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

techcrunch.com

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

#501

Post by surajrmal »

loeber wrote: post #284
_fat_santa wrote: post #95

IMO this looks largely like another circular investment. Amazon's investment is tied to OpenAI using AWS for their Frontier product and I assume Nvidia's conditions are that OpenAI continue buying hardware from them. Then there's SoftBank though given that those are the same guys that invested heavily in WeWork, I assume this is just very brash bullishness on their part. From my perspective, I hope that OpenAI surviv…

Comparing OpenAI and WeWork is a nonsensical perspective. OpenAI is shipping the most revolutionary product in a generation, with 800 million monthly active users. It's the fastest revenue ramp ever, at incredible scale -- $20B+ ARR. These are real fundamentals. They matter. And the cost of inference is coming down all the time. WeWork was a short-term/long-term lease arbitrage business. The two are nothing alike.

They aren't making money on the vast majority of those 800 million monthly actives. I wonder how many will stick around once they roll out ads. If they keep those users with ads, they definitely will be worth their valuation.

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

#503

Post by oblio »

est31 wrote: post #488
dangus wrote: post #280

Earlier quoted context omitted.

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…

> OpenAI is also in a rapidly transforming field where there are a lot of cost reductions happening, efficiency gains etc.

But also ever increasing quality requirements. So we can't possibly know at this point if this is a market with high margins or not.

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

#504

Post by vicchenai »

$730B pre-money is remarkable context for an industry that barely existed commercially a decade ago. Worth noting the implied revenue multiple here - OpenAI reportedly hit $4B ARR in 2024, so this round prices them at ~180x forward revenue. For comparison, Salesforce peaked at ~12x. The bull case obviously requires AGI-level defensibility that makes traditional SaaS multiples irrelevant. The bear case is that frontier model costs continue compressing (DeepSeek effect) and commoditization erodes the moat before the network effects lock in. Either way, this is a defining data point for how markets price transformative but uncertain technology.

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

#507

Post by marcosdumay »

2OEH8eoCRo0 wrote: post #49
thefounder wrote: post #19

Earlier quoted context omitted.

Let the retailers decide this year at IPO! The heavy bags must be carried by someone

Is this really the con? Be part of the in-group and buy pre-IPO shares to dump them on joe-six-pack shortly afterwards?

I guess making the investment conditional on the company doing an IPO (or something that will never happen) should remove any doubts.

But I'm not sure there is enough money on the world (literally) for them to get an IPO high enough. If they sell too little of the company, they'll be still holding the bag when it fails.

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

#508

Post by marcosdumay »

redleader55 wrote: post #375

Everyone thinks this bubble will continue until AGI(bulls) or until someone calls them on it(bears). I think it will continue until someone finds a quick way to make cheap energy(bullish) or until we can't build more power plants to support AI growth(bearish). While nothing fancy has happened yet in the area of cheap energy, there is still enough power around the world to build AI data centers. The problem is this po…

The bubble will continue until the FED stops printing or the dollar sees enough inflation that the printing becomes meaningless.

Right now the US seems to not have a lot of inflation and the FED has every reason to print. So don't expect a burst, but this can change in a blink.

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

#509

Post by Aditya_Garg »

dangus wrote: post #280
max51 wrote: 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…

This is a common misconception

OpenAI and others are already profitable on inference (inference is really really cheap)

They are just heavily investing into the latest frontier

The biggest risk is whether they can stay cutting edge, or if open source or others will catch up quickly.

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

#510

Post by rasz »

Aditya_Garg wrote: post #509
dangus wrote: post #280

Earlier quoted context omitted.

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…

This is a common misconception OpenAI and others are already profitable on inference (inference is really really cheap) They are just heavily investing into the latest frontier The biggest risk is whether they can stay cutting edge, or if open source or others will catch up quickly.

>inference is really really cheap

cough Sora cough

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