Why OpenAI's $157B valuation misreads AI's future (Oct 2024) • Hacker News Board

Re: Why OpenAI's $157B valuation misreads AI's future (Oct 2024)

#71

Post by Animats » Tue, Jan 28, 2025, 5:34 AM UTC

dralley wrote: post #4

A year ago Sam Altman was going around trying to convince people we all needed to drop 7 trillion dollars to build hundreds of fabs and nuclear power plants to fuel his AI ambitions. Only a week ago he was triumphantly announcing 500 billion dollar deals with our new President. The (regrettably temporary) ousting of Sam Altman looks like the right call, in hindsight. Of course some amount of showmanship is expected,…

Latest word from The Leader:

"Even as some U.S. tech stocks plunged on Monday after it appeared that DeepSeek could produce similar results as rival models with a system that was cheaper to build, Trump projected confidence, calling it “very much a positive development.” He reasoned that American companies would be able to adapt and evolve based on DeepSeek’s demonstration that effective systems can be developed more easily than some assumed."

Re: Why OpenAI's $157B valuation misreads AI's future (Oct 2024)

#72

Post by drakenot » Tue, Jan 28, 2025, 5:36 AM UTC

Animats wrote: post #65

elijahbenizzy wrote: post #42

We’ve just learned that it’s possible to do AI on less compute (deepseek). if OpenAI doesn’t scale and that’s the problem then I’d argue that in the long run, if you believe in their ability to do research, then the news this week is a very bullish sign. IMO the equivalent of moores law for AI (both on software and hardware development) is baked into the price, which doesn’t make the valuation all too crazy.

Does anyone know how Deepseek does it yet?

(Summary from Reddit)

- fp8 instead of fp32 precision training = 75% less memory

- multi-token prediction to vastly speed up token output

- Mixture of Experts (MoE) so that inference only uses parts of the model not the - entire model (~37B active at a time, not the entire 671B), increases efficiency

- PTX (basically low-level assembly code) hacking in old Nvidia GPUs to pump out as much performance from their old H800 GPUs as possible

Then, the big innovation of R1 and R1-Zero was finding a way to utilize reinforcement learning within their LLM training.

Re: Why OpenAI's $157B valuation misreads AI's future (Oct 2024)

#73

Post by bambax » Tue, Jan 28, 2025, 5:43 AM UTC

blackeyeblitzar wrote: post #39

People are announcing the death of foundational models too early. Don’t people realize that the big AI players will take all of the proprietary things they’ve been building up behind closed doors and simply layer onto them all the winning techniques everyone else is publishing (like what DeepSeek has used)? DeepSeek itself is taking ideas that have proven out in various other papers and stacking them up to produce th…

Yeah, the cost figures need more scrutiny; they started with Llama3 which they got for free; had they had to build it from scratch it would have cost more than $6M.

But as for your first paragraph: even if the "big AI players" have some secret sauce that will make their products better (and that they can actually keep secret), it seems unlikely it would be enough to command higher prices durably.

A model would have to be incredibly superior to justify paying for it, when there are so many free (or dirt cheap) alternatives that are simply good enough.

Re: Why OpenAI's $157B valuation misreads AI's future (Oct 2024)

#74

Post by coffeebeqn » Tue, Jan 28, 2025, 5:45 AM UTC

broken_clock wrote: post #66

stego-tech wrote: post #53

A pretty good read that succinctly picks apart the realities of current AI businesses. Easily something I’d reference as a “primer” to someone that is more business-minded than technically-minded. One point I’ll agree on is his final one: that the true big players haven’t even been founded yet. Right now, the AI hype seems to still revolve around the dream of replacing humans with machines and still magically making…

Aren't there already a ton of startups doing finetunes for their local niche? Many aren't even "AI" companies - it's pretty easy to slap a finetune together if you enough data. If you mean developing a model from scratch just for your niche - the bitter lesson is that scale is everything and that a finetune from an internet-scale model will outperform you easily.

DeepSeek has some something pretty remarkable. It’s certainly not “just” fine-tuning a Llama or a GPT prompt. More of a order of magnitude optimization

Re: Why OpenAI's $157B valuation misreads AI's future (Oct 2024)

#75

Post by poorcedural » Tue, Jan 28, 2025, 5:46 AM UTC

Why do we not value QBASIC in billions? Honestly, we value current Van Gogh paintings in billions. The past cost us more, we got here because of that art fought through decades of litigation. Does progress mean we forget all of that and hope on a promise of easy answers?

