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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

#431

Post by Chyzwar »

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,…

Anthropic is building moat around theirs models with claude code, Agent SDK, containers, programmatic tool use, tool search, skills and more. Once you fully integrate you will not switch. Also being capital intensive is a form of moat.

I think we will end up with market similar to cloud computing. Few big players with great margins creating cartel.

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

#432

Post by famouswaffles »

RandallBrown wrote: post #394
famouswaffles wrote: post #354

Earlier quoted context omitted.

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.

I mean we're all talking about how Google is 'catching up' and 'taking over' Open AI right ? In that case, it genuinely is meaningless. AI Overviews, even if it had the usage OP assumes, is not a threat to Open AI or chatGPT. People use chatGPT for a lot of different things, and AI overviews only handles (rather poorly in my opinion) a small, limited part of the kind of things it gets used for. I use AI mode a lot. It's better than Overviews in every conceivable way, and it's still not a chatGPT replacement.

https://cdn.openai.com/pdf/a253471f-8260-40c6-a2cc-aa93fe9f1...

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

#433

Post by mhuffman »

Chyzwar wrote: post #431
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,…

Anthropic is building moat around theirs models with claude code, Agent SDK, containers, programmatic tool use, tool search, skills and more. Once you fully integrate you will not switch. Also being capital intensive is a form of moat. I think we will end up with market similar to cloud computing. Few big players with great margins creating cartel.

>Anthropic is building moat around theirs models with claude code, Agent SDK, containers, programmatic tool use, tool search, skills and more.

I think this is something the other big players could replicate rapidly, even simulating the exact UI, interactions, importing/exporting existing items, etc. that people are used to with claude products. I don't think this is that big of a moat in the long run. Other big players just seem to be carving up the landscape and see where they can can fit in for now, but once resource rich eyes focus on them, Anthropic's "moat" will disappear.

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

#434

Post by 578_Observer »

ManuelKiessling wrote: post #406
578_Observer wrote: post #360

Earlier quoted context omitted.

The "Railway Bubble" analogy is spot on. As a loan officer in Japan who remembers the 1989 bubble, I see the same pattern. In the traditional "Shinise" world I work with, Cash is Oxygen. You hoard it to survive the inevitable crash. For OpenAI, Cash is Rocket Fuel. They are burning it all to reach "escape velocity" (AGI) before gravity kicks in. In 1989, we also bet that land prices would outrun gravity forever. But…

I‘m aware this means leaving the original topic of this thread, but would you mind giving us a rundown of this whole Japan 1989 thing? I would love to read a first-person account.

I am honored to receive a question from a fellow "Craftsman" (I assume from your name).

To be honest, in 1989, I was just a child. I didn't drink the champagne. But as a banker today, I am the one cleaning up the broken glass. So I can tell you about 1989 from the perspective of a "Survivor's Loan Officer."

I see two realities every day.

One is the "Zombie" companies. Many SMEs here still list Golf Club Memberships on their books at 1989 prices. Today, they are worth maybe 1/20th of that value. Technically, these companies are insolvent, but they keep the "Ghost of 1989" on the books, hoping to one day write it off as a tax loss. It is a lie that has lasted 30 years.

But the real estate is even worse. I often visit apartment buildings built during the bubble. They are decaying, and tenants have fled to newer, modern buildings. The owner cannot sell the land because demolition costs hundreds of thousands of dollars—more than the land is worth.

The owner is now 70 years old. His family has drifted apart. He lives alone in one of the empty units, acting as the caretaker of his own ruin.

The bubble isn't just a graph in a history book. It is an old man trapped in a concrete box he built with "easy money." That is why I fear the "Cash Burn" of AI. When the fuel runs out, the wreckage doesn't just disappear. Someone has to live in it.

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

#435

Post by sothatsit »

therobots927 wrote: post #301
siliconc0w wrote: post #201

The best case I can see is they integrate shopping and steal the best high-intent cash cow commercial queries from G. It's not really about AI, it's about who gets to be the next toll road.

Google already puts AI summaries at the top of search. It would be trivial for them to incorporate shopping. And they have infinitely more traffic than OpenAI does. I just don’t see how OpenAI could possibly compete with that. What are you seeing that I’m not?

ChatGPT has already won a lot of people away from Google like my mum, who now defaults to ChatGPT when she has a question. I was just talking to one of their friends last night who is in his 90s and he loves using Perplexity to learn about cooking and gardening.

A lot of people now reach for ChatGPT by default instead of Google, even with the AI summaries. I wonder whether they just prefer the interface of the chat apps to Google that can be a bit cluttered in comparison.

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

#436

Post by tjwebbnorfolk »

avalys wrote: post #305
jfrbfbreudh wrote: post #294

Earlier quoted context omitted.

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?

If the “moat” is not AI technology itself but merely sufficient other lines of business to deploy it well, then that’s further evidence that venture investments in AI startups will yield very poor returns.

It's funny that a decade ago the exit strategy of many of these startups would have been to get acquired by MSFT / META / GOOG. Now, the regulators have made a lot of these acquisitions effectively impossible for antitrust reasons.

Is it better for society for promising startups to die on the open market, or get acquired by a monopoly? The third option -- taking down the established players -- appears increasingly unlikely.

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

#437

Post by AnonHP »

margalabargala wrote: post #346
bdangubic wrote: post #326

Earlier quoted context omitted.

we suggesting that nvidia/google/.. be regulated for like utilities?

[flagged]

Not GP and haven’t participated in this thread. I’m clueless on what the point in your earlier comment is. Can you elaborate, please?

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

#438

Post by throw310822 »

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,…

> AI is a world-changing technology, just like the railroads were

This comparison keeps popping up, and I think it's misleading. The pace of technology uptake is completely different from that of railroads: the user base of ChatGPT alone went from 0 to 200 million in nine months, and it's now- after just three years- around 900 million users on a weekly basis. Even if you think that railroads and AI are equally impactful (I don't, I think AI will be far more impactful) the rapidity with which investments can turn into revenue and profit makes the situation entirely different from an investor's point of view.

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

#439

Post by aurareturn »

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…

There is clearly a very strong moat. OpenAI is close to 1 billion active users on ChatGPT while Claude barely have any non-business users. Even though Anthropic had better models at different times this year, I never stopped using ChatGPT and paying for Plus.

We just don't know who will win in which area yet. It doesn't mean there is no moat.

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

#440

Post by danielscrubs »

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…

Can you explain it in another way? What you are saying is that instead of loosing 100% they loose 70% and loosing 70% is somehow good? Or are you saying the risk adjusted returns are then 30% better on the downside than previously thought? Because if you are, I think people here are saying the risk is so high that it is a given they will fail.
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