Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

economist.com

Post reply on HN
Print view View original

551–560 of 777 posts

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

#551

Post by hrimfaxi »

guelo wrote: post #492
jedberg wrote: post #420

Earlier quoted context omitted.

When I worked at PayPal back in 2003/4, one of the things we did (and I think we were the first) was encrypt the datacenter backhaul connections. This was on top of encrypting all the traffic between machines. It added a lot of expense and overhead, but security was important enough to justify it.

And yet Venmo, a Paypal company, publishes transaction data publicly by default, no need to decrypt anything ¯\_(ツ)_/¯

Venmo publishes raw unencrypted transaction data? Or are you referring to their social network features?

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

#552

Post by benjiro »

lotsofpulp wrote: post #466
pvtmert wrote: post #441

Earlier quoted context omitted.

Amazon already has not been paying any sort of income tax to the EU. There was a lawsuit in Belgium but Amazon has won that in late-2024 since they had a separate agreement in/with Luxembourg. Speaking for EU, all big tech already not paying taxes one way or another, either using Dublin/Ireland (Google, Amazon, Microsoft, Meta, ...) and Luxembourg (Amazon & Microsoft as far as I can tell) to avoid such corporate/inco…

> Amazon already has not been paying any sort of income tax to the EU. That should be expected, because https://european-union.europa.eu/priorities-and-actions/acti... > The EU does not have a direct role in collecting taxes or setting tax rates. > There was a lawsuit in Belgium but Amazon has won that in late-2024 since they had a separate agreement in/with Luxembourg. Dec 2023. > Speaking for EU, all big tech alrea…

> any sort of income tax to the EU.

Its clear that OP means "in the EU".

> Ireland (due to pressure from EU) closed this in 2020. The amount of tax collected by Ireland quadrupled. See Figure 5 and 6 in link below.

And Ireland fought against this tooth and nail. Yes, a country was fighting to have less income. All out of fear that the companies will leave the little tax heaven. Did they leave? No ...

> See Figure 5 and 6 in link below.

Figure 7 is also interesting if we look at the tax income increase and the outbound.

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

#553

Post by tacker2000 »

pvtmert wrote: post #441
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…

Amazon already has not been paying any sort of income tax to the EU. There was a lawsuit in Belgium but Amazon has won that in late-2024 since they had a separate agreement in/with Luxembourg. Speaking for EU, all big tech already not paying taxes one way or another, either using Dublin/Ireland (Google, Amazon, Microsoft, Meta, ...) and Luxembourg (Amazon & Microsoft as far as I can tell) to avoid such corporate/inco…

The EU doesnt collect income/corporate tax, the individual countries do.

These big corps use holdings in low tax jurisdisctions like Ireland and Luxemburg, funnel all their EU subsidiaries’ revenues there and end up paying 0 tax in the individual EU countries.

This system is actually legal, EU lawmakers should pass laws to prevent this.

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

#554

Post by samiv »

OGEnthusiast wrote: post #313
johnnyanmac wrote: post #310

Earlier quoted context omitted.

Like I said, they aren't "that" dumb. They are playing a risky game, but when they see the number go down rapidly they will pull. Which will make the line go down even faster. >And even in the worst case scenario, a 10-15% decline in the S&P 500 won't trigger the next Great Depression Only if you believe the 10% decline won't domino and that the S&P500 is secluded from the rest of the global economy. I wish I shared…

> Only if you believe the 10% decline won't domino and that the S&P500 is secluded from the rest of the global economy. I wish I shared your optimism. So your hypothesis is that a 10% decline in the S&P 500 will trigger the next Great Depression, i.e. years of negative GDP growth and unemployment? I agree that it could cause a slight economic slowdown, but I don't think AI and tech stocks are a large enough part of t…

The problem is that the non AI economy is already in the toilet. The consumer and commodities markets are all flashing red. Consumer debt is all time high. Inflation is still punishing the bottom end of workers severely and the ACA cuts will cause a lot of financial stress (unless people of course discountinue their plans)

An expected outcome from a AI blowout is the uncertainty and everyone holding onto their assets and credit recalls plus interest rate hikes.

During the great depression it wasn't the stock market collapse that caused it as much as it was the credit crunch that followed. Prior to the blowout people literally bought stocks on credit.

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

#555

Post by 578_Observer »

octoberfranklin wrote: post #515
578_Observer wrote: post #434

Earlier quoted context omitted.

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.

That is an interesting nomination.

But in my experience as a banker, the ones left in the wreckage are rarely the ones who drank the champagne. It is usually the ones who were hired to clean the glasses.

I hope history proves me wrong this time.

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

#556

Post by yossi_peti »

well_ackshually wrote: post #535
sigmoid10 wrote: post #497

Earlier quoted context omitted.

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…

If your accountants suggest that you take a single 5% chance deal, they probably skipped maths and statistics and you should fire them. It's the dumb as rocks MBAs that will go head first into the 5% chance deal.

I guess the reasoning assumes that you have multiple eggs in your basket. A 95% chance of failure is bad if you're pinning the whole business on it, but if you have a variety of 5% chance deals, then it can make sense to pursue them, which is basically what venture capitalists do.

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

#557

Post by visarga »

iLoveOncall wrote: post #477
Chyzwar wrote: post #431

Earlier quoted context omitted.

Anthropic is building moat around theirs models with claude code, Agent SDK, containers, programmatic tool use, tool search, skills and more. Once you fully integrate you will not switch. Also being capital intensive is a form of moat. I think we will end up with market similar to cloud computing. Few big players with great margins creating cartel.

A GPT wrapper isn't a moat.

A generic wrapper is not a moat, but the context is. Both the LLM provider and the wrapper provider depend on local context for task activities. The value flows to the context, the LLMs and wrappers are commodities. Who sets the prompts stands to benefit, not who serves AI services.

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

#558

Post by c1sc0 »

epolanski wrote: post #537
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.

> 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 This would make sense if every person was given similar opportunities, like providing quality education to all of our youngest and making higher education a mission rather than a business as a starter. As a society we move at the speed of the weakest among us, we only move forward when we start lifting a…

No that’s the system working as intended: there’s good private money to be made on incarcerating the poor and uneducated!

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

#559

Post by 578_Observer »

lelanthran wrote: post #517
578_Observer wrote: post #360

Earlier quoted context omitted.

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.

Exactly. They have chosen to burn the lifeboats to power the engine.

It is a magnificent gamble. If they reach escape velocity (AGI), they own the future. But if they run out of fuel mid-air, gravity is unforgiving.

As a loan officer, I prefer businesses that don't need to leave the atmosphere to survive.

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

#560

Post by visarga »

nateb2022 wrote: post #162
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 going to be a highly-competitive, extremely capital-intensive commodity market It already is. In terms of competition, I don't think we've seen any groundbreaking new research or architecture since the introduction of inference time compute ("thinking") in late 2024/early 2025 circa GPT-o4. The majority of the cost/innovation now is training this 1-2 year old technology on increasingly large amounts of conten…

> I don't think we've seen any groundbreaking new research or architecture since the introduction of inference time compute ("thinking") in late 2024/early 2025 circa GPT-o4

It was model improvements, followed by inference time improvements, and now it's RLVR dataset generation driving the wheel.

Post reply on HN