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OpenAI raises $110B on $730B pre-money valuation

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Re: OpenAI raises $110B on $730B pre-money valuation

#481
post #9

Without circular investments and valuations what would Open AI be worth? 100B? 300B? Entirely on revenue alone it seems like 20B. Current valuation appears to be two orders of magnitude off.

>Without circular investments and valuations what would Open AI be worth? 100B? 300B? Entirely on revenue alone it seems like 20B. Current valuation appears to be two orders of magnitude off. They just passed $20B in revenue, you can't really expect a company with this much hype and traction to have a 1x multiple.. that's not to say a 35x multiple makes sense either.

> $20B in revenue

All I see everywhere is "OpenAI generated $13 billion in revenue in 2025" and it just cost them $8 billion. $5B loss in 2025 and projections of losing $14B this year.

Re: OpenAI raises $110B on $730B pre-money valuation

#482
post #164

Earlier quoted context omitted.

Thiel said around last autumn that AI is a bubble and exited Nvidia. Nvidia is now falling despite good earnings. If OpenAI keeps getting circular financing, of course they will not collapse yet.

> Nvidia is now falling despite good earnings. I think it's still too early to tell. By what measure did you even determine that Nvidia is falling?

Not GP, but I imagine they are referring to Nvidia's stock price It's down 6% today

Re: OpenAI raises $110B on $730B pre-money valuation

#483
post #308

Earlier quoted context omitted.

I don't see the problem as long as materially significant transactions by publicly traded companies are properly disclosed to investors. If someone loses money by buying NVDA then they have only themselves to blame.

This is Jeremy Irons' argument in "Margin Call" too. But most people were unhappy with the secular result.

Tuld wasn't wrong. There will always be financial bubbles and misallocation of capital. It can't be prevented, and even trying to prevent it would involve intrusive government overreach that would make most people even more unhappy. Investors who want safety are free to buy Treasuries.

Re: OpenAI raises $110B on $730B pre-money valuation

#484
post #43

Nvidia will get all that money back via GPU purchases, Amazon via cloud rental and SoftBank is being typical SoftBank - a rich but not particularly bright kid in a class :) .

"I give you $30 billion if you use it to buy $30 billion of stuff from me" doesn't sound like a very good investment. Is Nvidia expecting more back than it puts in? Enough more to make the deal profitable? Or is it just to keep Nvidia from crashing?

I'd say the latter. Right now AI is Nvidia's biggest consumers. If any big AI company crashes, they'll lose a lot of money

Re: OpenAI raises $110B on $730B pre-money valuation

#485
post #322

Earlier quoted context omitted.

I’m convinced these “guys you gotta believe me I’m a seasoned veteran and this shit is the real deal” posts that show up in every AI thread are either coming from Sam Altman or a bot.

Just try it.

Yeah, I do use agentic coding a good bit. It’s impressive, but not so much that I’ve convinced myself that my days are numbered.

Re: OpenAI raises $110B on $730B pre-money valuation

#486

Earlier quoted context omitted.

OK, so absolutely good faith here what is the end game? Obviously, there’s a scenario of super power AI and then it’s a matter of continuing course. Electricity and silicon. What if you are right, and the scaling doesn’t work. It is too much power, time, hardware to improve… does openAI fold? Do they just actual use the models they have? Does everyone just decide that AI didn’t work and go back 5 years like it didn’t…

The people running these companies have a perverse incentive to keep the ball rolling as long as possible so that they can extricate as much personal wealth and influence as possible. Maybe AGI makes all the problems go away. But, failing that, they get out relatively scot-free when it all collapses. And they don't owe anything to the public. And no one is going to bring them up on fraud charges or any other kind of…

I generally agree with the sentiment, but it's not the russian oligarch playbook. The playbook is some kind of a variation of buying out a productive asset in a legacy industry under it's market price (because everything is on fire already), then using political or monopoly power to funnel (tax) money through it and into your pockets (the asset has to function, but doesn't have to provide a good quality of service due to not allocating proper maintenance). Sovereign AI fund and Microsoft are very close to that setup. If NYC subway would be sold to certain Elon and he will then jack up the prices and have the city hall to subsidize it still, but keep the quality of service the same, that would be more or less it.

