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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

#621

Post by cjblomqvist »

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…

If that $7-8 billion is spent on Azure, then it's basically a way to invest in data center capacity while also getting a big piece of Open AI ownership at the same time.

Är the same time, MS revenues are looking real good, causing the stock price to go up. It's a win win win maybe win huge situation.

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

#622

Post by Verdex »

password54321 wrote: post #49

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

I get the allure of the hypothetical future of video slop. Imagine if you could ask the AI to redo lord of the rings but with magneto instead of gandalf. Imagine watching shawshank redemption but in the end we get a "hot fuzz" twist where andy fights everyone. Imagine a dirty harry style police movie but where the protagonist is a xenomorph which is only barely acknowledged.

You could imagine an entirely new cultural engine where entire genres are born off of random reddit "hey have you guys every considered" comments.

However, the practical reality seems to be that you get tick toc style shorts that cost a bunch to create and have a dubious grasp on causality that have to compete with actual tick toc, a platform that has its endless content produced for free.

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

#623

Post by gruez »

lumost wrote: post #593
Jare wrote: post #421

Earlier quoted context omitted.

> 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 engi…

>The taxes on returning profits to investors via dividends are quite high.

isn't that what buybacks are for?

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

#624

Post by [deleted] »

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…

[deleted]

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

#625

Post by throw310822 »

latchup wrote: post #591
throw310822 wrote: post #443

Earlier quoted context omitted.

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.

"Slop" in English means "liquid junk, rubbish, tripe". No need to call for Merriam Webster's help.

The point is that AI can produce slop (as people do, too), but it's just silly to imply that everything it can produce is slop. That's just lazy, sloppy thinking.

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

#626

Post by irishcoffee »

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…

> … into fighting the causes that make many fall into that?

A morbid thought that would probably address the bulk of this: male birth control.

The backlash would be profound, it’ll never happen. But if there were a way to make a “perfect pill/shot/procedure” boys had maybe at birth to prevent unplanned pregnancies… just think about it.

I’m not even sure I’m advocating for it. Everyone says “education will fix all the things!” I think raising kids where the parents wanted to be parents would fix a whole lot, at least on the incarnation side.

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

#627

Post by gruez »

ludicrousdispla wrote: post #419
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 So just a loss for governments, or in other words, socializing the losses.

>So just a loss for governments, or in other words, socializing the losses.

How's that different than any other sort of R&D incentive? Would you rather that companies return as much money as possible to shareholders, future growth be damned? What about other sorts of tax incentives, which by definition also "just a loss for governments"? Are tax breaks for people with kids also "socializing the losses", given that most households don't have kids?

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

#628

Post by louiereederson »

jotras wrote: post #396
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,…

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…

this is not accurate. microsoft recognizes openai losses on their income statement, proportionate to their ownership stake. this has created a huge drag on eps, along with a lot more eps volatility than in the past. it's gotten so bad that microsoft now points people to adjusted net income, which is notable as they had always avoided those games. none of this has been welcomed

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

#629

Post by throw310822 »

shaky-carrousel wrote: post #571
throw310822 wrote: post #475

Earlier quoted context omitted.

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.

They like the AI chat. Not ChatGPT. AI chats are interchangeable.

Indeed, but in the end they all have to cover their costs. People are already getting real, measurable value out of them and they will be willing to pay for it like they pay for utilities. Though I'm not excluding that the AI companies will manage to create some kind of moat to keep their customers (such as personalisation, memory, etc.).
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