[HN Gopher] OpenAI raises $8.3B at $300B valuation
___________________________________________________________________
OpenAI raises $8.3B at $300B valuation
https://archive.md/H9JNt
Author : mfiguiere
Score : 172 points
Date : 2025-08-01 14:22 UTC (8 hours ago)
(HTM) web link (www.nytimes.com)
(TXT) w3m dump (www.nytimes.com)
| tiniuclx wrote:
| It boggles the mind what OpenAI could possibly do with all this
| money.
| jordanb wrote:
| Turn electricity into heat.
| marshall2x wrote:
| And plenty of warm water
| Ekaros wrote:
| Not to forget buy really expensive sand...
| criley2 wrote:
| I mean, they can burn it all up in a fire in a few months. xAI
| loses $1 billion per month, so this round would be an 8 month
| runway for that company. OpenAI loses $2 for every $1 it brings
| in, but perhaps they're only losing $500M/mo, so maybe this $8b
| could last them more than a year...
| andsoitis wrote:
| > xAI loses $1 billion per month
|
| Isn't the vast majority of that capex?
| rasz wrote:
| Paying Oracle monthly bills is not capex.
| andsoitis wrote:
| It was recently reported by Reuters:
|
| _XAI is training Grok on 230,000 graphics processing
| units, including Nvidia 's 30,000 GB200 AI chips, in a
| supercluster, with inference handled by the cloud
| providers, Musk said in a post on X on Tuesday. He added
| that another supercluster will soon launch with an
| initial batch of 550,000 GB200 and GB300 chips._
|
| I suppose one could argue this training isnt capex, but I
| was also under the impression that xAI was building sites
| for housing their AI.
| lanthissa wrote:
| hire like 8 people?
| pokstad wrote:
| Put millions of people out of work
| rvz wrote:
| The true definition of AGI.
| rasz wrote:
| Pay current expenses for about two and a half months.
| ratg13 wrote:
| They want to build several 5 GW data centers. (equivalent to
| the power consumption of a major city)
|
| $8.3B is not even close to enough in order to get to what they
| are thinking.
| bobsmooth wrote:
| Give it to Nvidia.
| bix6 wrote:
| Nice they can poach 3 engineers back from Meta!
| ozgrakkurt wrote:
| Out of all blockchain/AI hype bs, best thing is engineers
| getting rich
| camillomiller wrote:
| Yeah, all 7 of them
| jstummbillig wrote:
| Because?
| halfmatthalfcat wrote:
| Because.
| rvz wrote:
| Because.
| jstummbillig wrote:
| I guess it's obvious why anyone should be delighted to
| learn or care at all that a random set of engineers are
| now getting a relatively bigger share of all the money in
| the world.
| shepherdjerred wrote:
| Because this is a site for engineers
|
| Commenters are going to prefer things that benefit
| engineers even if it's not themselves
| jstummbillig wrote:
| a) That kind of group identity think seems super cringe
|
| b) If a particular set of engineers works to put "their
| people" out of a job, I am even more confused about the
| sanity of those willfully subscribing to the idea.
| halfmatthalfcat wrote:
| So by extension unions are super cringe?
| scottyah wrote:
| ah, money is not a fixed resource. It is a made up system
| to track how much value people/groups are adding to the
| world. "share of all the money in the world" is a
| frequently quoted bad mental model, typically from people
| trying to bring others down
| jstummbillig wrote:
| OpenAI, Google, and friends now hand out $10-20 M
| packages to a few hundred ML specialists worldwide, not
| because those engineers add more "value units" but
| because their skill set is brutally scarce.
|
| Money is elastic, but relative slices still matter when
| the pie is made of houses, GPUs, and your grocery bill.
| Calling "share of all the money" a bad mental model is
| like saying gravity is a bad mental model because planes
| fly: True in the abstract, irrelevant when you hit the
| ground.
| bobsmooth wrote:
| Because at least the people doing the work are getting rich
| instead of the already wealthy.
| chickenzzzzu wrote:
| The only thing that can be stated as definitely good is that
| every person receives as much wealth from the profits of
| their actions in proportion to the amount of legitimate,
| valuable effort and vision that they contributed.
|
| EDIT: ive been rate limited
|
| I did realize that as I typed that :) that's why I added that
| extra bit about "valuable effort" and "vision".
|
| "Valuable effort" to me is a good proxy for "if this action
| wasn't performed, the profits would not have been made".
|
| And "vision" is, "you were objectively the person who saw the
| value of performing some action and stuck to it even when
| things became tough and other options were available".
|
| Taken together, these two constraints do a mostly-perfect job
| of preventing the gaming of the system as described in your
| boulder example.
|
| Lastly, if me and my teammate/business partner contributed
| roughly equally, and sales of our product were $10,000,000,
| then nobody should be offended when the proposed split is
| $5,000,000 each
| paulcole wrote:
| Why do you want to reward effort? I'll just push a boulder
| uphill all day and accomplish nothing and then come with my
| hand out.
|
| Also, in your opinion what is the correct proportion of
| wealth received to legitimate, valuable effort, and vision
| contributed? I'd love an answer that is an integer
| percentage, like "43%."
| jamespo wrote:
| Makes a change from rewarding the luck of being in the
| right place at the right time
| antonvs wrote:
| Which includes having the right sort of parents
| paulcole wrote:
| A real man makes his own luck. Billy Zane. Titanic.
| ttul wrote:
| And, down the road, after the bust finishes, these rich
| engineers will seed the next thing. Assuming the world still
| needs engineers.
| chpatrick wrote:
| Just because they're both hyped doesn't mean they're the
| same. Blockchain has always (largely) been a solution in
| search of a problem but LLMs are already being used by
| everyone and their dog right now.
| bix6 wrote:
| While the artists get poorer :/
| defraudbah wrote:
| 2 and a half :D
| debarshri wrote:
| Why would you hire engineers if you can buy agentic code AI
| platforms?
| webdevver wrote:
| damnit why didn't they make it a trillion!? that would really
| send a message.