Re: Why OpenAI's $157B valuation misreads AI's future (Oct 2024)

#76

Post by coffeebeqn » Tue, Jan 28, 2025, 5:47 AM UTC

tonyhart7 wrote: post #18

and microsoft literally spent 80 billions on top of its, like bro imagine 80 billions dollar company is like top 0,01 percent and that valuation would crumble because of deepseek

What did they spend it on? I’m sure the next gen models will still be better to train on that new infra

Re: Why OpenAI's $157B valuation misreads AI's future (Oct 2024)

#77

Post by FeepingCreature » Tue, Jan 28, 2025, 5:50 AM UTC

elijahbenizzy wrote: post #42

We’ve just learned that it’s possible to do AI on less compute (deepseek). if OpenAI doesn’t scale and that’s the problem then I’d argue that in the long run, if you believe in their ability to do research, then the news this week is a very bullish sign. IMO the equivalent of moores law for AI (both on software and hardware development) is baked into the price, which doesn’t make the valuation all too crazy.

It's always been possible to "do (worse) AI on less compute". We've had years of open models! I also don't understand how anyone can see this as anything but good news for OpenAI. The ultimate value proposition of AI has always depended on whether it stretches to AGI and beyond, and R1 demonstrates that there's several orders of magnitude of hardware overhang. This makes it easier for OpenAI to succeed, not harder, because it makes it less likely that they'll scale to their financial limits and still fail to surpass humans.

Re: Why OpenAI's $157B valuation misreads AI's future (Oct 2024)

#78

Post by a13n » Tue, Jan 28, 2025, 5:51 AM UTC

> I’d argue that the most valuable companies of the AI era don’t exist yet. They’ll be the startups that harness AI’s potential to solve specific, costly problems across our economy—from engineering and finance to healthcare, logistics, legal, marketing, sales, and more.

I feel like the author's concluding point contradicts himself. There is a gold rush and OpenAI is selling shovels.

Re: Why OpenAI's $157B valuation misreads AI's future (Oct 2024)

#79

Post by addicted » Tue, Jan 28, 2025, 5:53 AM UTC

FeepingCreature wrote: post #77

elijahbenizzy wrote: post #42

We’ve just learned that it’s possible to do AI on less compute (deepseek). if OpenAI doesn’t scale and that’s the problem then I’d argue that in the long run, if you believe in their ability to do research, then the news this week is a very bullish sign. IMO the equivalent of moores law for AI (both on software and hardware development) is baked into the price, which doesn’t make the valuation all too crazy.

It's always been possible to "do (worse) AI on less compute". We've had years of open models! I also don't understand how anyone can see this as anything but good news for OpenAI. The ultimate value proposition of AI has always depended on whether it stretches to AGI and beyond, and R1 demonstrates that there's several orders of magnitude of hardware overhang. This makes it easier for OpenAI to succeed, not harder, b…

The point is that this was developed outside of OpenAI.

So the real question is why does anyone believe that OpenAI will bring AGI when actual innovation was happening in some hedge fund in China while OpenAI was going on an international tour trying to drum up a trillion dollars.

Re: Why OpenAI's $157B valuation misreads AI's future (Oct 2024)

#80

Post by markvdb » Tue, Jan 28, 2025, 5:55 AM UTC

SlightlyLeftPad wrote: post #47

elijahbenizzy wrote: post #42

We’ve just learned that it’s possible to do AI on less compute (deepseek). if OpenAI doesn’t scale and that’s the problem then I’d argue that in the long run, if you believe in their ability to do research, then the news this week is a very bullish sign. IMO the equivalent of moores law for AI (both on software and hardware development) is baked into the price, which doesn’t make the valuation all too crazy.

Honestly, I’m not sure I’m completely sold on the value of LLMs long term but this is the most realistic and reasonable take I’ve read on this post so far. If anything, it’s an downward adjustment in the cost implications but could actually unlock exponential improvements on a shorter time horizon than expected because of that. Investors getting scared probably is a good opportunity to buy in.

Bullish on the use. Bearish on the profit margins for the big players.

If (big if!) I understand correctly, the ceiling for edge/local/offline AI has just blown off.