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OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

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Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#51

Post by JeremyNT »

lelanthran wrote: post #28
JumpCrisscross wrote: post #27

Earlier quoted context omitted.

Oh! What’s his reputation?

> Oh! What’s his reputation? The people who are completely sold on the belief that AI providers are running at a profit believe him to be utterly, totally and completely wrong in every one of his predictions. The people who are completely sold on the belief that AI providers are running at a loss they can never recover from believe him to be utterly, totally and completely correct in every one of his predictions. The…

> The people who are completely sold on the belief that AI providers are running at a loss they can never recover from believe him to be utterly, totally and completely correct in every one of his predictions.

It's funny, because you can both believe that these entities are bleeding money on every token and also believe that "financial engineering" will bail them out when they IPO despite this fact.

The fundamentals of running a business that sells products or services for more than the cost to produce them seem increasingly decoupled from the financial success of the company and its owners.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#52

Post by thepasch »

disgruntledphd2 wrote: post #36
thepasch wrote: post #30

Earlier quoted context omitted.

Up until this post, I thought he was someone with good financial insight, analytical chops, and business sense, stuck with an audience that thinks it's still 2023 and ChatGPT 3 is still the pinnacle of the technology, and that he therefore has to pander to in order to pay the bills. After this supposedly being the reveal for his bubble-bursting massive revelation that will send the industry flying and lead to journal…

> After this supposedly being the reveal for his bubble-bursting massive revelation that will send the industry flying and lead to journalists kicking in his door for interview requests and exposés I mean, the fact that lots of expenses are not scaling with revenue (sales and marketing 5xed versus revenue 3xing) and that the losses are very very large is important. More importantly, these are audited figures which ha…

Right, but this still isn't exactly new information. I don't think anyone was assuming that the labs are close to being profitable or that the losses wouldn't be rather large. The way this was announced was as if it was going to be a bombshell, but it just confirms what everyone (including the investors) was assuming anyway. Now if he had concrete numbers about whether inference at API pricing is profitable, that'd be a different thing (and it's what that hype bit was heavily implying since it's something he constantly keeps harping on, and rightfully so), but as it stands, nothing about these numbers says anything about whether this fundamentally has a road to profitability. It just says that this is a super high-risk high-reward investment, which isn't new information.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#53

Post by efficax »

Traster wrote: post #45

To be honest I almost think the numbers are irrelevant. In 2024/25 there was a lot going on - will AI replace authors, film makers etc. Will it replace social media (anyone remember Sora?). A tonne of that stuff didn't work out. At the tail end of 2025 a real product market fit emerged. Coding agents. They work. They do a job that you can actually profit from. So everything else is kind of academic. Of course they we…

coding agents aren't enough to justify the amount of capital invested

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#54

Post by simianwords »

disgruntledphd2 wrote: post #36
thepasch wrote: post #30

Earlier quoted context omitted.

Up until this post, I thought he was someone with good financial insight, analytical chops, and business sense, stuck with an audience that thinks it's still 2023 and ChatGPT 3 is still the pinnacle of the technology, and that he therefore has to pander to in order to pay the bills. After this supposedly being the reveal for his bubble-bursting massive revelation that will send the industry flying and lead to journal…

> After this supposedly being the reveal for his bubble-bursting massive revelation that will send the industry flying and lead to journalists kicking in his door for interview requests and exposés I mean, the fact that lots of expenses are not scaling with revenue (sales and marketing 5xed versus revenue 3xing) and that the losses are very very large is important. More importantly, these are audited figures which ha…

Part of the losses are because of valuation increase and the real operating losses are much lower.

https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb... this uses the same sources and answers more honestly and Ed Zitron doesn't touch on this.

> As OpenAI’s worth rose, the increased value of those investor rights created a roughly $30bn charge, added the person. The charge is not expected to recur following the restructuring, they said.

> Stripping out the charge and other non-cash expenses, such as stock-based compensation of staff and computing credits from Microsoft, OpenAI’s losses were $8bn, according to the person.

Whom would you trust? FT or Ed Zitron?

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#55

Post by simianwords »

Relevant: https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb... this uses the same sources and answers more honestly and Ed Zitron doesn't touch on this.

> As OpenAI’s worth rose, the increased value of those investor rights created a roughly $30bn charge, added the person. The charge is not expected to recur following the restructuring, they said.

> Stripping out the charge and other non-cash expenses, such as stock-based compensation of staff and computing credits from Microsoft, OpenAI’s losses were $8bn, according to the person.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#56

Post by disgruntledphd2 »

simianwords wrote: post #54
disgruntledphd2 wrote: post #36

Earlier quoted context omitted.