| Imustaskforhelp wrote:
| To be honest Chatgpt really really spiked nvidia's stocks
| because (AI duh), so yes they did make it a trillion except its
| in some other company lol.
| ahmedhawas123 wrote:
| So OpenAI is running at a $13B ARR, meaning this is a ~23X
| valuation. I don't have a good read on margin.
|
| But this would imply massive growth assumptions which I struggle
| a bit to understand where they come from.
|
| (1) New customers new to AI or migrations from
| Claude/Perplexity/Google: The overwhelming majority of people
| already know about the offerings, leaving most new people to come
| from residual people who identify Plus/Pro as a worthy service
| (can't imagine this will be huge). OpenAI can be better than
| their peers for certain use cases but not sure it will drive
| massive growth
|
| (2) API: If anything, my bet here is that price squeezing will
| continue to happen until most API services are dirt cheap /
| commoditized
|
| (3) New consulting services: What's the differentiation here?
| Palantir and many consulting companies have been doing this for
| years and have the industry connections, etc
|
| Not sure what I'm missing here, I like to not subscribe to the
| bubble thought but having a hard time merging the reality of
| running a business to the AGI-implied valuations
| empath75 wrote:
| Think about how much money openai could make _just_ by getting
| referrals for agentic work flows (ie: help me plan my
| vacation).
|
| The thing that people are missing is that openai is a platform
| like google's, and there are a million different businesses
| they can expand into.
| ahmedhawas123 wrote:
| Sure, but I think the question is who will win the domain
| specific use cases (delivery, not API). Delivery of the
| agentic workflows is up for anyone to win (players like
| Perplexity, Lovable, etc) and OpenAI/Gemini/Anthropic is in a
| way only a vendor to that by providing what will become a
| commoditized function calling API/MCP provider.
| empath75 wrote:
| Open AI has 10 times the active users of any of it's
| competitors, including google.
| lelanthran wrote:
| > The thing that people are missing is that openai is a
| platform like google's, and there are a million different
| businesses they can expand into.
|
| That should make it easy for them to choose one and start
| already, then. I wonder why they haven't started. /s
| ahmedhawas123 wrote:
| Exactly my point! They're up against thousands of founders
| who are moving on domain specific use cases faster
| sameermanek wrote:
| I havent seen a single case apart from coding where end
| user has appreciated a clanker integration into their
| software!
| jononor wrote:
| They have started. Their strategy is just for others to
| build it on top of their platform. And not build one, but
| hundreds of businesses. Much faster way to grow. Why retain
| 100+ internal product/integration teams when you can have
| 100+ external teams that will _pay you_ and do the
| building, the trying and failing, in each niche.
|
| The things that actually work out you can just buy or
| outcompete later. But that is another phase, perhaps 1
| decade from now. Right now it is about starting _alll_ the
| snowballs.
| pacificmaelstrm wrote:
| You can just ask chat GTP to help you plan your vacation.
| jjallen wrote:
| They are already growing massively right. I saw the user growth
| from May was up massively. So it's not much of an assumption of
| something changing, just a continuation of the same.
| ahmedhawas123 wrote:
| I guess my broader point is that there will undoubtedly be a
| bunch of churn as these models advance and a pricing war
| takes place. Specially if the open models continue to advance
| at a similar rate (e.g., Llama, Deepseek, Qwen)
|
| We've seen this in many industries where it's a duopoly /
| oligopoly or even more players where margins get really
| squeezed
| Imustaskforhelp wrote:
| Regarding point (2), My brother told me that openai had some
| exclusive contracts with companies where they could only use
| openai api and I don't think that they would really switch now,
| because I think switching would be hard.
|
| Regarding point (1), OpenAI created 2 amazing trends which
| (though I hate OpenAI, Should be called ClosedAI) took internet
| by wild
|
| First when chatgpt 3 was launched
|
| And now when image ability of chatgpt was launched with the
| ghibli trend.
|
| So Honestly, I had seen so many comments on r/localllama saying
| that openai has become just an infrastructure company or
| something and then openai dropped the new image update and now
| they are commenting about local ai's by pasting images
| generated by that new chatgpt ...
|
| I am not sure but see, google makes most of its money using
| advertising & data basically.
|
| I wouldn't be surprised if we started seeing sudden shifts of
| AI or started getting ads in AI somehow too.., because people
| trust AI and its a landmine of money really...
|
| So OpenAI's 27x evaluation without any thought of ads or some
| data selling isn't that bad because they still got some nice
| engineers. The only Disgrace is the fact that they went from a
| non profit to an american psycho esque corporation saying "well
| OUR AI will take over jobs, but it was good for the
| shareholders in the short term though"
| 0cf8612b2e1e wrote:
| ... they could only use openai api and I don't think that
| they would really switch now, because I think switching would
| be hard.
|
| Do they have exclusive APIs? I thought more or less everyone
| had the same interface and switching might be almost as easy
| as changing the endpoint.
|
| Given how many players are in this space, I am incredibly
| dubious that anyone will win. Market is going to be sliced
| between multiple big companies who are going to be
| increasingly squeezed on margin. Unless someone can produce
| some magic that is 10x more reliable, consumers are going to
| price compare. Today, all of the options can occasionally
| produce brain dead output -why pay a premium?
|
| Especially bad for OpenAI, because they have no fallback
| revenue. Microsoft and Google can subside their offerings
| forever to eliminate competition.
| wongarsu wrote:
| We are still at the very start of seeing AI integrated into
| products and industry use cases. Even if AI capabilities stop
| improving and Altman's dreams of replacing workers don't pan
| out there is enormous economic potential here.
|
| How much of that OpenAI can capture is an interesting question.
| But right now APIs for open-source models are commoditized
| while similarly capable proprietary models can charge ~3x the
| price. If the flagship models run on similar margins the API
| offering has decent profit margins. And if we stay in a
| triopoly (Anthropic, Mistral, OpenAI) it's certainly possible
| that profits stay high. It wouldn't be the first industry where
| that happens
| sameermanek wrote:
| The problem is open ai's deal with the devil (microsoft)
| where they own a copyright to all the models that open ai
| produces until AGI. So what is the moat driving that $300B
| valuation?
