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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

#501

Post by troupo »

simonsarris wrote: post #265
fooblaster wrote: post #160

Earlier quoted context omitted.

There is a pretty big moat for Google: extreme amounts of video data on their existing services and absolutely no dependence on Nvidia and it's 90% margin.

Google has several enviable, if not moats, at least redoubts. TPUs, mass infrastructure and own their own cloud services, they own delivery mechanisms on mobile (Android) and every device (Chrome). And Google and Youtube are still #1 and #2 most visited websites in the world.

The biggest moat is amount of money. Google has infinite amounts of money the print out of thin air (ads). They don't need complex entangled schemes with circular debts to prop up their operations.

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

#502

Post by troupo »

onion2k wrote: post #393
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?

Try “@gmail” in Gemini I think this is a problem for Google. Most users aren't going to do that unless they're told it's possible. 99% of users are working to a mental model of AI that they learned when they first encountered ChatGPT - the idea that AI is a separate app, that they can talk to and prompt to get outputs, and that's it. They're probably starting to learn that they can select models, and use different mo…

> I think this is a problem for Google. Most users aren't going to do that unless they're told it's possible.

Google is telling this in about a hundred different popups and inline hints when you use any of its products

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

#503

Post by oblio »

parentheses wrote: post #371
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,…

This is different because now the cats out of the bag: AI is big money! I don't expect AGI or Super intelligence to take that long but I do think it'll happen in private labs now. There's an AI business model (pay per token) that folks can use also.

> don't expect AGI or Super intelligence to take that long

I appreciate the optimism for what would be the biggest achievement (and possibly disaster) in human history. I wish other technologies like curing cancer, Alzheimer's, solving world hunger and peace would have similar timelines.

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

#504

Post by oblio »

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.

> chips with brain matter and or light

The... what now?

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

#505

Post by chroma205 »

stevenjgarner wrote: post #303
fooblaster wrote: post #160

Earlier quoted context omitted.

There is a pretty big moat for Google: extreme amounts of video data on their existing services and absolutely no dependence on Nvidia and it's 90% margin.

Agreed. Even xAI's (Grok's) access to live data on x.com and millions of live video inputs from Tesla is a moat not enjoyed by OpenAI.

>Agreed. Even xAI's (Grok's) access to live data on x.com and millions of live video inputs from Tesla is a moat not enjoyed by OpenAI.

Tesla does not have live video feed from (every) Tesla car.

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

#506

Post by lotsofpulp »

sigmoid10 wrote: post #497
Jare wrote: post #421

Earlier quoted context omitted.

> For the right investor base, $10B in annual losses at OpenAI could be worth $2-3B in tax shields (depending on their bracket and how the structure works). That completely changes the return calculation I know nothing about finances at this level, so asking like a complete newbie: doesn't that just mean that instead of risking $10B they're risking $7-8B? It is a cheaper bet for sure, but doesn't look to me like a ga…

It all depends on the actual numbers. Consider this simplified example: If you are offered a deal that requires you to lay down 10 billion today and it has a 5% chance to pay out 150 billion tomorrow, your accountants will tell you not to take this deal because your expected return is -2.5 billion. But if you can offset 3 billion in cost to the tax payer, your expected return suddenly becomes $500 million, making it…

This applies to any spending Microsoft does. What does it have to do with OpenAI?

Also, classifying business expenses as "cost to the tax payer" seems less than useful, unless you are a proponent of simply taxing gross receipts. Which has its merits, but then the discussion is about taxing gross receipts versus income with at least some deductible expenses, not anything to do with OpenAI.

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

#507

Post by nielsbot »

alex43578 wrote: post #480
lenkite wrote: post #455

Earlier quoted context omitted.

> OpenAI's losses might actually be attractive to certain investors from a tax perspective. OpenAI is anyways seeking Govt Bailout for "National Security" reasons. Wow, I earlier scoffed at "Privatize Profits, Socialize Losses", but this appears to now be Standard Operating Procedure in the U.S. https://www.citizen.org/news/openais-request-for-massive-gov... So the U.S. Taxpayer will effectively pay for it. And not j…

There's already a lot that the US taxpayer is on the hook for that's a lot less valuable than a best on the next big thing in software, productivity, and warfare. It shouldn't be the job of the US taxpayer to feed someone that doesn't want to work, study, or pass a drug test, and it absolutely shouldn't be the job of the US taxpayer to feed another country's citizens half a world away.

> It shouldn't be the job of the US taxpayer to feed someone that doesn't want to work, study, or pass a drug test

What about someone who works and still can’t afford enough housing/food?

> shouldn't be the job of the US taxpayer to feed another country's citizens half a world away.

I mean where’s the profit in that, am i right?

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

#508

Post by nosianu »

Ar-Curunir wrote: post #493
alex43578 wrote: post #480

Earlier quoted context omitted.

There's already a lot that the US taxpayer is on the hook for that's a lot less valuable than a best on the next big thing in software, productivity, and warfare. It shouldn't be the job of the US taxpayer to feed someone that doesn't want to work, study, or pass a drug test, and it absolutely shouldn't be the job of the US taxpayer to feed another country's citizens half a world away.

The modern welfare state is the compromise reached by capitalist democracies to stave off communist revolutions. If you’re going to kill of the welfare part, be ready for the uprising part.

That's where the surveillance and the militarized police force(s) come in. Especially the former now has reached extraordinary levels, given that almost all communication now is easily trackable.

Compare that to when we still had revolutions, where it was very hard for government to know what is going on, and to find individuals without a huge effort.

I think revolutions have become next to impossible, unless it is lead by significant parts of the elite that controls at least part of the apparatus.

That's not even counting the far more sophisticated propaganda methods, so that many of the affected people won't even begin to target the actual culprits but are lead to chase shadows, or one another.

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

#509

Post by rjzzleep »

Jare wrote: post #421
jotras wrote: post #396

Earlier quoted context omitted.

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…

> For the right investor base, $10B in annual losses at OpenAI could be worth $2-3B in tax shields (depending on their bracket and how the structure works). That completely changes the return calculation I know nothing about finances at this level, so asking like a complete newbie: doesn't that just mean that instead of risking $10B they're risking $7-8B? It is a cheaper bet for sure, but doesn't look to me like a ga…

That just doesn't sound right. This kind of thought process only works if you think you are guaranteed more than that the next year. It only works in crony capitalism where your friends in government put money in your pockets. It's where we are right now, but definitely not something that is sustainable or something to aspire to.

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

#510

Post by woooooo »

krige wrote: post #390
woooooo wrote: post #188

Earlier quoted context omitted.

Gemini adoption via search is legit, though. I had a question, I got an answer, its not forced, fake adoption in that case.

It's hardly legit for everyone. I had a question, I got an incorrect answer I didn't ask for, scrolled past it and got actual results.

Fair
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