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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

#601

Post by jghn »

atombender wrote: post #538
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.

I thought that, too, but lately I've been using OpenCode with Claude Opus, rather than Claude Code, and have been loving it. OpenCode has LSPs out of the box (coming to Claude Code, but not there yet), has a more extensive UI (e.g. sidebar showing pending todos), allows me to switch models mid-chat, has a desktop app (Electron-type wrapper, sure, but nevertheless, desktop; and it syncs with the TUI/web versions so yo…

> coming to Claude Code, but not there yet

Wasn't this released a couple of weeks ago?

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

#602

Post by parineum »

lenkite wrote: post #455
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…

> OpenAI's losses might actually be attractive to certain investors from a tax perspective. OpenAI is anyways seeking Govt Bailout for "National Security" reasons. Wow, I earlier scoffed at "Privatize Profits, Socialize Losses", but this appears to now be Standard Operating Procedure in the U.S. https://www.citizen.org/news/openais-request-for-massive-gov... So the U.S. Taxpayer will effectively pay for it. And not j…

> Make billionaires richer, make the middle class poor. Make the poor destitute. Make the destitute dead. (All USAID cuts)

How do you square this thought with the actual rate of poverty being on a steady downward trend while billionaires do their things?

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

#603

Post by latchup »

johnnyanmac wrote: post #226
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,…

>That doesn't mean AI is going to go away, or that it won't change the world - railroads are still here and they did change the world - but from a venture investment perspective, get ready for a massive downturn. I don't know why people always imply that "the bubble will burst" means that "literally all Ai will die out and nothing will remain that is of use". The Dotcom bubble didn't kill the internet. But it was a b…

I don't think anyone seriously believes AI will disappear without a trace. At the very least, LLMs will remain as the state of the art in high-level language processing (editing, translation, chat interfaces, etc.)

The real problem is the massive over-promises of transforming every industry, replacing most human labor, and eventually reaching super-intelligence based on current models.

I hope we can agree that these are all wholly unattainable, even from a purely technological perspective. However, we are investing as if there were no tomorrow without these outcomes, building massive data-centers filled with "GPUs" that, contrary to investor copium, will quickly become obsolete and are increasingly useless for general-purpose datacenter applications (Blackwell Ultra has NO FP64 hardware, for crying out loud...).

We can agree that the bubble deflating, one way or another, is the best outcome long term. That said, the longer we fuel these delusions, the worse the fallout will be when it does. And what I fear is that one day, a bubble (perhaps this one, perhaps another) will grow so large that it wipes out globalized free-market trade as we know it.

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

#604

Post by sigwinch »

gosub100 wrote: post #590
nosianu wrote: post #508

Earlier quoted context omitted.

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?

If you’re comparing Dubai and Abu Dhabi with New York City, there’s larger variation than, say, China and Brazil.

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

#605

Post by saghm »

abc123abc123 wrote: post #581
tacker2000 wrote: post #553

Earlier quoted context omitted.

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 the…

If that's a substitute for corporate taxes, why even have them at all, instead of there needing to be schemes so specific that they have their own Wikipedia articles to describe them [1]? Either you think that corporate taxes should exist, and therefore companies shouldn't just get to opt out of them based on whether they can make a claim to benefiting the economy via trickling down, or you don't, in which case you might as well just state that directly.

[1]: https://en.wikipedia.org/wiki/Dutch_Sandwich?wprov=sfla1

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

#606

Post by drowsspa »

dktp wrote: post #176
password54321 wrote: post #49

Not sure why they put so much investment into videoSlop and imageSlop. Anthropic seems to be more focused at least.

OpenAI is (was?) extremely good at making things that go viral. The successful ones for sure boost subscriber count meaningfully Studio Ghibli, Sora app. Go viral, juice numbers then turn the knobs down on copyrighted material. Atlas I believe was a less successful than they would've hoped for. And because of too frequent version bumps that are sometimes released as an answer to Google's launch, rather than a meaning…

I guess we'd have to see the graph with the evolution of paying customers: I don't see the number of potential-but-not-yet clients being that high, certainly not one order of magnitude higher. And everyone already knows OpenAI, they don't have the benefit of additional exposure when they go viral: the only benefit seems to be to hype up investors.

And there's something else about the diminishing returns of going viral... AI kind of breaks the usual assumptions in software: that building it is the hard part and that scaling is basically free. In that sense, AI looks more like regular commodities or physical products, in that you can't just Ctrl-C/Ctrl-V: resources are O(N) on the number of users, not O(log N) like regular software.

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

#607

Post by barrenko »

oblio wrote: post #503
parentheses wrote: post #371

Earlier quoted context omitted.

This is different because now the cats out of the bag: AI is big money! I don't expect AGI or Super intelligence to take that long but I do think it'll happen in private labs now. There's an AI business model (pay per token) that folks can use also.

> don't expect AGI or Super intelligence to take that long I appreciate the optimism for what would be the biggest achievement (and possibly disaster) in human history. I wish other technologies like curing cancer, Alzheimer's, solving world hunger and peace would have similar timelines.

We are making decent strides on the first two, the latter two are like wanting cats to stop scratching. What's the point of being a cat than?

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

#608

Post by zozbot234 »

latchup wrote: post #603
johnnyanmac wrote: post #226

Earlier quoted context omitted.

>That doesn't mean AI is going to go away, or that it won't change the world - railroads are still here and they did change the world - but from a venture investment perspective, get ready for a massive downturn. I don't know why people always imply that "the bubble will burst" means that "literally all Ai will die out and nothing will remain that is of use". The Dotcom bubble didn't kill the internet. But it was a b…

I don't think anyone seriously believes AI will disappear without a trace. At the very least, LLMs will remain as the state of the art in high-level language processing (editing, translation, chat interfaces, etc.) The real problem is the massive over-promises of transforming every industry, replacing most human labor, and eventually reaching super-intelligence based on current models. I hope we can agree that these…

> Blackwell Ultra has NO FP64 hardware, for crying out loud...

But can it run Crysis?

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

#610

Post by rat9988 »

sigmoid10 wrote: post #572
Fraterkes wrote: post #521

Earlier quoted context omitted.

I get that this example is simplified, but doesn’t the maths here change drastically when the 5% changes by even a few percentage points? The error bars on Openais chance of succes are obviously huge, so why would this be attractive to accountants?

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'm pretty the armies of accountants would have rated it higher if the cashflow was positive than negative. Negative can't be good even while accounting for taxes.
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