[HN Gopher] OpenAI signs $38B cloud computing deal with Amazon
___________________________________________________________________
OpenAI signs $38B cloud computing deal with Amazon
Author : donohoe
Score : 164 points
Date : 2025-11-03 14:20 UTC (8 hours ago)
(HTM) web link (www.nytimes.com)
(TXT) w3m dump (www.nytimes.com)
| thelastgallon wrote:
| How much is Amazon 'investing' in OpenAI for this deal?
| throw03172019 wrote:
| Will OpenAI models be available in Bedrock?
| easton wrote:
| Last week's Microsoft deal said Azure was still exclusive:
| https://openai.com/index/next-chapter-of-microsoft-openai-pa...
|
| But that feels weird combined with this. You can buy OpenAI API
| access which is served off of AWS infrastructure, but you can't
| bill for it through AWS? (I mean, lots of companies work like
| that. but Microsoft is betting that a lot of people move
| regular workloads to Azure so they can have centralized billing
| for inference and their other stuff?)
| f4uCL9dNSnQm wrote:
| It says
|
| > Non-API products may be served on any cloud provider.
|
| I am not sure if Bedrock counts. There are 2 OpenAI models
| already there: https://aws.amazon.com/blogs/aws/openai-open-
| weight-models-n...
| samcat116 wrote:
| I would imagine they couldn't offer models through Bedrock.
| I think this means training and traditional computing
| workloads for their products (such as the workspaces for
| Codex cloud)
| JCM9 wrote:
| Does OpenAI have $38 billion to buy this? Does AWS have
| sufficient free cash flow to pay for this "infrastructure"
| investment they speak of?
|
| Recent analysis shows AWS is burning through Amazon's free cash
| on AI buildouts which is very concerning if the bubble pops,
| leaving Amazon holding the bag of invested capital not making
| returns.
|
| Amazon is a bit late to the party on these headlines, and lots of
| unanswered questions about what's really going on here.
| gizajob wrote:
| No, they don't have the money at the bottom of their burning
| pit of other peoples cash.
| vessenes wrote:
| oAI is growing rapidly at over $1bn a month in revenues, maybe
| as much as $2bn if you read between the lines from Sam's
| interviews. Over 7 years will they see $38bn of revenue demand
| against inference? ABSOLUTELY. Is it an incredibly good trick
| to get access to that much infrastructure without having to run
| a datacenter while you pilot the fastest growth ever consumer
| tech company? I'd say it is. Others might disagree
| cmiles8 wrote:
| Amazon is a bit late to the announcements party on this front so
| this comes across as a bit "hey guys, us too!"
|
| Lots of questions on if this makes sense, and highly likely
| Amazon never gets $38B cash from OpenAI out of this.
| mocha_nate wrote:
| i think this shows Amazon filling a need Microsoft couldn't.
| They probably tried, but decided to use Amazon cloud services
| after reviewing infrastructure needs.
| Handy-Man wrote:
| MSFT is power constrained.[0]
|
| [0] https://www.tomshardware.com/tech-industry/artificial-
| intell...
| mike_d wrote:
| Everyone is. The grids always had a problem supplying
| enough power to even modestly sized commercial datacenters.
| This is what kicked off the trend of companies building
| their own datacenters in obscure cities that used to house
| large steel mills or other power hungry businesses.
|
| I remember when everyone was racing to produce "datacenter
| in a shipping container" solutions. I just laughed because
| apparently nobody actually bothered to check if you could
| actually plug it in anywhere.
| bespokedevelopr wrote:
| Amazon still does this. The customers aren't saas
| companies in the bay though. It's militaries, and they're
| sent to FOBs.
| ahmeneeroe-v2 wrote:
| >"hey guys, us too!"
|
| In what context? This isn't fashion, being the 2nd mover has
| benefits which often outweigh the costs.
| Havoc wrote:
| They sure seem to be writing a lot of cheques. Hope they all cash
| ok because if they don't it'll suck the entire tech industry down
| with it
| gizajob wrote:
| Those cheques absolutely are going to bounce at some point and
| will bring the entire tech industry down. At least on the stock
| market.