| tbruckner wrote:
| 23X revenue multiple is not an expensive valuation for
| something growing well over 100% YoY, even by public market
| standards let alone venture capital valuation.
| ahmedhawas123 wrote:
| Yah but is that growth really an ARR or 1-2 year revenue
| considering AI capability growth across players, open weight
| / source models, and inevitable price wars?
| ozgung wrote:
| It's not about the products or revenue probably. It's about its
| stocks. Nvidia market cap is 4.262 Trillion dollars and for
| META it's $1.9T (in the six place among the tech companies).
| After the IPO, OPAI is guaranteed to be among these stocks, so
| 300B is pretty cheap today.
| spyckie2 wrote:
| Sometimes the bet is not on the company but the industry. If
| you can argue the industry has room to grow 10x in terms of
| market cap, which is possible, then merely staying even in
| market share is a 10x growth.
|
| Ai applications have not even scratched the surface, IMO. I
| don't think it is unreasonable to see a world where, when AI
| gets strong enough to do senior level white collar work, like
| doctors or lawyers, AI companies build sub-companies to capture
| the end value of their AI products rather than the base value
| as a vertical integration tactic.
|
| We are at a lull but AI value add is real and the ways that AI
| companies capture that value add is still very primitive.
| Workaccount2 wrote:
| Tech people and their friends are like 1% of the population.
|
| Go out on the the street of Anytown in any western country, and
| people know "ChatGPT".
|
| A friend of mine is a teacher, and told me that at a recent
| school board meeting there was discussion about implementing AI
| into the learning curriculum. And to the board, "AI" and
| "ChatGPT" were used interchangeably. There was no discussion of
| other providers or models, because "AI" is "ChatGPT".
|
| That's why OpenAI has these huge projections. When average
| people are asked to reach for AI, they reach for ChatGPT.
| v5v3 wrote:
| More than just tech people on X and they all know Grok.
|
| I imagine Meta users know Llama too?
| christianqchung wrote:
| Facebook users do not know Llama anywhere near the degree
| the X network does Grok, and both are pallid in comparison
| to Chatgpt.
| kgwgk wrote:
| They may be satisfied with anyone's "ChatGPT" though.
| kubectl_h wrote:
| Exactly, it's hard to dismiss the broad penetration of
| ChatGPT in the general population. I was an AI
| skeptic/luddite until almost exactly a year ago when, in a
| span of a month or so, I had three different friends/family
| members who work in various administrative jobs tell me that
| they all used ChatGPT surreptitiously at work to get things
| done. Now a year later I don't know many people that don't
| use it at least occasionally. The ones that don't are older
| and I'm confident eventually they'll be using it like crazy
| to annoy me.
| xnx wrote:
| > because "AI" is "ChatGPT".
|
| People still call it "Kleenex" when they're using any old
| facial tissue. They may still call it "ChatGPT" when it's
| coming from Google.
| kibwen wrote:
| _> When average people are asked to reach for AI, they reach
| for ChatGPT._
|
| No, average people are nowhere near that tech-savvy. Just
| because every mom in the 90s called every video game console
| a "Nintendo" did not mean that Sony didn't mop the floor with
| Nintendo in that era. This isn't brand loyalty, it's brand
| genericity. Other than, say, Replika-style users who have
| formed an emotional bond with a certain style of chatbot, no
| average joe on the planet gives a damn whether the LLM
| powering their chat is provided by OpenAI or Google or etc.
| They'll use whatever's in front of them and most convenient,
| and unlike Google, Apple, or Microsoft, OpenAI doesn't own
| the platform that establishes the crucial defaults that
| nearly no user ever changes.
| og_kalu wrote:
| Except Open AI happen to be the Sony in this case. 700M
| Weekly active users and the 5th most visited site on the
| planet, with no-one else close. I mean, it's pretty clear
| this is less 'Nintendo' and more 'Google'.
| piqufoh wrote:
| Anecdotally, "skype" was once synonymous with video calls but
| it's pretty much never used now.
| thijsvandien wrote:
| It's literally never used now, because it was taken offline
| earlier this year.
| jsnell wrote:
| Information retrieval for consumers is an existing high margin
| $250B/year business at a minimum (search ads revenue). That
| market is being disrupted before our eyes. That's 20x right
| there. There's going to be fierce competition and OpenAI is by
| no means guaranteed it, but surely they have more than just a
| puncher's chance.
|
| The ad-monetized consumer market is funny in that they tend to
| be winner take all. Nobody can compete on price, because the
| ads go where the users are, and the users don't pay. And
| preferences are sticky, after making a choice, the users don't
| switch just for incremental improvements. So
|
| The software development industry is likewise well in the
| process of being disrupted. LLMs for programming market seems
| to have grown from nothing to >$10B in a year. And the software
| development market is hundreds of billions / year, if you just
| consider the employment costs. We don't know exactly how this
| will play out, but again there's at least an order of magnitude
| more growth available there.
|
| The above two are just the places where the impact is already
| obvious and it's clear that we don't need to assume any
| additional increase in capabilities. But an increase in
| capabilities seems _really_ likely. Even if it turns out that
| we 're right now on the cross-over of the sigmoid, and the
| asymptote won't be ASI or even AGI, a large proportion of
| knowledge work is also at risk. And then the addressable market
| is trillions if not tens of trillions.
|
| I know this is hand-wavy, apologies for that. Doing this kind
| of analysis properly is both hard work and would require
| specialized data sources. But I think that's the general
| intuition for why high valuations for frontier labs are
| justifiable (and the same justification for bigtech capex).
| It's a lottery ticket with good odds for redistributing
| existing markets, as well as another set of lottery tickets for
| some set of probable markets, though we don't know exactly
| which.
|
| With AGI or ASI, the addressable market is all economic
| activity, and at that point basically anything is justifiable.
| ttul wrote:
| IMHO, investors are happy to pay 23x ARR because Nvidia trades at
| 29x EV/sales and arguably OpenAI should support a higher multiple
| given it is a smaller entity with more headroom for growth.
