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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

#591

Post by latchup »

throw310822 wrote: post #443
steve1977 wrote: post #442

Earlier quoted context omitted.

Railroads enabled people and goods to move from one place to another much easier and faster. AI enables people to... produce even more useless slop than before?

At this point I'm taking the word "slop" as a sign meaning "I really didn't think this through and I'm just autocompleting based on a gut feeling and the first word that comes to mind".

Well unfortunately for you, it has a precisely defined and well-understood meaning for all those not covering their eyes and ears in denial. Quoting Merriam-Webster:

> Digital content of low quality that is produced usually in quantity by means of artificial intelligence.

Chosen by the editors as word of the year, by the way.

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

#592

Post by tliltocatl »

zeofig wrote: post #405
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,…

I still don't understand how it's world-changing apart from considerably degrading the internet. It's laughable to compare it to railroads.

Translation is big thing, maybe not the same scale as railroads, but still important. The rest is of dubious economic utility (as in you can do it with LLM easier than without, but if you think a little you could just as well not do it at all without losing anything). On the other hand, disrupting signalling will have pretty long-lasting consequences. People used to assume that a long formal-sounding text is a signal of seriousness, certainly so if it's personally addressed. Now it's just a sign of sloppiness. School essays are probably dead as a genre (good riddance). Hell, maybe even some edgy censorable language will enter mainstream as a definite proof of non-LLMness - and stay.

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

#593

Post by lumost »

Jare wrote: post #421
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…

> For the right investor base, $10B in annual losses at OpenAI could be worth $2-3B in tax shields (depending on their bracket and how the structure works). That completely changes the return calculation I know nothing about finances at this level, so asking like a complete newbie: doesn't that just mean that instead of risking $10B they're risking $7-8B? It is a cheaper bet for sure, but doesn't look to me like a ga…

The taxes on returning profits to investors via dividends are quite high. You’d be looking at the corporate tax rate (35%) + the dividend tax rates (between 15 and 35%). For any company which may need to raise equity finance later, this is an awful deal - but growing a cash balance doesn’t do the job either.

So MSFT is effectively getting 2x the equity by putting money into OpenAI, it also conveys some financial engineering capability as they can choose to invest more when profits are high to smooth out cash flow growth.

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

#594

Post by gosub100 »

throw310822 wrote: post #475
shaky-carrousel wrote: post #459

Earlier quoted context omitted.

Paid user base or free user base? Because free user base on a very expensive product is next to meaningless.

It's meaningful because it shows that people like the product a lot , and for a lot of different reasons. There are only few products that can reach such market penetration, not to mention in only three years. As the quality of AI increases, people will quickly realise that they are willing to pay for it as much as they pay for electricity. And the same goes for businesses.

Isn't that akin to a 1990s tech model like CompuServe or AOL? "Let's create this awesome environment where people will want to pay us for this wonderful service, we'll send them a CD in the mail to get them started withh a free month, then charge $0.30/minute. We'll make a fortune!"

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

#595

Post by alex43578 »

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…

The US already spends 38% more than the OECD average on education per student, just lagging Luxembourg, Austria, Norway, etc - if you’re a student in America, you have access to plenty of resources.

You’re right that these are complex systems, and just pouring more tax dollars and more debt into them isn’t working. Portions of our society need to value education, value contributing to society instead of taking, and reject criminality - but those changes require more than blind spending.

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

#596

Post by alex43578 »

nielsbot wrote: post #507
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 What about someone who works and still can’t afford enough housing/food? > shouldn't be the job of the US taxpayer to feed another country's citizens half a world away. I mean where’s the profit in that, am i right?

> What about someone who works and still can’t afford enough housing/food?

Food stamps? The original comment is addressing those not working or studying, or staying off drugs.

>I mean where’s the profit in that, am i right?

We’re $38 trillion dollars in debt. Digging a deeper whole isn’t a sound decision.

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

#597

Post by mikkupikku »

adammarples wrote: post #534
mikkupikku wrote: post #528

Earlier quoted context omitted.

Using thought terminating clichés in general is, and that can include "slop".

The irony of atacking thought terminating clichés while defending slop

I have no love for slop. But I also don't write off the whole technology as only being good for slop.

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

#598

Post by parineum »

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.

I don't really understand this perspective.

What should be taxed?

Amazon, as an example, has servers in country X. Country X taxes the transaction or the income from the server company.

Amazon pays delivery drivers in country X to deliver goods, and the driver is taxed through various means (vehicle, fuel, payroll, etc).

What is Amazon doing in country X that should be taxed?

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

#599

Post by smeeagain2 »

yossi_peti wrote: post #556
well_ackshually wrote: post #535

Earlier quoted context omitted.

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.

[dead]

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

#600

Post by johnisgood »

latentsea wrote: post #341
dartharva wrote: post #323

Earlier quoted context omitted.

Also, Google doesn't have to finance Gemini using venture capital or debt, it can use its own money.

DeepMind also solved the protein folding problem, so they have that going for them.

Did it really? That is actually huge if so.
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