| jgbuddy wrote:
| This is crazy, satya punching the air rn
| Handy-Man wrote:
| I don't think they care that much. They just aren't able to
| keep up with the infra that OpenAI wants.
|
| https://www.tomshardware.com/tech-industry/artificial-intell...
| ChrisArchitect wrote:
| Official post: https://openai.com/index/aws-and-openai-
| partnership/ (https://news.ycombinator.com/item?id=45799021)
| datax2 wrote:
| Looks like someone knew about this on Thursday, gotta love those
| over efficient market trends.
| silisili wrote:
| Thursday was their last earnings call.
| PKop wrote:
| No they just had a great quarterly earnings report that day.
| Try to put the absolute minimal effort into checking the
| obvious before you revert to conspiracy.
| netdevphoenix wrote:
| This looks quite concerning imo. We all know this is a bubble.
| When the transformer implosion happens, you can be sure that
| OpenAI will be ground zero. All these investors feeding OpenAI
| and all these adjacent companies exposing themselves to OpenAI
| will suffer huge losses. Everyone is chasing growth so hard that
| they are making questionable choices regarding returns from a far
| future that may never come. And let's be clear, the future that
| is going to pay this off is a future where this tech or a direct
| successor to this tech brings about a level of general learning
| skills and autonomy that should be pretty close to a third
| revolution. Anything else is massive loves for all of these
| companies.
| lm28469 wrote:
| Like in politics, all they care about is getting out before
| shtf and pass the bag to the next sucker while making $$$ in
| the meantime
| empath75 wrote:
| You are stating a lot of things as fact that aren't really
| supported. We don't know this is a bubble, we don't know that
| there will be a transformer implosion, whatever that means, we
| don't know that OpenAI would ground zero if this is a bubble
| and it pops, etc..
| indigodaddy wrote:
| No one ever knows before these things happen. These
| predictions are obviously always conjecture, they can't be
| stated as fact, ever-- at best you can give some supporting
| evidence often based on similar prior art
| indigodaddy wrote:
| loves is typo for losses I assume?
| treis wrote:
| Nah this is a repeat of Google's early days. They built storage
| at such a scale that it was hard for anyone else to compete in
| anything that required storage like email.
|
| OpenAI is doing the same with compute. They're going to have
| more compute than everyone else combined. It will give them the
| scale and warchest to drive everyone else out. Every AI company
| is going to end up being a wrapper around them. And OpenAI will
| slowly take that value too either via acquisition or cloning
| successful products.
| kilroy123 wrote:
| Google, too, has a lot of compute. Not to mention the chips
| to power the compute.
| pityJuke wrote:
| And they own the compute, as opposed to renting some of it.
| And they have the engineers to utilise that compute.
| gizajob wrote:
| If only everyone in the world had compute in their pockets or
| on their desk...
| sipjca wrote:
| seems like a flawed assumption when the cost of tokens -> 0
| mdasen wrote:
| But is OpenAI building that compute or are they renting it?
|
| OpenAI and Anthropic are signing large deals with Google and
| Amazon for compute resources, but ultimately it means that
| Google and Amazon will own a ton of compute. Is OpenAI paying
| Amazon's cap ex just so Amazon can invest and end up owning
| what OpenAI needs over the long term?
|
| For those paying Google, are they giving Google the money
| Google needs to further invest in their TPUs giving them a
| huge advantage?
| treis wrote:
| Practically, it doesn't matter like it didn't matter for
| Google that storage got many orders of magnitude cheaper.
| By the time training a novel LLM and serving it to a
| billion users is trivial in the way that providing 1GB of
| email storage is today there will be other moats. They'll
| have decades of user history and a monitization framework
| that will be hard to overcome.
|
| Google is a viable competitor here.
|
| Everyone else is missing part of the puzzle. They
| theoretically could compete but they're behind with no
| obvious way of catching up.
|
| Amazon specifically is in a position similar to where they
| were with mobile. They put out a competing phone but with
| no clear advantage it flopped. They could put out their own
| LLM but they're late. They'd have to put out a product that
| is better enough to overcome consumer inertia. They have no
| real edge or advantage over OpenAI/Google to make that
| happen.