| layer8 wrote:
| That would imply that OpenAI has less competition to fear than
| Nvidia, which I'm doubtful is the case.
| signatoremo wrote:
| That doesn't imply anything. Each investor has their own take
| on risk. They'd invest if they think the risks are worth it.
| GiorgioG wrote:
| So how much more runway does this give OpenAPI? A year?
| layer8 wrote:
| Less than a year. They spent $9B last year and are spending
| more than that this year.
| woeirua wrote:
| Yeah, I thought they were trying to raise $40B. $9B doesn't
| even cover the bills for this upcoming year.
| onlyrealcuzzo wrote:
| Didn't OpenAI's last raise in March value them at $300B [1]?
|
| [1] https://www.channelinsider.com/news-and-trends/us/open-ai-
| fu...
|
| Crunchbase appears to list it as $157B [2], but I seem to find
| the other terms & valuations more commonly.
|
| [2] https://news.crunchbase.com/venture/biggest-rounds-
| october-2...
| ozzy6009 wrote:
| Looks like it is talking about the same thing:
|
| > OpenAI has raised $8.3 billion at a $300 billion valuation,
| months ahead of schedule, as part of its plan to secure $40
| billion in funding this year, DealBook has learned. Back in
| March, OpenAI announced its ambitious funding plans, with
| SoftBank committing to provide $30 billion by year-end.
| softwaredoug wrote:
| IMO they are overvalued considering the competition from Google
| and Anthropic. They're not doing much interesting, unless they
| release GPT-5 and its a gamechanger.
| _fat_santa wrote:
| Given their current product offerings, I really don't see a way
| they could ever justify a $300B valuation unless they get
| everyone on the planet to subscribe to their $200/month plan.
|
| I'm calling it now: investors are gonna get burned hard on this
| one. Cause right now all they have is "well we are working on
| superintelligence" and to that I say "great, then what?". Even if
| they do make that breakthrough I don't see how that will equate
| to that kind of valuation, especially considering that Anthropic
| and Google are both hot on their heels.
| mgfist wrote:
| > OpenAI's business continues to surge. DealBook hears that the
| company's annual recurring revenue has soared to $13 billion,
| up from $10 billion in June -- and is projected to surpass $20
| billion by the end of the year.
|
| This is why.
|
| Of course $300B still implies a lot of growth, but when you're
| growing 100% in 6 months at $10B in ARR, you can demand a lot.
| indigodaddy wrote:
| And what's the profit on the 13B?
| mgfist wrote:
| Irrelevant at this stage.
| KerrAvon wrote:
| the problem with the post-dotcom market in a nutshell.
| everything's a bubble. bubbles have more durability now.
| until they don't.
| mgfist wrote:
| Sure, but this mentality always would result in missing
| out on the trillion dollar companies that followed these
| types of growth curves.
|
| Surely you must understand that prioritizing growth over
| profit makes economic sense in the long run for a company
| like OpenAI.
| pphysch wrote:
| Enron was also "growing" a lot when it was in full "paper
| tiger" mode.
| mgfist wrote:
| Ok, and? Last I heard were talking about OpenAI, not Enron.
| rvba wrote:
| Come on: openAI has a product that you can "touch" - both
| on your phone /home computer and at work, since their tech
| sits behind copilot (msft hit the jackpot with the
| licence).
|
| It is a virtual product yes, but come on - no vapoware.
|
| At work I see it - people want the better (and more
| expensive ) licences
| boringg wrote:
| There is A LOT of optionality to get different revenue streams
| that aren't strictly retail buying subs.
|
| Whether they are able to do that, customer stickiness and the
| trade off of damage to the quality of their product by driving
| revenue remain the largest long term questions in my mind
| (outside of the viability of super intelligence).
| scottyah wrote:
| They're going to sell glasses with cameras that analyze your
| life to better assist your AI in product placement. Set gentle
| reminders that three of your friends have the new fall color
| line Stanley Cups, and remind you to get one before your
| nemesis does.
| disgruntledphd2 wrote:
| They're currently "worth" 3.2 Stripes, which seems pretty
| absurd to me. (I'm now using 1 Stripe as a metric to measure
| the valuation of AI companies).
| beering wrote:
| Do you think that is absurd because OpenAI is overvalued? Or
| because Stripe is overvalued? Or one of them is undervalued?
| svantana wrote:
| > get everyone on the planet to subscribe to their $200/month
| plan
|
| Not necessarily. Google is valued 7x that and most people don't
| pay them anything. They just make ridiculous money from ads for
| insurance and loans. Meanwhile, ChatGPT is the #1 app and the
| #5 website, which should really worry google (and it does by
| all accounts).
| peab wrote:
| yeah, it's pretty easy to see how openai could steal those
| high paying queries from Google, if they continue growing at
| this rate.
| grues-dinner wrote:
| I assume the plan is getting AI into everything and making
| millions of data centipedes that eventually lead back to
| their APIs.
|
| Then embed ads.
| alfalfasprout wrote:
| Yes, and they have a monopoly on the ad market. Whereas a
| SOTA LLM can be used to bootstrap an almost-as-good LLM. The
| gap is shrinking between SOTA models and there's now fierce
| competition.
|
| Moreover, ads are a very high ROI business. The profit
| margins on SOTA LLM offerings are razor thin or negative.
| svantana wrote:
| > they have a monopoly on the ad market
|
| Only if you look narrowly at search ads, but really they
| compete with Meta, Tiktok and X for ad spend. And the
| quality of the LLMs is beside the point, just like search
| engine quality. ChatGPT has a near monopoly on 'AI'
| mindshare, with the general public.
| vasco wrote:
| What they mean is there's no moat in a SOTA model.
| an0malous wrote:
| They're going to sell to the military, that's why they hired
| the former NSA director into their board. The current state of
| AI is a perfect mass surveillance technology.
| delusional wrote:
| > The current state of AI is a perfect mass surveillance
| technology.
|
| How? Are you just going to ask the LLM about who is doing the
| crime? OpenAI is not an "AI company", it's an "LLM company".
