I think it'll bear more meaningful fruit.

I'm not sure if today's investors are patient enough to see us through to that phase in any kind of a controlled manner, so I expect a bumpy ride in the interim.

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

#374

Post by vkou »

ljlolel wrote: post #351
vkou wrote: post #290

Earlier quoted context omitted.

You and the other hobbyists aren't what's driving valuations. Enterprise subscriptions are.

OpenAI is 80% consumer subs

And do those subs justify their valuation?

They don't, the only thing that can justify it is if they get themselves into every business workflow. That's what the investors are counting on.

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

#375

Post by transcriptase »

razodactyl wrote: post #340
hattmall wrote: post #333

Earlier quoted context omitted.

Exactly, Google's business isn't search, it's ads. Is ChatGPT a more profitable system for delivering ads? That doesn't appear so, which means there's really no reason for Google to have created it first.

There was a very negative "immune" response from the users when they perceived suggestions from ChatGPT as ads. This will be hard for them to integrate in a way that won't annoy users / will be better implemented than any other competitor in the same space. Or perhaps we just deal with all AI across the board serving us ads.... this makes more sense unfortunately.

There’s a very negative immune response to the idea of Netflix running ads.

And yet they’re there, in the form of prominent product placement in all of their original series along with strategic placement in the frame to make sure they appear in cropped clips posted to social media and made into gifs.

Stranger Things alone has had 100-200 brands show up under the warm guise of nostalgia, with Coke alone putting up millions for all the less-than-subtle screen time their products get.

I’m certain AI providers will figure out how to slyly put the highest bidder into a certain proportion of output without necessarily acting out that scene in Wayne’s World.

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

#376

Post by mahirsaid »

razodactyl wrote: post #340
hattmall wrote: post #333

Earlier quoted context omitted.

Exactly, Google's business isn't search, it's ads. Is ChatGPT a more profitable system for delivering ads? That doesn't appear so, which means there's really no reason for Google to have created it first.

There was a very negative "immune" response from the users when they perceived suggestions from ChatGPT as ads. This will be hard for them to integrate in a way that won't annoy users / will be better implemented than any other competitor in the same space. Or perhaps we just deal with all AI across the board serving us ads.... this makes more sense unfortunately.

I suspect google can last much longer in regards to an AI model chat engine that competes with open AI and other companies, without needing a profit from that particular product in a timely manner. I can's say the same for the others. Google is using it's own money to fund this without mch pressure for immediate profit in a time deadline. They can rely on their other services for revenue and profit for the meantime.

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

#377

Post by hakfoo »

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,…

The railroads provided something of enduring value. They did something materially better than previous competitors (horsecarts and canals) could. Even today, nothing beats freight rail for efficient, cheap modest-speed movement of goods.

If we consider "AI" to be the current LLM and ImageGen bubble, I'm not sure we can say that.

We were all wowed that we could write a brief prompt and get 5,000 lines of React code or an anatomically questionable deepfake of Legally Distinct Chris Hemsworth dancing in a tutu. But once we got past the initial wow, we had to look at the finished product and it's usually not that great. AI as a research tool will spit back complete garbage with a straight face. AI images/video require a lot of manual cleanup to hold up to anything but the most transient scrutiny. AI text has such distinct tones that it's become a joke. AI code isn't better than good human-developed code and is prone to its own unique fault patterns.

It can deliver a lot of mediocrity in a hurry, but how much of that do we really need? I'd hope some of the post-bubble reckoning comes in the form of "if we don't have AI to do it (vendor failures or pricing-to-actual-cost makes it unaffordable), did we really need it in the first place?" I don't need 25 chatbots summarizing things I already read or pleading to "help with my writing" when I know what I want to say.

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

#378

Post by Ekaros »

agentifysh wrote: post #95

2008: US Banks pump stocks -> market correction -> taxpayer bailout 2026: US AI companies pump stocks -> market correction -> taxpayer bailout Mark my words. OpenAI will be bailed out by US taxpayers.

Even if there is a bailout. Will it happen in time? Once the confidence is lost it is lost and valuations have dropped. Bailout would just mean that who ever gave money would end up as bag holder of something now worth lot less.

Banks needed bailout to keep lending money. Auto industry needed one to keep employing lot of people. AI doesn't employ that many.

I just don't believe bailout can happen before it is too late for it to be effective in saving the market.

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

#379

Post by conartist6 »

__MatrixMan__ wrote: post #373
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,…

I think we'll find that that asymptote only holds for cases where the end user is not really an active participant in creating the next model: - take your data - make a model - sell it back to you Eventually all of the available data will have been squeezed for all it's worth the only way to differentiate oneself as an AI company will be to propel your users to new heights so that there's new stuff to learn. That gro…

Yeah except that models don't propel communities towards new heights. They drive towards the averages. They take from the best to give to the worst, so that as much value is destroyed as created. There's no virtuous cycle there...

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

#380

Post by cmiles8 »

mizzao wrote: post #361
cmiles8 wrote: post #276

AI is turning into the worst possible business setup for AI startups. A commodity that requires huge capital investment and ongoing innovation to stay relevant. There’s no room for someone to run a small but profitable gold mine or couple of oil wells on the side. The only path to survival is investing crazy sums just to stay relevant and keep up. Meanwhile customers have virtually zero brand loyalty so if you slip b…

If you think of it like cloud, where it's a commodity that reaches competitive prices, then you can use it to build products and applications, instead of competing for infrastructure (see also: railroads, optical fiber) There is tons of money to be made at the application layer, and VCs will start looking at that once the infrastructure layer collapses. Here's a blog post I wrote about that: https://parsnip.substack.…

Not really though. The cloud has some stickiness. It’s pretty hard to move once you’ve settled in. For a lot of AI integrations though it’s just swapping some API endpoints and maybe tweaking the prompting a bit. For probably 95% of AI use cases there almost no barrier to switching.
Post reply on HN