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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

#631

Post by louiereederson »

mvkel wrote: post #27

The fact is nobody has any idea what OpenAI's cash burn is. Measuring how much they're raising is not an adequate proxy. For all we know, they could be accumulating capital to weather an AI winter. It's also worth noting that OpenAI has not trained a new model since gpt4o (all subsequent models are routing systems and prompt chains built on top of 4), so the idea of OpenAI being stuck in some kind of runaway training…

i'm sure openai and their investors know what the cash burn is. it's also been well reported by The Information with no pushback from the company or investors. they have also reported that openai is forecasting $9b in training compute spending for 2025, up from $3b last year. this more or less lines up with Epoch's estimate that training compute has reliably grown by ~4x per year. the vast majority of that is just from building bigger data centers rather than chip performance improvements. you obviously need to grow revenue pretty quickly to absorb that.

https://www.theinformation.com/articles/openai-says-business...

https://epoch.ai/blog/training-compute-of-frontier-ai-models...

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

#632

Post by ep103 »

Verdex wrote: post #622
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…

You and I see the tiktok slop. But as that functionality improves, its going to make its way into the toolchain of every digital image and video editing software in existence, the same way that its finding its way into programming IDEs. And that type of feature build is worth $. It might be a matter of time until we get to the point where we start seeing major Hollywood movies (for example) doing things that were unthinkable the same way that CGI revolutionized cinema in the 80s. Even if it doesn't, from my layman perception, it seems that Hollywood has spent the last ~20 years differentiating itself from the rest of global cinema largely based on a moat built on IP ownership and capital intensive production value (largely around name brand actors and expensive CGI). AI already threatens to remove one of those pillars, which I have to think in turn makes it very valuable.

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

#633

Post by deadbabe »

stephen_g wrote: post #286
deadbabe wrote: post #259

What does it mean for the AI bubble to pop? Everyone stops using AI en masse and we go back to the old ways? Cloud based AI no longer becomes an available product?

I think it mostly just means a few hundred billion dollars of value wiped from the stock market - all the models that have been trained will still exist, as well as all the datacentres, even if the OpenAI entity itself and some of the other startups shut down and other companies else get their assets for pennies on the dollar. But it might mean that LLMs don't really improve much from where they are today, since ther…

Sounds like a big nothingburger then.

I don’t really have faith the current LLMs will improve dramatically anyway, not without totally new approaches to AI.

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

#634

Post by deadbabe »

aurareturn wrote: post #457
deadbabe wrote: post #259

What does it mean for the AI bubble to pop? Everyone stops using AI en masse and we go back to the old ways? Cloud based AI no longer becomes an available product?

It's a good question. Sad that you're downvoted.

It happens a lot. People here just want to silence voices that don’t fit their agenda.

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

#635

Post by matkoniecz »

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.

Would you take 5% chance of earning 100 dollars if it would cost 1 dollar?

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

#636

Post by marbro »

gruez wrote: post #627
ludicrousdispla wrote: post #419

Earlier quoted context omitted.

>> 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 mo…

I call it theft when the government steals money from people without kids to enrich parents.

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

#637

Post by matkoniecz »

parineum wrote: post #598
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.

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?

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

its profits within that country (income minus actual expenses)

in practice expenses are fakely inflated to transfer tax payments top jurisdiction with near-zero taxes

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

#638

Post by jklinger410 »

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,…

> The simple evidence for this is that everyone who has invested the same resources in AI has produced roughly the same result. OpenAI, Anthropic, Google, Meta, Deepseek, etc. There's no evidence of a technological moat or a competitive advantage in any of these companies.

I think this is analysis is too surface level. We are seeing Google Gemini pull away in terms of image generation, and their access to billions of organic user images gives them a huge moat. And in terms of training data, Google also has a huge advantage there.

The moat is the training data, capital investment, and simply having a better AI that others cannot recreate.

I don't see how Google doesn't win this thing.

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

#639

Post by kkukshtel »

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 like to tell people that all the AI stuff happening right now is capitalism actually working as intended for once. People competing on features and price where we arent yet in a monopoly/duopoly situation yet. Will it eventually go rotten? Probably — but it's nice that right now for the first time in a while it feels like companies are actually competing for my dollar.

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

#640

Post by matkoniecz »

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)_/¯

where?
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