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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

#411

Post by Marsymars »

johnnyanmac wrote: post #262
Aurornis wrote: post #214

Earlier quoted context omitted.

> 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. I'd be willing to bet that, like many US websites, OpenAI's users are at lest 60% American. Just because there's 20x more people out there doesn't mean they have the same exposure to American products. For instance, China is an obvious one. So that's 35%+ of the population already mostly out of consideration. >It’s also obvious that they’re selling heavily to businesses, not consume…

Even if you grant that OpenAI might be as successful as Apple at international expansion and support, that’s still only a non-US market about double the size of the US market.

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

#412

Post by golem14 »

dheera wrote: post #348
raw_anon_1111 wrote: post #309

Earlier quoted context omitted.

You weren’t around pre Google were you? The only thing Google learned from other search engines is what not to do - like rank based on the number of times a keyword appeared and not to use expensive bespoked servers

I was around pre-Google. Ranking was Google's 5% contribution to it. They stood on the shoulders of people who invented physical server and datacenter infrastructure, Unix/Linux, file systems, databases, error correction, distributed computing, the entire internet infrastructure, modern Ethernet, all kinds of stuff.

Eh ... I question that 5% ranking is google's only contribution, even if it was important.

Everyone stood on the shoulders of file systems and databases, ethernet (and firewalls and netscreens, ...) Well, maybe a few stood on the shoulder of PHP.

Google did in fact pretty much figure out how to scale large number of servers (their racking, datacenters, clustering, global file systems etc) before most others did. I believe it was their ability to run the search engine cheap enough that enabled them to grow while largely retaining profitability early on.

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

#413

Post by anshumankmr »

pier25 wrote: post #382
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,…

Did railroads change the world though? They only lasted a couple of decades as the main transportation method. I'd say the internal combustion engine was a lot more transformative.

Umm yes? The metro even if not a big deal in the states is like a small but quiet way it has changed public transport, plus moving freight, plus people over large distances, plus the bullet train that mixed luxury, speed and efficiency onto trains, all of these are quietly disruptive transformations, that I think we all take for granted.

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

#414

Post by satvikpendem »

catoc wrote: post #388
devsda wrote: post #277

Earlier quoted context omitted.

Don't forget the other moat. While their competitors have to deal with actively hostile attempts to stop scraping training data, in Google's case almost everyone bends over backwards to give them easy access.

‘Actively hostile’ as in objecting to your content getting ripped off without permission?

It's a matter of perspective. In this scenario both sides see the other as hostile, just as one would look at a war happening as an outside observer.

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

#415

Post by satvikpendem »

DoesntMatter22 wrote: post #353
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.

They also have one of the biggest negatives in that they abandon almost everything they build so it’s hard to get invested in thier products. I agree with the rest though

They don't abandon their money makers. That's the thing people don't get about the Google graveyard meme, they only cut things that obviously aren't working to make them more money.

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

#416

Post by Marsymars »

cameronh90 wrote: post #90
Avicebron wrote: post #44

On the radio they mentioned that the total global chocolate market is ~100B, I googled it when I was home and it seems to be about ~135B. Apparently that is ... all chocolate, everywhere.. OpenAI's valuation is about 500B. Maybe going up to like 835B. I'd love to see the rationale that OpenAI (not "AI" everywhere) is more valuable than chocolate globally. ... so crash early 2026?

Ignoring that those numbers aren't directly comparable, it did make me wonder, if I had to give up either "AI" or chocolate tomorrow, which would I pick? Even as an enormous chocolate lover (in all three senses) who eats chocolate several times a week, I'd probably choose AI instead. OpenAI has alternatives, but also I do spend more money on OpenAI than I do on chocolate currently.

It’s a bit of a weird comparison, AI vs a luxury sweet.

Maybe instead of the chocolate market, look at the global washing machine market of $65 billion.

I’d rather give up both AI and chocolate than my washing machine.

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

#417

Post by satvikpendem »

jakeydus wrote: post #316
monocasa wrote: post #233

Earlier quoted context omitted.

And we're probably already starting to see that, given the semirecent escalations in game of cat and also cat of youtube and the likes of youtube-dl. Reminds me of Reddit's cracking down on API access after realizing that their data was useful. But I'd expect both youtube to be quicker on the gun knowing about AI data collection, and have more time because of the orders of magnitude greater bandwidth required to scra…

And reddit turned around and sold it all for a mess of pottage…

Sold being the operative word, rather than giving it away for free.

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

#418

Post by thrwaway55 »

rebuilder wrote: post #399
jotras wrote: post #396

Earlier quoted context omitted.

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.

Sure but if there's no moat would you rather pay 100% or 80% until the credits run out? You reap the 100% spend in the meantime. Not everyone even has the no moat discount.

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

#419

Post by ludicrousdispla »

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…

>> For the right investor base, $10B in annual losses at OpenAI could be worth $2-3B in tax shields

So just a loss for governments, or in other words, socializing the losses.

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

#420

Post by jedberg »

mootothemax wrote: post #327
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

While I don’t disagree with you, for historical purposes I think it’s important to highlight why google started its push for 100% wire encryption everywhere all the time: The NSA and GHCQ and basically every TLA with the ability to tap a fibre cable had figured out the gap in Google’s armour: Google’s datacenter backhaul links were unencrypted. Tap into them, and you get _everything_. I’ve no idea whether Snowdon’s l…

When I worked at PayPal back in 2003/4, one of the things we did (and I think we were the first) was encrypt the datacenter backhaul connections. This was on top of encrypting all the traffic between machines. It added a lot of expense and overhead, but security was important enough to justify it.
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