| rwmj wrote:
| You do what they're already doing - ask the LLM to
| summarise someone's entire facebook feed (including all the
| private stuff they can access) into a few bullet points.
| Whether it works reliably is a different matter.
| an0malous wrote:
| You ask it to do the things that human analysts already
| currently do with the vast amounts of text, image, and
| video data they collect but at an unprecedented scale. You
| can extract what people are talking about, identify people,
| weapons, or objects in images, extract addresses, license
| plate numbers, or other identifying references. It can
| probably even detect when people are using coded language
| that won't trigger explicit keywords.
|
| OpenAI is an AI company, it's literally in the name. Even
| currently they use more than LLMs, they use other
| transformers and related technology in the field of AI.
| topato wrote:
| There's also the option of running sentiment analysis on
| social media posts, easily allowing placing individuals
| on a left-to-right scale of political leaning.
| adriand wrote:
| Yes, you can do all those things, and critically, if the
| bottom falls out of the market, you can make that case to
| the US government, complete with a fear-based narrative
| (China!) and get bailed out by the American taxpayer.
| rvba wrote:
| It is even worse. The AI can build a profile of you and
| then feed you stuff that works on you.
|
| Not even fear, more like a personal bubble that feeds you
| stuff that works on you
| vessenes wrote:
| Startup-land valuations are for PR. The real negotiation is in
| the discount and the cap, warrants, etc.
|
| That $8.3b came in early, and was oversubscribed, so the terms
| are likely favorable to oAI, but if an investor puts in $1b at
| a $300b valuation (cap) with a 20% discount to the next round,
| and the company raises another round at $30b in two months;
| good news: they got in at a $24b price.
|
| To your point on Anthropic and Google; yep. But, if you think
| one of these guys will win (and I think you have to put META on
| this list too), then por que no los quatro? Just buy all four.
|
| I'll call it now; they won't lose money on those checks.
| itkovian_ wrote:
| I'm gonna go ahead and guess they didn't raise 8.3b on SAFEs
| MangoCoffee wrote:
| >I'm calling it now: investors are gonna get burned hard on
| this one.
|
| I'm in my late 40s. I'm Gen X. I lived through the glory days
| of the dotcom boom, when investors got burned for tons of
| money. But from the ashes of those bullshit companies, we got
| Amazon, Google, etc., which made investors rich beyond belief.
|
| SoftBank's Masayoshi Son made a bet on Alibaba ($20 million,
| its stake now worth $72 billion), and he's been living off that
| wealth ever since. I haven't seen him make any good bets
| lately. investors don't really care if 100 of the shit they
| throw don't stick because all they need is just one.
| zozbot234 wrote:
| Amazon is technically a dotcom company. (I.e. it was around,
| and quite successful, during the dotcom era.)
| pera wrote:
| Yeah by 2001 Amazon was already cash flow positive.
| ac29 wrote:
| > I'm in my late 40s. I'm Gen X. I lived through the glory
| days of the dotcom boom, when investors got burned for tons
| of money. But from the ashes of those bullshit companies, we
| got Amazon, Google, etc., which made investors rich beyond
| belief.
|
| True, but I think they were talking specifically about the
| direct investors in OpenAI.
|
| "Investors" writ large will likely continue to have good long
| term returns (with occasionally significant short term
| volatility).
| IshKebab wrote:
| I think he made a good profit on ARM, and probably most
| people wouldn't have called that. More than enough to cancel
| out WeWork. But looking at their overall value over 5
| years... it's pretty random; you could have done just as well
| investing in index funds. He clearly got super lucky with
| Alibaba and once you're mega rich it's not hard to stay mega
| rich.
| lelanthran wrote:
| Firstly, the $200/m plan is at a loss, they'll make a profit on
| PAYG tokens, not plans.
|
| Secondly, this is looking very risky: they are at the bottom of
| the value chain and eventually they'll be running on razor thin
| margins like all actors who are at the bottom of the value
| chain.
|
| Anything they can offer is doable by their competitors (in
| Google's case, they can even do it cheaper due to ow ing the
| vertical which OpenAI doesn't own).
|
| Their position in the value chain means they are in a
| precarious spot: any killer app for AI that comes along will be
| owned by a customer of OpenAI, and if OpenAI attempts to skim
| that value for itself that customer will simply switch to a new
| provider of which there are many, including, eventually, the
| customer themselves should they decide to self host.
|
| Being an AI provider right now is a very risky proposition
| because any attempt to capture value can be immediate met with
| "we're switching to a competitor" or even the nuclear "fine,
| we'll self host an open model ourselves".
|
| We'll know more only when we see what the killer app is, when
| it eventually comes.
| notfromhere wrote:
| Maybe the better analogy for LLM businesses isn't SaaS but
| more like power generation.
|
| If AI really becomes that ubiquitous then OpenAI capturing
| that value is no less ridiculous than ComEd capturing the
| value of every application of electric power.
| zozbot234 wrote:
| What OpenAI has is the know-how in developing new models
| and training them efficiently. That's a kind of value they
| can provide even in a world where open-sourced local models
| are in common use.
| notfromhere wrote:
| Sure but so do like a dozen other companies. Given that
| models bump past each other every few months, I haven't
| seen anything that says they have any kind of competitive
| advatange.
| empiko wrote:
| Considering their budget, their research is a bit
| underwhelming. At this point, anybody is able to match
| their models. No technology moat whatsoever despite
| infinite money glitch.
| 7952 wrote:
| So they become a consultancy?
| nzealand wrote:
| The real revenue opportunity for OpenAI is advertising. More
| than 25% of Americans use ChatGPT instead of Google, and
| OpenAI has already announced partnership with Shopify to
| directly list products. But for now they are focused on
| market share.
|
| Google does not really own the complete AI stack, NVDA is
| extracting a lot of the value there.
|
| Google has two other impediments to doing what ChatGPT does.
|
| Googles entire business model is built around search. They
| have augmented search with AI, but that is not the same as
| completely disrupting an incredibly profitable business model
| with an unprofitable and unproven business model.