The other variation goes in reverse -- using the legacy asset and it's capture labor force to output some kind of a commodity that is sold below market price to a controlled company in a different jurisdiction, where it's resold at small discount of a market price. The company still has to function here too.

Bonus points for not even owning the asset in question, but having effective control over it through the corrupt management, this way the government still pays the bills to keep it running at loss.

What you are describing is actually very western thing, because it assumes you can exchange the asset into cash directly and then buy something with that liquidity, which assumes solid property rights. I'm not even talking about OpenAI being an actual tech company that just wasn't there before. It's not how oligarchy works in the places.

Since the US is slowly moving in a direction of oligarchy, I think the actual reference will be helpful.

Re: OpenAI raises $110B on $730B pre-money valuation

#487

Earlier quoted context omitted.

You forgot to mention they solved vision based autonomous driving, but I guess that doesn’t matter if Elon = bad

It's this kind of dynamic that makes me pull back on my otherwise pretty AI-forward stance. There's an entire community of people who passionately believe it's obvious and undeniable that Elon Musk has solved problems that he has not solved and his companies deliver things they don't deliver. Tesla is absolutely unambiguous in their marketing material ( https://www.tesla.com/fsd ) that they do not have autonomous dri…

You definitely would not know if you were, no one does. I think the healthy position is to assume you are wrong and trying to find evidence of why you are wrong

For instance,I'm very skeptical of AI and, from experience, do not think that the current models are worth the cost, but I'm always in HN trying to find arguments/people that use AI successfully to prove that I'm wrong

Re: OpenAI raises $110B on $730B pre-money valuation

#488
post #280
post #242

Earlier quoted context omitted.

The "circular investment" is mostly start up companies using their stocks instead of cash to pay for server hardware and cloud computing. There is a few extra steps in between that make things look weird and convoluted, but the end results is really just big companies giving hardware and getting shares of ai companies in exchange for it.

I think you’re just describing how it’s circular. It’s like Toys R Us not having enough money to pay Mattel for Barbie dolls and telling Mattel they can have partial ownership of the company if they just supply them with some more toys. But the problem is that Toys R Us is spending $15, 20, or maybe even $50 (who knows?) to sell a $10 toy. Toys R Us continues selling toys faster and faster despite a lack of profit, m…

> But the problem is that Toys R Us is spending $15, 20, or maybe even $50 (who knows?) to sell a $10 toy.

It's like how Uber and Airbnb in the early days were burning loads of cash to build market share. People went to these services because they were cheaper. Then they would increase prices once they had a comfortable position.

OpenAI is also in a rapidly transforming field where there are a lot of cost reductions happening, efficiency gains etc. Compared to say Uber which didn't provide a lot of efficiency gains.

Re: OpenAI raises $110B on $730B pre-money valuation

#489
post #414

Earlier quoted context omitted.

Nvidia just needs the winner to be an Nvidia customer. OpenAI is replacable.

If OpenAI folded, you’d have the one LLM company that consumers know suddenly gone. Which seems like the opposite of an AI success story. People will start looking at valuations more carefully. Investors will get jittery. Spending on GPUs will drop, as will NVidia’s stock price. I’m not sure that NVidia views OpenAI as replaceable.

If OAI folded, there would also be a sudden tsunami of recent Nvidia hardware on the used market.

Re: OpenAI raises $110B on $730B pre-money valuation

#490
post #318

Someone please explain how OpenAI is not Netscape 2026. They had first mover advantage but no network effect, no moat, and are racing to stay ahead of infinitely resourced incumbents.

How are ~1B active users not "moat"? Might have to pull out the "Haters gonna hate" like it's 2007

You're parroting misleading "monthly/weekly active user" numbers from OpenAI that include free accounts.

It's much more important to look at "paid." Only up to 50M (est.) are paid with a substantial chunk (10M) as enterprise/edu/promotional paid accounts.

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