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OpenAI's Ad Business Is on Pace to Miss Its Own Forecast by 90%, Analyst Says

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Re: OpenAI's Ad Business Is on Pace to Miss Its Own Forecast by 90%, Analyst Says

#51

Post by 4ggr0 »

jcfrei wrote: post #30
thg wrote: post #12

Earlier quoted context omitted.

Will Locket wrote about it last month: https://www.planetearthandbeyond.co/p/openai-is-in-a-far-wor... tldr is: They either get a successful IPO to stave off bankruptcy for a couple more months, or they're going to be bankrupt by the beginning of next year.

There's a very low chance of OpenAI doing an IPO this year: https://polymarket.com/event/openai-ipo-by . So the assumption that they "have to do an IPO" already seems questionable. The rest of the analysis also feels pretty hand-wavy. I'm not saying OpenAI is in a strong financial position, but this article doesn't make a solid enough case for why it's supposedly in such dire straits.

are we genuinely using prediction gambling as sources now?

Re: OpenAI's Ad Business Is on Pace to Miss Its Own Forecast by 90%, Analyst Says

#52

Post by xdertz »

netdevphoenix wrote: post #41
ozlikethewizard wrote: post #26

Ignoring whether or not OpenAI can reach this, do we think a massive expansion of ad revenue is fruit of the poisonous tree for GPTs? Does anyone want to use a tool that is capable of disguising an ad as a geniune recommendation at anytime? I suppose if the platforms become super entrenched and we boil slowly then they'll get away with it

> Does anyone want to use a tool that is capable of disguising an ad as a geniune recommendation at anytime? It depends on the economics and usefulness of the tool. Google Search got away with it because it was useful AND trading zero cost of usage for ads was worth it for most. Whether LLMs can get away with it seems very unclear now as they don't seem as popular as search engines.

> as they don't seem as popular as search engines.

Anecdotal evidence that I observe is that people stopped using google and only ask LLMs nowadays for their everyday queries.

Re: OpenAI's Ad Business Is on Pace to Miss Its Own Forecast by 90%, Analyst Says

#53

Post by georgemcbay »

m4tthumphrey wrote: post #48
georgemcbay wrote: post #47

Earlier quoted context omitted.

> When you use Facebook you get ads for things you aren't looking for. When you use Facebook you get ads for things you are looking for in a broad sense, they just happen to figure out what you are looking for via fingerprinting and spying on all your web and app activity (to the maximum extent allowed by platforms and regulators). Google, of course, also does this in addition to looking at your currently active web…

Sure, they retarget ads they think you might want to see, but the difference is when using Google you are actively looking for something, not passively.

Sure but I still don't think there is much meaningful difference.

Google looks at both your current search/browse activity and gathered data (the gathered data being especially important for all the very many Google-served Ads off of google.com)

Facebook also looks at your current search/browse activity and gathered data.

The only real difference is Facebook search is universally entirely worthless so far less of that signal gets used relative to more passive snooping.

Re: OpenAI's Ad Business Is on Pace to Miss Its Own Forecast by 90%, Analyst Says

#54

Post by fragmede »

netdevphoenix wrote: post #41
ozlikethewizard wrote: post #26

Ignoring whether or not OpenAI can reach this, do we think a massive expansion of ad revenue is fruit of the poisonous tree for GPTs? Does anyone want to use a tool that is capable of disguising an ad as a geniune recommendation at anytime? I suppose if the platforms become super entrenched and we boil slowly then they'll get away with it

> Does anyone want to use a tool that is capable of disguising an ad as a geniune recommendation at anytime? It depends on the economics and usefulness of the tool. Google Search got away with it because it was useful AND trading zero cost of usage for ads was worth it for most. Whether LLMs can get away with it seems very unclear now as they don't seem as popular as search engines.

LLMs don't seem as popular as search engines? We are all living in our own bubbles, so I'll tell you about mine. In mine, LLMs have replaced search engines. Not just the query itself, but how it's used. I don't use Google to find a site that tells me what to do after I've spilled some red wine kny the carpet, I use ChatGPT to tell me directly what to do about it. That's foundational.

Re: OpenAI's Ad Business Is on Pace to Miss Its Own Forecast by 90%, Analyst Says

#56

Post by atwrk »

JumpCrisscross wrote: post #45
thg wrote: post #12

Earlier quoted context omitted.

Will Locket wrote about it last month: https://www.planetearthandbeyond.co/p/openai-is-in-a-far-wor... tldr is: They either get a successful IPO to stave off bankruptcy for a couple more months, or they're going to be bankrupt by the beginning of next year.