|
| Also... Americans are in the habit of going to ChatGPT now
| for AI. When you think of AI, you now think of ChatGPT first.
|
| The real risk is we are at the tail end of a long economic
| boom cycle, OpenAI is incredibly dependent on additional
| funding rounds, and if we recess access to that funding gets
| cut off.
| dmix wrote:
| I also believe the main business will be via APIs and
| integrations, but wouldn't be surprised on the consumer
| side if it ends up being on phones, in your house ala
| Alexa, in your car etc. Big brands typically win in B2C.
| Tons of affiliate and transactional potential (ie, do my
| grocery shopping or buy tshirt). That's assuming LLMs don't
| plateau and become generic with minor specialization like
| databases.
| disqard wrote:
| > Google does not really own the complete AI stack, NVDA is
| extracting a lot of the value there.
|
| ...not sure what you're implying.
|
| Google most _definitely_ has their own stack (spanning
| hardware-to-software) for AI. Gemini was trained on in-
| house TPUs:
|
| https://www.forbes.com/sites/richardnieva/2023/12/07/google
| -...
| mlboss wrote:
| I would argue that Google is even better place for
| advertising. All they need to do is enable advertising in
| Gemini. There is a whole ecosystem already in place for
| Google advertising.
| LZ_Khan wrote:
| I feel like being at the bottom of the value chain is a mis-
| categorization. If you consider base LLM model as their sole
| offering I agree with you, but these companies have shown an
| eagerness to eat their way up the value chain. Agent mode,
| Search, Study Mode, AI code editors, are such examples of
| products that could be higher-on-the-chain startups but are
| offered in-house by OpenAI.
|
| This reminds me of Amazon choosing to sell products that it
| knows are doing well in the marketplace, out-competing third
| party sellers. OpenAI is positioned to out-compete its
| competitors on virtually anything because they have the
| talent and more importantly, control over the model weights
| and ability to customize their LLMs. It's possible the
| "wrapper" startups of today are simply doing the market
| research for OpenAI and are in danger of being consumed by
| OpenAI.
| eduardofcgo wrote:
| OpenAI valued at 300B will never be able to produce the
| same products "wrappers" that these 5 people startups are
| making. Same reason Facebook could not make Instagram, of
| Jira could never make bootcamp for example.
| LZ_Khan wrote:
| Counterexample- Facebook made Threads which has similar #
| users as Twitter now.
| cyberpunk wrote:
| .... Does anyone actually use Threads? I've never once
| seen a threads link and I understood the user count was
| just because every facebook or IG or whatever user
| automatically got a generated account?
| eduardofcgo wrote:
| Didn't it came out recently that those numbers were
| bugus, since basically every Instagram account must have
| a Threads account, and those are not actual active users?
| wand3r wrote:
| I think you are correct, but my hot take is that they will
| capture most of the G7 through scummy regulatory capture and
| bundling with Microsoft. They will use this to mostly
| dominate the markets and run at small profitable margins.
| They will then pad out revenue by bundling in advertisement
| and agenda based pay to play messaging. They will also do a
| bunch of military and government contracts, take positions in
| profitable applications (or simply copy them) and maybe even
| do a hardware offering. Ultimately the company will end up
| being something like a facebook/google/palantir/apple hybrid.
| I'll admit the execution barrier is high, but the valuation
| is justified if they achieve. These are proven executors who
| have a nearly sociopathic capitalist mindset with deep ties
| to governments and corporations globally. I think it's
| probably likely they execute and if they fail in the grand
| scheme, it's hard to imagine they fail enough to bring down
| the company.
|
| Let's not forget this company was founded by basically
| stealing seed investment from the non-profit arm, completely
| abandoning the mission, crushing dissent in the company and
| blackmailing the board. Sam will do anything to succeed and
| they have the product and powerbase to do it.
| minraws wrote:
| I don't think they are at the bottom and that's the issue.
|
| Nvidia is at the bottom or if we get charitable cloud
| providers.
|
| They are the ones who would have the margins, from their rent
| seeking.
|
| And to be frank other than consumers everyone else is at the
| fucking bottom..
|
| Getting squeezed for user acquisition when the margins of the
| old and cheap internet software service don't exist.
| skeptrune wrote:
| What are you talking about? All they have to do is sell ads at
| this point
| antonvs wrote:
| As a large language model, I cannot help you with your
| request, but have you heard about the latest Starbucks Summer
| Frapulaccini?
| alephnerd wrote:
| > I really don't see a way they could ever justify a $300B
| valuation
|
| Their ARR is around $13B. A 23x multiple is acceptable when
| compared against peers with a similar ARR.
|
| > unless they get everyone on the planet to subscribe to their
| $200/month plan
|
| I used to be a sceptic as well, but OpenAI successfully built
| their enterprise GTM. A number of corporate AI/ML apps are
| using OpenAI's paid APIs in the background.
| philjohn wrote:
| > unless they get everyone on the planet to subscribe to their
| $200/month plan.
|
| that would be a monthly recurring revenue of 200 x 7bn =
| $1,400,000,000,000 or $1.4tn a month, $16.8tn per year!
|
| I think they've be valued a bit higher than $300bn if that were
| the case.
| sapphicsnail wrote:
| I think it was hyperbole
| fragmede wrote:
| Obviously. But if you look at the math, 20 million people
| paying $200/month justifies a $300b valuation for a saas
| business, so saying $300b isn't justified because it's a
| big number is lazy thinking.
| kevingadd wrote:
| Isn't that $4b in raw revenue per month, or $48b/year?
| That's not even considering the expenses to operate the
| service and deliver the $200/mo product. I don't see how
| that automatically equates to a $300b valuation. A high
| valuation, to be sure, but...
|
| I'm still very curious whether OpenAI is turning a profit
| on any of their services.
| impossiblefork wrote:
| It also seems that Google might be slightly ahead, since they
| claim to have released something in the style of their IMO-
| winning model and have the claim that it's useful to
| professional mathematicians.
|
| I haven't tried it yet though.
