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

Post by konschubert » Sat, Feb 28, 2026, 7:10 AM UTC

mattfrommars wrote: post #478

konschubert wrote: post #80

Earlier quoted context omitted.

So they’re getting in on the IPO. Are they going to get stock for it or is it a PIPE? Personally, I don’t think I want to get in on this at retail prices. It can both be true at the same time that AI going to disrupt our world and that being an AI lab is a terrible business.

like the other comment, openai can force itself onto the massive index like VOO/FXAIX etc to make retail folks to provide liquidity exit for openai investors.

Post by chrisandchris » Sat, Feb 28, 2026, 7:16 AM UTC

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…

Post by andriy_koval » Sat, Feb 28, 2026, 7:28 AM UTC

bjt wrote: post #279

asadotzler wrote: post #224

Earlier quoted context omitted.

Not agreeing with the parent, but that hardly matters. Google has a real business, advertising, that brings in $400 billion a year and income around $150B. They can afford to throw away tens of billions every year while still remaining immensely profitable and quite solid as a business. OpenAI has no such income to spend so it's as the above comments reflect, entirely unsustainable while Google's spending on AI is a…

That's not saying that Gemini is profitable though.

Post by lelanthran » Sat, Feb 28, 2026, 7:35 AM UTC

onlyrealcuzzo wrote: post #325

7777777phil wrote: post #287

$730B pre-money for a company where each model is roughly 2x profitable on its own, but each next model costs 10x the last. The whole thing only works if scaling keeps delivering. Research (Sara Hooker et al.) is not encouraging on that front, compact models already outperform massive predecessors on downstream tasks while scaling laws only predict pre-training loss reliably. Wrote about both the per-model math and t…

> each model is roughly 2x profitable on its own, but each next model costs 10x the last. The whole thing only works if scaling keeps delivering. This is a decent argument, but it's not the death knell you think. Models are getting 99% more efficient every 3 years - to get the same amount of output, combined with hardware and (mostly) software upgrades - you can use 99% less power. The number of applications where AI…

Post by trvz » Sat, Feb 28, 2026, 7:40 AM UTC

inder1 wrote: post #526

$730B on roughly $11B ARR is ~66x. Microsoft trades at 12x. The market is pricing OpenAI as infrastructure, not software. That's probably right. The implication is that the productivity gains accrue to whoever controls the infrastructure layer. The workers and companies building on top of it are taking the displacement risk without the upside.