"It means that OpenAI could soon rack up losses that exceed its asset value. In other words, they are on course to slam into bankruptcy this year." ...that's not how bankruptcy happens. What is this guy's background? Assets on a balance sheet are held at book value. You can absolutely run GAAP losses that exceed net assets without running into bankruptcy, particularly if you're granting (and having employees exercise…

You're right of course, but in this case the statement doesn't look that false. The source article [0] states that half of the assets is cash, so "assets" is defined a bit more freely here.

If we assume a 2026 revenue of 23B (Q1 2026 revenue x4) and costs of 70B (2025 costs * (2026 revenue / 2025 revenue)), even those 25B in cash reserves won't mean much. And this napkin math even ignores their debt obligations. So either they raise money in the range of 50-75B this year (actual money, not datacenter vouchers), or ...

[0] https://www.wheresyoured.at/exclusive-openai-financials/

Re: OpenAI's Ad Business Is on Pace to Miss Its Own Forecast by 90%, Analyst Says

#57

Post by pjc50 »

dependsontheq wrote: post #17

There are only two successful ad business forms in the digital world, attention or intent. Meta is built on attention and Google and others like amazon are built on intent. Everything else is optimizing the targetting data in some kind of behavioral way to get better intent data or to reach the right users. I have no idea where something like Chatgpt stands on that axis, it has actually very little attention (in hour…

Wouldn't the idea be to leverage inattention: people delegating their purchasing decisions to the chatbot without realizing that it's on the take?

Re: OpenAI's Ad Business Is on Pace to Miss Its Own Forecast by 90%, Analyst Says

#58

Post by pjc50 »

lelanthran wrote: post #35
ArtTimeInvestor wrote: post #9

Emarketer’s data finds that standalone chatbots like ChatGPT, Microsoft Copilot app, Google AI Mode, and Amazon Alexa for Shopping (formerly Rufus) in U.S, will generate less than $1 billion in ad revenue this year, and just $5.41 billion by 2030. How would that be possible? In the past I used Google maybe 10 times a day with a short query. From which Google had to guess my intent. Now I babble with Gemini all day ab…

> How would that be possible? In the past I used Google maybe 10 times a day with a short query. From which Google had to guess my intent. Now I babble with Gemini all day about everything. And Gemini can ask questions what exactly I mean. Why wouldn't Alphabet be able to generate more revenue from this than from search? When you used google 10x a day, you saw, at a minimum, 20 ads/day. How many ads are you seeing wh…

> How many ads are you seeing when you babble all day long with a chatbot?

You wouldn't see any of them, because you'd not be aware of the invisible bidding war over which products the bot recommends.

Re: OpenAI's Ad Business Is on Pace to Miss Its Own Forecast by 90%, Analyst Says

#59

Post by [deleted] »

netdevphoenix wrote: post #41
ozlikethewizard wrote: post #26

Ignoring whether or not OpenAI can reach this, do we think a massive expansion of ad revenue is fruit of the poisonous tree for GPTs? Does anyone want to use a tool that is capable of disguising an ad as a geniune recommendation at anytime? I suppose if the platforms become super entrenched and we boil slowly then they'll get away with it

> Does anyone want to use a tool that is capable of disguising an ad as a geniune recommendation at anytime? It depends on the economics and usefulness of the tool. Google Search got away with it because it was useful AND trading zero cost of usage for ads was worth it for most. Whether LLMs can get away with it seems very unclear now as they don't seem as popular as search engines.

[deleted]

Re: OpenAI's Ad Business Is on Pace to Miss Its Own Forecast by 90%, Analyst Says

#60

Post by JumpCrisscross »

atwrk wrote: post #56
JumpCrisscross wrote: post #45

Earlier quoted context omitted.

"It means that OpenAI could soon rack up losses that exceed its asset value. In other words, they are on course to slam into bankruptcy this year." ...that's not how bankruptcy happens. What is this guy's background? Assets on a balance sheet are held at book value. You can absolutely run GAAP losses that exceed net assets without running into bankruptcy, particularly if you're granting (and having employees exercise…

You're right of course, but in this case the statement doesn't look that false. The source article [0] states that half of the assets is cash, so "assets" is defined a bit more freely here. If we assume a 2026 revenue of 23B (Q1 2026 revenue x4) and costs of 70B (2025 costs * (2026 revenue / 2025 revenue)), even those 25B in cash reserves won't mean much. And this napkin math even ignores their debt obligations. So e…

> costs of 70B (2025 costs (2026 revenue / 2025 revenue)), even those 25B in cash reserves won't mean much*

If all those costs are cash costs, sure. When OpenAI gets non-cash investment, and it "burns" that investment on compute, that should be counted as a GAAP expense. Yet it doesn't touch cash. (It would destroy a unit of compute asset. But again, book versus market value can mess with how that works intuitively.)

Similarly, if you're granting lots and lots of options they're going to generate lots and lots of compensation expenses (and thus losses) as they vest. These aren't cash expenses, however.

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