| riku_iki wrote:
| > Given their current product offerings, I really don't see a
| way they could ever justify a $300B valuation unless they get
| everyone on the planet to subscribe to their $200/month plan.
|
| the strongest opportunity is to compete with google on search
| queries, and make money from ads (200B annual revenue)
| svara wrote:
| > Cause right now all they have is "well we are working on
| superintelligence" and to that I say "great, then what?
|
| Then you ask your superintelligence for advice on how to make
| money, obviously.
| deadbabe wrote:
| Instead of everyone on the planet, how about 800 million people
| paying $2k/month?
| toephu2 wrote:
| Also, how would they go public? Do to their legal structure,
| has it been determined how they can IPO?
| fisherjeff wrote:
| Just picking a semi-related stock, NVDA trades at ~30x gross
| revenue, so a $300B "only" translates into ~$10B in revenue.
| And OpenAI can ask for a better multiplier because I'm sure
| they're forecasting a ton of growth and a ton of cost savings.
| missinglugnut wrote:
| NVDAs valuation is insane. At 30X revenue, they could double
| sales and reduce expenses to zero and they'd still need a
| story about future growth to justify the valuation.
|
| Consider this: Nvidia doesn't do the manufacturing, just the
| engineering. If we had AI super intelligence, you'd just need
| to type "give me CUDA but for AMD" into chatGPT and Nvidia
| wouldn't be special anymore. Then someone at TSMC could type
| "design a gpu" and the whole industry above them would be
| toast.
|
| There's no reason to expect an engineering firm to win if AI
| commoditizes engineering. It's very possible to change the
| world and lose money doing it.
| vasco wrote:
| Super intelligence doesn't make it real it just knows how.
| You can't type "bring me a moon rock" to it.
| ab_testing wrote:
| You have to look at Palantir revenue and market cap to justify
| this. Palantir is around $1B in revenue and around 350B market
| cap. They build AI solutions for the government. I think OpenAI
| has something similar in mind. They got the AI part and the
| government contract part and now just need to capitalize on it.
| Also from what I have heard, they are at $5B in revenue anyway.
| boringg wrote:
| Why is this article from nytimes - they aren't a great source for
| VC deal info.
| dgb23 wrote:
| From online discourse and talking to people in different sectors
| that are impacted by "AI", I feel like there is great
| uncertainty, incredible hype and doomerism at the same time.
|
| My intuition is that we're in a huge tech bubble that will
| correct at some point. I don't know when that is or how severe it
| will be. But why should this tech hype cycle be qualitatively
| different from any of the others?
| MangoCoffee wrote:
| Sweet VC money fueling the AI hype. Funny enough, my TikTok feed
| recently started showing videos about how corporate America is
| going to replace workers with AI. I even came across an interview
| with Marc Benioff where he said Salesforce will deploy AI to help
| with engineering.
| throwawaylaptop wrote:
| Who wouldnt deploy AI to help with engineering? The question
| is, will it help so much that you need fewer engineers, or will
| you simply be ecstatic that your engineers are now a little or
| a lot more productive. If you have x engineers, and your
| competitor has the same x number of engineers.. and you both
| start using AI, are you going to layoff half your engineers
| when your competitor doesn't? Unless your cash strapped and
| also don't have any plans for new development, I suppose yes.
| But otherwise, it's just another thing you need.
| v5v3 wrote:
| What does OpenAI have over XAI to make such a difference in
| valuation?
|
| XAi includes x/twitter and lots of hardware and is valued at $113
| billion
|
| https://www.eweek.com/news/elon-musk-xai-valuation-debt-pack...
| sollewitt wrote:
| I think _not_ having Elon Musk is worth a couple of hundred
| billion in 2025, the guy has become a random liability
| generator.
| jsnell wrote:
| XAI does not include Twitter, as far as I know? Aren't they
| separate entities? But Twitter can't be worth more than a
| couple of tens of billions at the most.
|
| Things OpenAI has that XAI doesn't:
|
| Hundreds of millions, if not already a billion, active users. A
| household brand-name. >$10B in revenue.
|
| In comparison XAI's revenue appears to be in the hundreds of
| millions/year and their brand is currently in the gutter after
| the recent spate of scandals. Their main differentiating factor
| is using their AI to power an anime waifu[0] companion app.
|
| [0] I don't think it's judgmental to use this term when they
| were doing so in their own job ad titles
| v5v3 wrote:
| X was sold to xAI earlier this year.
|
| https://www.bbc.com/news/articles/ceqjq11202ro
| jajko wrote:
| It doesnt have an owner who is open nazi sympathiser and doesnt
| wage frequent petty verbal wars with most powerful person on
| the planet, at least on the paper?
|
| trump could make musk go away in a blink, literally abd
| figuratively. He wont do it, probably, we will see.
| timmg wrote:
| Does xAI have a similar amount of revenue/customers? (I've
| personally never heard anyone talk about using it -- except on
| Twitter.)
| christianqchung wrote:
| I thought they were going for $340B?[0]
|
| [0] https://www.cnbc.com/2025/01/30/openai-in-talks-to-raise-
| up-...
| alexnewman wrote:
| Aren't they a non profit. Do I get stock for my donation?
| hodder wrote:
| I'd give my left nut to buy into OpenAI at this valuation. 300B
| is peanuts compared to where it would trade publicly, FCF and net
| income be damned. The growth and the optionality are there when
| you bring a tool this valuable to the world. This is destined to
| trade over 2T rapidly imo. PLTR (granted imo a bubble) trades
| above that, and PLTR is basically a glorified IBM/Accenture
| business model with mediocre growth.
| adammarples wrote:
| If you owned 100% of OpenAI, and you weren't allowed to sell
| it, how would you go about using it to generate $2Tn?
| rich_sasha wrote:
| How much do investors make on average on VC? I mean, OpenAI is
| hardly a startup. But VC money can't be a one way street forever.
| So either:
|
| - VC invests on the whole sensibly and makes a return that
| justifies 10-15 year lock-in
|
| - VC has somehow changed and is now unsustainable, it is a one
| way cash flow and it will blow up like MBS did
|
| - VC sustainably delivers mediocre returns and gets some money
| in, some money out, but nothing special
|
| Im not sure which it might be.