> After this supposedly being the reveal for his bubble-bursting massive revelation that will send the industry flying and lead to journalists kicking in his door for interview requests and exposés I mean, the fact that lots of expenses are not scaling with revenue (sales and marketing 5xed versus revenue 3xing) and that the losses are very very large is important. More importantly, these are audited figures which ha…

Part of the losses are because of valuation increase and the real operating losses are much lower. https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb... this uses the same sources and answers more honestly and Ed Zitron doesn't touch on this. > As OpenAI’s worth rose, the increased value of those investor rights created a roughly $30bn charge, added the person. The charge is not expected to recur following…

As a long time FT subscriber, I'm happy you're using them as a source. The Zitron details were more useful to me though.

And none of my points have anything to do with the once off losses. I'm observing that a bunch of costs appear to be scaling with revenue or above revenue, which does not bode well for future profitability.

Also, as an aside, stripping out equity grants is really misleading for a private, high growth tech company.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#57

Post by disgruntledphd2 »

simianwords wrote: post #47
disgruntledphd2 wrote: post #43

Earlier quoted context omitted.

> understanding what ARR means Can you share me the official meaning of ARR? Preferably on a GAAP basis. Should be no problem, right?

ARR has no official GAAP definition, but is generally understood as the annualized value of a company's current recurring revenue base. This is something Ed clearly doesn't understand https://x.com/edzitron/status/2031124650474852382 And you haven't addressed the fact that he doesn't do simple data calculations - see his blog https://www.wheresyoured.at/the-beginning-of-history

That's the trouble I have with ARR, because there's no standard, people engage in shenanigans. I do find the 5bn lifetime revenue versus their ARR figures pretty sketchy which is why I really want to see the S1.

Can you be more specific on his incorrect calculations please?

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#58

Post by simianwords »

disgruntledphd2 wrote: post #56
simianwords wrote: post #54

Earlier quoted context omitted.

Part of the losses are because of valuation increase and the real operating losses are much lower. https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb... this uses the same sources and answers more honestly and Ed Zitron doesn't touch on this. > As OpenAI’s worth rose, the increased value of those investor rights created a roughly $30bn charge, added the person. The charge is not expected to recur following…

As a long time FT subscriber, I'm happy you're using them as a source. The Zitron details were more useful to me though. And none of my points have anything to do with the once off losses. I'm observing that a bunch of costs appear to be scaling with revenue or above revenue, which does not bode well for future profitability. Also, as an aside, stripping out equity grants is really misleading for a private, high grow…

The losses are scaling with revenue because increase in (expected) revenue increases valuation which increases compensation.

Once expectation stabilises these losses won’t happen because the valuation will remain constant. A lot of people were paid really high equity grants simply because they started low. You can’t expect them to be paid the same amount each time.

FT themselves point this out and who you believe is up to you.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#59

Post by simianwords »

disgruntledphd2 wrote: post #57
simianwords wrote: post #47

Earlier quoted context omitted.

ARR has no official GAAP definition, but is generally understood as the annualized value of a company's current recurring revenue base. This is something Ed clearly doesn't understand https://x.com/edzitron/status/2031124650474852382 And you haven't addressed the fact that he doesn't do simple data calculations - see his blog https://www.wheresyoured.at/the-beginning-of-history

That's the trouble I have with ARR, because there's no standard, people engage in shenanigans. I do find the 5bn lifetime revenue versus their ARR figures pretty sketchy which is why I really want to see the S1. Can you be more specific on his incorrect calculations please?

Wait. ARR has no precise definition but has a clear social understanding. It’s clear Ed doesn’t get that and ARR not having a clear definition doesn’t absolve him of the mistake. His misunderstanding was on a different axis.

The miscalculations are pretty clearly pointed out in the tweet I linked earlier.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#60

Post by s1artibartfast »

disgruntledphd2 wrote: post #42
simianwords wrote: post #40

Earlier quoted context omitted.

There is no evidence that Uber was systemically losing money per ride instead of at edge cases. Share your evidence please.

> Share your evidence please. This is an impossible ask unless one works at Uber. I can tell you that i saw how much they were spending on ads back in 2016, and how long it continued and can assure you that they were 100% losing money back then. Like, even now their margin is around 10% (they made 5bn on 50bn of revenue). Other software companies make a much, much, much better margin because Uber is basically not a r…

ads =/= rides
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