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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

#701

Post by epolanski »

hvb2 wrote: post #654
alex43578 wrote: post #595

Earlier quoted context omitted.

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 r…

Let me phrase it this way for you. The best universities are in the US for a lot of things. But they don't scale. In another way, the top talent gets Ferraris for their tuition, the rest gets a bike. In a lot of European countries everyone can get the Toyota Camry of education, decent but not world class. That does scale though. Spending isn't everything, it's how you apply that spending.

I very much disagree with your statement.

A lot.

As an European I can assure you even public second tier universities have excellent education.

Where they lag the rankings is where money matters: politics to be highly ranked and money for high impact research.

But when it comes to testing proficiency in e.g. science and math, the second university of Rome ranks higher than most ivy leagues in US ;)

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

#702

Post by neilv »

camillomiller wrote: post #330
neilv wrote: post #322

Earlier quoted context omitted.

I don't think that's diagnosis (as a clinical term); closer to defamation. Is it necessary to a point you want to make? You can just point to behavior of a given entity, such as to conclude it's untrustworthy, without the problematic area of armchair psychoanalysis.

I redacted the comment because you’re right. I need a better form to express the point.

Good move. We all have second thoughts on occasion.

You might want to include an "Edit:" when substantially changing or replacing a comment.

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

#703

Post by pvtmert »

rizzom5000 wrote: post #651
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.

> EU lawmakers should pass laws to prevent this. So EU lawmakers should determine the amount member countries collect in tax?

No, but EU should somehow mandate products and services that are built within EU and used within EU or elsewhere, should receive the benefit(s) in terms of taxation.

To give an (absurd) example; You work in country X, but the parent company is in country Y. Imagine your income tax is not going to where you reside but where you work, (usually the opposite) in this case, country Y. (~20-40% of the gross salary).

One day, your basic needs (electricity, water, etc) stops working. You call the relevant government department asking what's the problem. They reply with saying they do not know and cannot afford to figure our or fix because they do not have the money to do so.

But you've been paying at least 20% (and up to 46%) of your salary as the income tax. Where the money go? Why do you work here but someone else in the other side of the world getting that slice for free?

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

#704

Post by londons_explore »

tucnak wrote: post #499
londons_explore wrote: post #467

Earlier quoted context omitted.

Whilst those other layers are useful, none of them are particularly hard to build or rebuild when you have many millions of dollars on hand. One doesn't need tens of billions for them.

Yeah, because making good chips (TPU) and compilers (XLA) is notoriously easy, right?

All of that is below the model

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

#705

Post by juped »

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…

Bubbles bursting aren't bad unless you were overinvested in the bubble. Consider that you'll be wiping your ass with DIMMs once this one bursts; I can always put more memory to good use.

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

#706

Post by socialcommenter »

sigmoid10 wrote: post #497
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…

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…

Those 150 billion will be taxable at the same (hypothetically 30%) tax rate, reducing the expected return by 45bn * 5% chance. The expected return is still negative; all this bet does is shift tax liabilities in time, which admittedly would matter to some people who subscribe to short-termism.

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

#707

Post by juped »

cmiles8 wrote: post #276

AI is turning into the worst possible business setup for AI startups. A commodity that requires huge capital investment and ongoing innovation to stay relevant. There’s no room for someone to run a small but profitable gold mine or couple of oil wells on the side. The only path to survival is investing crazy sums just to stay relevant and keep up. Meanwhile customers have virtually zero brand loyalty so if you slip b…

Well, Claude has the best personality in a field where the rest are in a race to make the most awful personality. That's kind of a moat. The models were smarter too though the others have largely caught up, especially Gemini.

I'll be sad when $20 a month Claude goes away.

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

#708

Post by latchup »

zozbot234 wrote: post #608
latchup wrote: post #603

Earlier quoted context omitted.

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?

Games tend to avoid FP64 compute as Nvidia has always gimped it in consumer GPUs, so you are somewhat lucky there. "Lucky" as in, you get to enjoy the broken-ass, glitchy FP32 physics that we've all grown to love so much.

However, if you actually need the much higher precision of FP64 for scientific computing (like most non-AI data center users do) and extremely slow emulation is not an option, consider yourself fucked.

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

#709

Post by pvtmert »

lotsofpulp wrote: post #466
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…

> Amazon already has not been paying any sort of income tax to the EU. That should be expected, because https://european-union.europa.eu/priorities-and-actions/acti... > The EU does not have a direct role in collecting taxes or setting tax rates. > There was a lawsuit in Belgium but Amazon has won that in late-2024 since they had a separate agreement in/with Luxembourg. Dec 2023. > Speaking for EU, all big tech alrea…

I find it funny because;

1. Amazon reports 250bn$+ revenue for entire EU in 2025. (of course, revenue != profit) while all 250bn$+ evaporates to somewhere. Their own page [1] reports 225k employees across EU, meaning that each employee returns whopping 1 million plus dollars! While being compensated less than 10% of their value!

2. In their own article [1], they boast how they invested (translated; smuggled money out) and enabled SMEs 20bn$+ revenue. (Like seriously, less than 10%?! actually goes back into the economy...)

3. Amazon says that they have invested 250bn$ in EU since 2010. It is completely unknown what or where that was invested. I do not see my street lightning being improved by the Amazon's investment or garbage being collected better.

4. Luxembourg's GDP is ~95bn$ in 2025. Amazon has contributed to that with the 0$ corporate tax. Obviously they employed about 4.5k people which they've decided to let go about 10% of them. Where the median/average yearly gross salary stands somewhere around 80k eur, it is hardly anywhere near 1mm+$ total income. I am guessing that they heat up the offices with burning the remaining cash...

[1]: https://www.aboutamazon.eu/news/job-creation-and-investment/...

For the date of the verdict for Amazon vs EU, apologies. The article date was November 2024 in the source [2].

[2]: https://www.techtimes.com/articles/308509/20241129/amazons-2...

For the Ireland, I only knew similarities between Luxembourg and specific laws allowing such loopholes pre-brexit period. The source is certainly interesting and I need to dive deeper to understand better.

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

#710

Post by eikenberry »

Chyzwar wrote: post #431
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,…

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.

Except most of their product line is oriented towards software development which has historically been dominated by free software. I don't see developers moving away from this tendency and IMO Anthropic will find themselves in a similar position to JetBrains soon enough (profitable, but niche)... assuming things pan out as you describe.
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