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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

#481

Post by aurareturn »

shaky-carrousel wrote: post #474
aurareturn wrote: post #470

Earlier quoted context omitted.

Google search is free to use too. So is Instagram. Facebook. Whatsapp. All of these have ads. OpenAI says they're very profitable on inference.

All of these have ads. And none of these have an equal value alternative. OpenAI, Claude, Deepseek, Mistral, Gemini, are mostly the same to a regular user.

Bing is mostly the same. Kagi is mostly the same. Yahoo, Yandex, etc. It's 2025. Hardly any difference. There were tens of search engines in the 90s and 2000s that were generally mostly the same. Yet, Google still won and owned nearly all search monetization.

Search was even easier to switch. At least ChatGPT has memory.

Most chat apps are the same as Whatsapp. All of them are free too.

"Ask ChaGPT" is the equivalent to "google it" in 2025.

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

#482

Post by Bombthecat »

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,…

Eh, I wouldn't be so sure, chips with brain matter and or light are on its way and or quantum chips, one of those or even a combination will give AI a gigantic boost in performance. Finally replacing a lot more humans and whoever implements it first will rule the world.

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

#483

Post by aurareturn »

cherryteastain wrote: post #472
famouswaffles wrote: post #247

Earlier quoted context omitted.

>But OpenAI doesn't have tiny COGS: inference is expensive as fuck. No, inference is really cheap today, and people saying otherwise simply have no idea what they are talking about. Inference is not expensive.

Clearly not cheap enough. > Even at $200 a month for ChatGPT Pro, the service is struggling to turn a profit, OpenAI CEO Sam Altman lamented on the platform formerly known as Twitter Sunday. "Insane thing: We are currently losing money on OpenAI Pro subscriptions!" he wrote in a post. The problem? Well according to @Sama, "people use it much more than we expected." https://www.theregister.com/2025/01/06/altman_gpt_pr…

So just raise the price or decrease the cost per token internally.

Altman also said 4 months ago:

  Most of what we're building out at this point is the inference [...] We're profitable on inference. If we didn't pay for training, we'd be a very profitable company.
https://simonwillison.net/2025/Aug/17/sam-altman/

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

#484

Post by nineteen999 »

Bombthecat wrote: post #482
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,…

Eh, I wouldn't be so sure, chips with brain matter and or light are on its way and or quantum chips, one of those or even a combination will give AI a gigantic boost in performance. Finally replacing a lot more humans and whoever implements it first will rule the world.

You seem to have forgotten that the ruling class requires tax payers to fund their incomes. If we're all out of work, there's nobody to buy their products and keep them rich.

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

#485

Post by nineteen999 »

chrishare wrote: post #452
Groxx wrote: post #426

Earlier quoted context omitted.

We really should have thought of this before becoming peasants.

Have you tried not being poor?

It gives you a new opportunity to pull yourself up by the bootstraps. Until mommy and daddy come along with another cash infusion.

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

#486

Post by lm28469 »

throw310822 wrote: post #438
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 impac…

> just three years- around 900 million users on a weekly basis.

Well, I rotate about a dozen of free accounts because I don't want to send 1 cent their way, I imagine I'm not the only one. I do the same for gemini, claude and deepseek, so all in all I account for like 50 "unique" weekly users

Apparently they have about 5% of paying customers, the amount of total users is meaningless, it just tells you how much money they burn and isn't an indication of anything else.

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

#487

Post by aurareturn »

jillesvangurp wrote: post #369

I don't see a bubble, I see a rapidly growing business case. MS Office has about 345 million active users. Those are paying subscriptions. IMHO that's roughly the totally addressable market for OpenAI for non coding users. Coding users is another few 20-30 million. If OpenAI can convert double digit percentages of those onto 20$ and 50$ per month subscriptions by delivering good enough AI that works well, they should…

  There is a hardware cost bubble though. I'm betting OpenAI will get a lot more bang for its buck in terms of hardware by 2030. It won't be NVidia taking most of that revenue.
Whoever has the most compute will ultimately be the winner. This is why these companies are projecting hundreds of billions in infrastructure spend.

With more compute, you can train better models, serve them to more users, serve them faster. The more users, the more compute you can buy. It's a run away cycle. We're seeing only 3 (4 if you count Meta) frontier LLM providers left in the US market.

Nvidia's margins might come down by 2030. It won't stay in the 70s. But the overall market can expand quicker than Nvidia's profits shrink so that they can be more profitable in 2030 despite lower market share.

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

#488

Post by wincy »

thisgetsit wrote: post #165
Ginden wrote: post #132

Earlier quoted context omitted.

Because almost everyone involved in AI race grew up in "winner takes it all" environments, typical for software, and they try really hard to make it reality. This means your model should do everything to just take 90% of market share, or at least 90% of specific niche. The problem is, they can't find the moat, despite searching very hard, whatever you bake into your AI, your competitors will be able to replicate in f…

> copyright provides such a moat. Been saying this since the 2016 Alice case. Apple jumped into content production in 2017. They saw the long term value of copyright interests. https://arstechnica.com/information-technology/2017/08/apple... Alice changed things such that code monkeys algorithms were not patentable (except in some narrow cases where true runtime novelty can be established.) Since the transformers pape…

OpenAIs opsec must be amazing, I had fully expected some version of ChatGPT to be leaked on torrent sites at some point this year. How do you manage to avoid something that could be exfiltrated on a hard disk from escaping your servers in all cases, forever?

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

#489

Post by joncrane »

booi wrote: post #424
ludicrousdispla wrote: post #419

Earlier quoted context omitted.

>> 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.

Hi, I'm here to hold the bag?

You guys are getting bags?

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

#490

Post by maeln »

tjwebbnorfolk wrote: post #436
avalys wrote: post #305

Earlier quoted context omitted.

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 un…

> Now, the regulators have made a lot of these acquisitions effectively impossible for antitrust reasons.

Is there any evidence that this is the case ? For very big merger (like nvdia and Arm tried) sure, but I can't think of a single time regulator stop a big player from buying a start up.

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