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

economist.com

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

#391

Post by consp »

Aurornis wrote: post #214
CharlieDigital wrote: post #187

Earlier quoted context omitted.

I've seen some calculation I think from an HSBC analyst that it would take a monthly subscription of $200/mo. from some large portion of the US population for some insane number of years to break even.

> from some large portion of the US population What a silly calculation. OpenAI’s customer base is global. Using US population as the customer base is deliberately missing the big picture. The world population is more than 20X larger than the US population. It’s also obvious that they’re selling heavily to businesses, not consumers. It’s not reasonable to expect consumers to drive demand for these services.

> OpenAI’s customer base is global.

Since when is English everyone's primary language?

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

#392

Post by IncreasePosts »

fooblaster wrote: post #160
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,…

There is a pretty big moat for Google: extreme amounts of video data on their existing services and absolutely no dependence on Nvidia and it's 90% margin.

Hasn't it all been scraped by other ai companies already?

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

#393

Post by onion2k »

jfrbfbreudh wrote: post #294
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,…

Google’s moat: Try “@gmail” in Gemini Google’s surface area to apply AI is larger than any other company’s. And they have arguably the best multimodal model and indisputably the best flash model?

Try “@gmail” in Gemini

I think this is a problem for Google. Most users aren't going to do that unless they're told it's possible. 99% of users are working to a mental model of AI that they learned when they first encountered ChatGPT - the idea that AI is a separate app, that they can talk to and prompt to get outputs, and that's it. They're probably starting to learn that they can select models, and use different modes, but the idea of connecting to other apps isn't something they've grokked yet (and they won't until it's very obvious).

What people see as the featureset of AI is what OpenAI is delivering, not Google. Google are going to struggle to leverage their position as custodians of everyone's data if they can't get users to break out of that way of thinking. And honestly, right now, Google are delivering lots of disparate AI interfaces (Gemini, Opal, Nano Banana, etc) which isn't really teaching users that it's all just facets of the same system.

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

#394

Post by RandallBrown »

famouswaffles wrote: post #354
websiteapi wrote: post #342

Earlier quoted context omitted.

doesn't seem accurate since gemini has many entry points

Entry points ? The visits are accurate for the website and app. If you're talking about AI overviews, then that's meaningless for reasons I've already explained.

I do understand why it makes it very hard to compare but it's certainly not meaningless. Google's AI overviews are pretty much the only way that I use AI.

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

#396

Post by jotras »

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,…

Something nobody's talking about: OpenAI's losses might actually be attractive to certain investors from a tax perspective. Microsoft and other corporate investors can potentially use their share of OpenAI's operating losses to offset their own taxable income through partnership tax treatment. It's basically a tax-advantaged way to fund R&D - you get the loss deductions now while retaining upside optionality later. This is why the "cash burn = value destruction" framing misses the mark. For the right investor base, $10B in annual losses at OpenAI could be worth $2-3B in tax shields (depending on their bracket and how the structure works). That completely changes the return calculation. The real question isn't "can OpenAI justify its valuation" but rather "what's the blended tax rate of its investor base?" If you're sitting on a pile of profitable cloud revenue like Microsoft, suddenly OpenAI's burn rate starts looking like a pretty efficient way to minimize your tax bill while getting a free option on the AI leader. This also explains why big tech is so eager to invest at nosebleed valuations. They're not just betting on AI upside, they're getting immediate tax benefits that de-risk the whole thing.

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

#397

Post by mr_toad »

johnnyanmac wrote: post #226
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,…

>That doesn't mean AI is going to go away, or that it won't change the world - railroads are still here and they did change the world - but from a venture investment perspective, get ready for a massive downturn. I don't know why people always imply that "the bubble will burst" means that "literally all Ai will die out and nothing will remain that is of use". The Dotcom bubble didn't kill the internet. But it was a b…

But some people do believe that AI is all hype and it will all go away. It’s hard to find two people who actually mean the same thing when they talk about a “bubble” right now.

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

#398

Post by dilyevsky »

xivzgrev wrote: post #283
simonsarris wrote: post #265

Earlier quoted context omitted.

Google has several enviable, if not moats, at least redoubts. TPUs, mass infrastructure and own their own cloud services, they own delivery mechanisms on mobile (Android) and every device (Chrome). And Google and Youtube are still #1 and #2 most visited websites in the world.

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

Not that I disagree with your assessment but in the spirit of hn pedantry - google had a very significant breach where gmail was a primary target and that was “only” 16 years ago in mid 2009. So bad that it has its own wikipedia page: https://en.wikipedia.org/wiki/Operation_Aurora

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

#399

Post by rebuilder »

jotras wrote: post #396
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,…

Something nobody's talking about: OpenAI's losses might actually be attractive to certain investors from a tax perspective. Microsoft and other corporate investors can potentially use their share of OpenAI's operating losses to offset their own taxable income through partnership tax treatment. It's basically a tax-advantaged way to fund R&D - you get the loss deductions now while retaining upside optionality later. T…

It’s hardly a free option, by your numbers it’d be a 20-30% discount.

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

#400

Post by tptacek »

esafak wrote: post #314
bdangubic wrote: post #116

Earlier quoted context omitted.

I have lived through Amazon’s rags to riches and there was never a clear plan to profitability. Vast majority of people were questioning sanity of anyone investing in Amazon. I am not saying OpenAI is Amazon but am saying I have seen this before where masses are going “oh business is bad, losses are huge, where is path to profitability…”

Your recollection is hazy. Bezos chose not to be profitable in order to grow the company, and reap greater rewards in the future. https://www.youtube.com/shorts/wjLs22dNOCE

I don't know either way but every company does this, it's not saying anything meaningful to say that a new company is taking an "investment year" or two or ten.

I do know that in the late aughts, people were writing stories about how Amazon was a charity run on behalf of the American consumer by the finance industry.

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