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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

#581

Post by abc123abc123 »

tacker2000 wrote: post #553
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…

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.

And let us not forget the millions and billions the global IT corporations pay in the EU in form of social security taxes, income taxes, the jobs they create, and the further millions and billions in the form of purchases from local delivery companies, consultants, DC vendors, office suppliers, taxi companies, delivery companies, food and catering and all the other local EU-based companies who benefit from having these giants walking among us.

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

#582

Post by gordonhart »

g947o wrote: post #577
gordonhart wrote: post #568

Earlier quoted context omitted.

For consumers, the chat history is the moat. Why switch to a different provider for a marginal model improvement when ChatGPT already “knows” you? The value of sticking to a single provider is already there, even with the limited memory features they’ve implemented thus far.

Do we know as a matter of fact that people don't want to leave ChatGPT for Gemini just because of chat history?

N=2, but for my wife and me, yes. Doubt that real numbers for this question exist even at the big labs.

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

#583

Post by rand_r »

pclmulqdq wrote: post #112
HardCodedBias wrote: post #107

OpenAI has #5 traffic levels globally. Their product-market fit is undeniable. The question is monetization. Their cost to serve each request is roughly 3 orders of magnitude higher than conventional web sites. While it is clear people see value in the product, we only know they see value at today’s subsidized prices. It is possible that inference prices will continue their rapid decline. Or it is possible that OAI w…

It's easy to get product-market fit when you give away dollars for the price of pennies.

Only in as much as their product is a pure commodity like oil. Like yes it’s trivial to get customers if you sell gas for half the price, but I don’t think LLMs are that simple right now. ChatGPT has a particular voice that is different from Gemini and Grok.

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

#584

Post by tliltocatl »

pier25 wrote: post #382
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,…

Did railroads change the world though? They only lasted a couple of decades as the main transportation method. I'd say the internal combustion engine was a lot more transformative.

Besides from he fact the freight is still universally carried by the rail when possible, railroads changed the world just like the vacuum valves did. If not for them nobody would invest in developing tire transport or transistors.

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

#585

Post by vmg12 »

gordonhart wrote: post #568
cmiles8 wrote: post #276

AI is turning into the worst possible business setup for AI startups. A commodity that requires huge capital investment and ongoing innovation to stay relevant. There’s no room for someone to run a small but profitable gold mine or couple of oil wells on the side. The only path to survival is investing crazy sums just to stay relevant and keep up. Meanwhile customers have virtually zero brand loyalty so if you slip b…

For consumers, the chat history is the moat. Why switch to a different provider for a marginal model improvement when ChatGPT already “knows” you? The value of sticking to a single provider is already there, even with the limited memory features they’ve implemented thus far.

The chat history feature makes the product worse, I had to turn it off.

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

#586

Post by jbs789 »

Fraterkes wrote: post #578
sigmoid10 wrote: post #572

Earlier quoted context omitted.

That's why you have armies of accountants rating stuff like this all day long. I'm sure they could show you a highly detailed risk analysis. You also don't count on any specific deal working, you count on the overall statistics being in your favour. That's literally how venture capital works.

(I think) I get how venture capital works, my point is that the bullish story for openAI has them literally restructuring the global economy. It seems strange to me that people are making bets with relatively slim profit margins (an average of 500m on a 10b investment in your example) on such volatile and unpredictable events.

I think you’re right that the critical assumption in that example is the 5pct rather than the tax treatment.

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

#587

Post by gosub100 »

danielscrubs wrote: post #440
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…

Can you explain it in another way? What you are saying is that instead of loosing 100% they loose 70% and loosing 70% is somehow good? Or are you saying the risk adjusted returns are then 30% better on the downside than previously thought? Because if you are, I think people here are saying the risk is so high that it is a given they will fail.

Let's say they are paying for "research". The research is very expensive and has a high likelihood of being worthless, but a small likelihood of having value later. So by claiming the financial loss, they can offset the cost of the expensive research by 30%, making it an even more attractive gamble.

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

#588

Post by trgn »

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,…

very few software has commoditized, doubt it will be the fate of AI tech stack.

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

#589

Post by CodinM »

gordonhart wrote: post #582
g947o wrote: post #577

Earlier quoted context omitted.

Do we know as a matter of fact that people don't want to leave ChatGPT for Gemini just because of chat history?

N=2, but for my wife and me, yes. Doubt that real numbers for this question exist even at the big labs.

Let's put N=3 there.

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

#590

Post by gosub100 »

nosianu wrote: post #508
Ar-Curunir wrote: post #493

Earlier quoted context omitted.

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 l…

You forgot gun control. Is it really a coincidence that the highest concentrations of rich people seem to be the places where citizens have the fewest rights to own guns?
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