| zeroonetwothree wrote:
| I would bet on #3
| ls612 wrote:
| #4: VC takes more risk (in the form of portfolio volatility on
| longer time horizons; look at the post dot com bust returns)
| and since capital markets in the US are reasonably efficient
| they get more expected returns for that risk.
| guywithahat wrote:
| I mean it could be the investor knows the company wants to IPO
| and expects to make quick cash before they go public. Given the
| size of the company, it could be a short term play where they
| expect them to IPO at 500B in the next year or two
| solatic wrote:
| > make on average
|
| This completely misses the boat on venture capital, which is
| almost by definition the riskiest of all risky bets. Any smart
| LP throwing $X into a fund has a portfolio valued, at the very
| least, at 100 if not 1000 times X. It is simply the way to
| expose the high-risk portion of the portfolio to that level of
| risk at the size of the investment needed. Being high-risk,
| probably it will return nothing. But it might not.
| rich_sasha wrote:
| It is the average that matters in the end. How much new money
| flows into VC per year? Some number of $1e9 - hundreds
| perhaps? What happens to it?
|
| If its all a folly and the money is burnt, it cannot last.
| But otherwise, these VCs investing at what looks like crazy
| valuations can't all be idiots.
| Ekaros wrote:
| How often playing with someone else's money happens? Investing
| in the top name sounds prudent to your investors or at least is
| reasonably inside the lines. Then you just skim of your cut on
| the capital given to you to invest. And while this is happening
| the numbers going up makes the valuations look good. Even if
| all the money was already burned.
| frognumber wrote:
| Personally, my estimate of a rational valuation would be:
|
| $1-2T with no legal risk.
|
| $300B assuming a rational and uncorrupt government, which should,
| at some point, kick them back to non-profit status, and convict
| people for fraud
|
| Of course, too-big-to-fail means this won't happen.
| nabla9 wrote:
| OpenAI hits $12 billion in annualized revenue, The Information
| reports https://www.reuters.com/business/openai-hits-12-billion-
| annu...
| rwmj wrote:
| Don't worry, they might be making a loss on each transaction
| but they'll make it up in volume..
| Ekaros wrote:
| They have invested how much money and still not producing
| enough volume?
| dmix wrote:
| So about the same revenue as SpaceX.
| hu3 wrote:
| SpaceX is unique.
|
| OpenAI is one of many.
| cactusplant7374 wrote:
| The many being companies that no one has heard of and only
| have a following here.
| ac29 wrote:
| SpaceX has a price advantage over their competitors, not a
| capability advantage.
|
| Putting things in orbit has been possible for ~70 years
| vasco wrote:
| Frequency of launches is a capability.
| raldi wrote:
| But what's SpaceX's revenue growth rate?
| amradio1989 wrote:
| Pretty insane valuation. It may pay off, it may not. Google
| search was vastly superior to its competitors. I don't think
| ChatGPT has that kind of edge.
|
| This is a monopoly kind of valuation where no monopoly exists.
| Its like paying Microsoft billions for Internet explorer.
|
| Personally I believe the future of AI models is open-source. The
| application of these models will be the real revenue driver.
| cactusplant7374 wrote:
| How would an average person even tell if ChatGPT was better
| than its competitors? Most people aren't running enough prompts
| every month to even care. Everyone knows ChatGPT and no one
| knows its competitors. It's going to stay like that.
| jm20 wrote:
| It's so funny. Every single time a company raises a ton of money
| at a large valuation, the comments are always filled with "how do
| they justify this valuation" or "they aren't work X...because Y
| and Z do the same thing".
|
| VC math is pretty simple - at the end of the day, there's a
| pretty large likelihood that at least 1 AI company is going to
| reach a trillion dollar valuation. VCs want to find that company.
|
| OpenAI, while definitely not the only player, is the most
| "mainstream". Your average teacher or mechanic uses "chatgpt" and
| "AI" interchangeably. There's a ton of value in becoming a vowel,
| even if other technically superior competitors exist.
|
| Furthermore, the math changes at this level. No investor here is
| investing at a $300B valuation expecting a 10x. They're probably
| expecting a 3x or even a 2x. If they put in 300MM, they still end
| up with 600-900MM.
|
| This isn't math on revenue, it's a bet. And if you think in terms
| of risk-adjusted bets, hoping the most mainstream AI company
| today might at least double your money in the next ten years in a
| red-hot AI market is not as wild as it seems.
| joshka wrote:
| I'm curious about how something like this affects compensation?
| OpenAI's compensation model is generally to use profit share
| instead of equity share. PPUs (Profit Participation Units) rather
| than RSUs (Restricted Stock Units).
| joshka wrote:
| I found the answer. Comp equity offers are based on the
| previous valuation at the last tender event. So now would still
| be a really good time to join OpenAI. I'm guessing this raise
| is likely a leading indicator of what that will trend towards
| in future.
| reducesuffering wrote:
| So many comments talking about revenue, investors, profit, etc.
|
| Remember when this company was a _non-profit_?! Our legal system
| is awful for letting this slide. The previous board was right.
| pmdr wrote:
| It's still pretty much nil-profit.
| moomin wrote:
| Routine reminder that if newspapers should quote the valuation
| implied by the debt, not the equity, in mixed deals.
| nextworddev wrote:
| It should be on track to becoming a $1trn company
| MagicMoonlight wrote:
| They haven't released a new model in ages and their research
| seems dead in the water. People are going to get burned on all
| these meme stocks.
| jonplackett wrote:
| How weird would it be though if OpenAI actually did go under.
| So many things are now built on top of this thing. Is it only
| really economically viable because it's being subsidised by
| generous venture caps?
| pointlessone wrote:
| Didn't they promise GPT-5 this month? The one that got gold on
| IMO?
| klysm wrote:
| 300 billion is completely absurd
| cedws wrote:
| I think NVIDIA's is absurder. Higher than Apple, Microsoft,
| Google. They're the number one for AI chips, but they're not
| the only company that can make them.
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