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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

#511

Post by KaiserPro »

aurareturn wrote: post #470
shaky-carrousel wrote: post #462

Earlier quoted context omitted.

OpenAI has close to 1 billion users which are mostly free users and will switch provider the moment OpenAI start charging them or adding ads. Which they will, as OpenAI themselves said they are losing money even with 200$ subs. So that amount of users is pretty meaningless.

Google search is free to use too. So is Instagram. Facebook. Whatsapp. All of these have ads. OpenAI says they're very profitable on inference.

> OpenAI says they're very profitable on inference.

Great, but they need to burn billions on advertising, freemeium, and mostly R&D for new models.

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

#512

Post by nosianu »

throw310822 wrote: post #438
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,…

> AI is a world-changing technology, just like the railroads were This comparison keeps popping up, and I think it's misleading. The pace of technology uptake is completely different from that of railroads: the user base of ChatGPT alone went from 0 to 200 million in nine months, and it's now- after just three years- around 900 million users on a weekly basis. Even if you think that railroads and AI are equally impac…

It is beside the point, but

> I think AI will be far more impactful

is not correct IMO. Those are two very different areas. The impact of railroads on transport and everything transport-related cannot be understated. By now roads and cars have taken over much of it, and ships and airplanes are doing much more, but you have to look at the context at the time.

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

#513

Post by freehorse »

throw310822 wrote: post #438
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,…

> AI is a world-changing technology, just like the railroads were This comparison keeps popping up, and I think it's misleading. The pace of technology uptake is completely different from that of railroads: the user base of ChatGPT alone went from 0 to 200 million in nine months, and it's now- after just three years- around 900 million users on a weekly basis. Even if you think that railroads and AI are equally impac…

Railroads carried the goods that everybody used. That’s like almost 100% in a given country.

The pace was slower indeed. It takes time to build the railroads. But at that time advancements also lasted longer. Now it is often cash grabs until the next thing. Not comparable indeed but for other reasons.

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

#514

Post by KaiserPro »

wincy wrote: post #488
thisgetsit wrote: post #165

Earlier quoted context omitted.

> copyright provides such a moat. Been saying this since the 2016 Alice case. Apple jumped into content production in 2017. They saw the long term value of copyright interests. https://arstechnica.com/information-technology/2017/08/apple... Alice changed things such that code monkeys algorithms were not patentable (except in some narrow cases where true runtime novelty can be established.) Since the transformers pape…

OpenAIs opsec must be amazing, I had fully expected some version of ChatGPT to be leaked on torrent sites at some point this year. How do you manage to avoid something that could be exfiltrated on a hard disk from escaping your servers in all cases, forever?

The model size is probably the thing here. I suspect they took the FAANG remote workstation approach, where VScode runs on a remote machine. After all its not that great having a desktop with 8 monster GPUs under your desk. (x100)

Plus moving all that data about is expensive. Keeping things in the datacenter is means its faster and easier to secure.

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

#515

Post by octoberfranklin »

578_Observer wrote: post #434
ManuelKiessling wrote: post #406

Earlier quoted context omitted.

I‘m aware this means leaving the original topic of this thread, but would you mind giving us a rundown of this whole Japan 1989 thing? I would love to read a first-person account.

I am honored to receive a question from a fellow "Craftsman" (I assume from your name). To be honest, in 1989, I was just a child. I didn't drink the champagne. But as a banker today, I am the one cleaning up the broken glass. So I can tell you about 1989 from the perspective of a "Survivor's Loan Officer." I see two realities every day. One is the "Zombie" companies. Many SMEs here still list Golf Club Memberships o…

I nominate Sam Altman to be that Someone.

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

#516

Post by KaiserPro »

OGEnthusiast wrote: post #281
johnnyanmac wrote: post #257

Earlier quoted context omitted.

>I know this is the latest catastrophizion meme for AI companies, but what is it even supposed to mean? Someone else put it succintly. "When A million dollar company fails, it's their problem. When a billion dollar company fails, it's our problem" In essence, there's so much investment in AI that it's a significant part of the US GDP. If AI falters, that is something that the entire stock market will feel, and by eff…

OpenAI isn't a publicly-traded company though, how will it going to zero affect the stock market?

Its about "animal spirits"

The stock market isn't rational, its a room full of people talking loudly, and moving to various tables.

All it takes is someone outside the room to shout something that triggers panic, and most of the people in the room will run for the exit.

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

#517

Post by lelanthran »

578_Observer wrote: post #360
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,…

The "Railway Bubble" analogy is spot on. As a loan officer in Japan who remembers the 1989 bubble, I see the same pattern. In the traditional "Shinise" world I work with, Cash is Oxygen. You hoard it to survive the inevitable crash. For OpenAI, Cash is Rocket Fuel. They are burning it all to reach "escape velocity" (AGI) before gravity kicks in. In 1989, we also bet that land prices would outrun gravity forever. But…

> Cash is Oxygen. You hoard it to survive the inevitable crash. For OpenAI, Cash is Rocket Fuel. They are burning it all to reach "escape velocity" (AGI) before gravity kicks in.

For OpenAI, cash is oxygen too; they're burning it all to reach escape velocity. They could use it to weather the upcoming storm, but I don't think they will.

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

#518

Post by Ginden »

worldsayshi wrote: post #141
Ginden wrote: post #132

Earlier quoted context omitted.

Because almost everyone involved in AI race grew up in "winner takes it all" environments, typical for software, and they try really hard to make it reality. This means your model should do everything to just take 90% of market share, or at least 90% of specific niche. The problem is, they can't find the moat, despite searching very hard, whatever you bake into your AI, your competitors will be able to replicate in f…

> your competitors will be able to replicate in few months. Will they really be able to replicate the quality while spending significantly less in compute investment? If not then the moat is still how much capital you can acquire for burning on training?

There are multiple tech companies with quadrillion-deep pockets.

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

#519

Post by aurareturn »

KaiserPro wrote: post #511
aurareturn wrote: post #470

Earlier quoted context omitted.

Google search is free to use too. So is Instagram. Facebook. Whatsapp. All of these have ads. OpenAI says they're very profitable on inference.

> OpenAI says they're very profitable on inference. Great, but they need to burn billions on advertising, freemeium, and mostly R&D for new models.

So do all their competitors.

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

#520

Post by lm28469 »

throw310822 wrote: post #498
lm28469 wrote: post #486

Earlier quoted context omitted.

> just three years- around 900 million users on a weekly basis. Well, I rotate about a dozen of free accounts because I don't want to send 1 cent their way, I imagine I'm not the only one. I do the same for gemini, claude and deepseek, so all in all I account for like 50 "unique" weekly users Apparently they have about 5% of paying customers, the amount of total users is meaningless, it just tells you how much money…

> I rotate about a dozen of free accounts .. I do the same for gemini, claude and deepseek For someone who doesn't like the product and doesn't care about it, you surely make a lot of effort to use it.

Sometime you have to force the trickle down economy a bit, these people are destroying my industry I might as well cost them as much as possible before I have no choice but to move on.

It's also literally 0 effort, click > sign out > click > sign in. It saves me $200 a month, that's not too far from half of my rent

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