|
| Theoretically they could back a competitor like Anthropic
| but what's the point? They look like an also ran these days
| and ultimately who wins doesn't affect Amazon's core
| businesses.
| esafak wrote:
| How is Anthropic an also-ran when they lead the
| enterprise market?
| dybber wrote:
| Do they? Doesn't big corporations just buy CoPilot from
| Microsoft where they already have a license for Office,
| Teams, GitHub, Visual Studio, Azure etc.?
| bespokedevelopr wrote:
| FB seems to have figured it out finally and their stock
| took a huge hit for the investment of infra. Also,
| despite being behind in sota models and huge human
| capital investments for research, I believe they are
| benefiting greatly from oai and the likes.
|
| Every image/video/text post on a meta app is essentially
| subsidized by oai/gemini/anthropic as they are all losing
| money on inference. Meta is getting more engagement and
| ad sales through these subsidized genai image content
| posts.
|
| Long term they need to catch up and training/inference
| costs need to drop enough such that each genai post costs
| less than net profit on the ads but they're in a great
| position to bridge the gap.
|
| The end of all of this is ad sales. Google and Meta are
| still the leaders of this. OpenAI needs a social
| engagement platform or it is only going to take a slice
| of Google.
| JimDabell wrote:
| > OpenAI is doing the same with compute.
|
| No, it's _Amazon_ that's doing this. OpenAI is paying Amazon
| for the compute services, but it's Amazon that's building the
| capacity.
| pphysch wrote:
| Pretty sure this "compute is the new oil" thesis fell flat
| when OAI failed to deliver on GPT-5 hype, and all the
| disappointments since.
|
| It's still all about the (yet to be collected) data and
| advancements in architecture, and OAI doesn't have anything
| substantial there.
| XorNot wrote:
| It's absolutely no longer about the data. We produce
| millions of new humans a year who wind up better at
| reasoning then these models but don't need to read the
| entire contents of the Internet to do it.
|
| A relatively localized, limited lived experience apparently
| conveys a lot that LLM input does not - there's an
| architecture problem (or a compute constraint).
| kingstnap wrote:
| I think GPT 5 is pretty good. My use case is vscode copilot
| and the GPT 5 Codex model and the 5 mini model are a lot
| better than 4.1. o4 mini was pretty good too.
|
| Its slow as balls as of late though. So I use a lot of
| sonnet 4.5 just because it doesn't involve all this waiting
| even though I find sonnet to be kinda lazy.
| Keyframe wrote:
| _Every AI company is going to end up being a wrapper around
| them._
|
| the race is for sure on:
| https://menlovc.com/perspective/2025-mid-year-llm-market-
| upd...
| lizknope wrote:
| Are we at the Pets.com stage of the bubble yet?
|
| I started working in 1997 at the height of the dot com bubble.
| I thought it would go on forever but the second half of 2000
| and 2001 was rough.
|
| I know a lot of people designing AI accelerator chips. Everyone
| over 45 thinks we are in an AI bubble. It's the younger people
| that think growth is infinite.
|
| I told them to diversify from their company stock but we'll see
| if they have listened after the bubble pops
| weeeeelp wrote:
| https://archive.is/6DtPq
| JCM9 wrote:
| At this point these announcements are more PR posturing than
| anything that makes financial sense for shareholders.
|
| I do worry what the other side of this looks like when the
| circular feedback loop driving hype up eventually reverses and
| drives things down with amplifying effect.
| justchad wrote:
| Came to post something with a similar sentiment. It's going to
| have broad market effects when the circle dealing doesn't work
| out as intended. OpenAI is losing so much money every quarter
| that they will undoubtedly have to raise prices I would think
| and people may not be willing to pay them.
| whalesalad wrote:
| > At this point these announcements are more PR posturing than
| anything that makes financial sense for shareholders.
|
| corporate would like you to find the difference between these
| two photos
| bwfan123 wrote:
| The negative drumbeat has started, and the narrative is
| changing to become critical. Every new fad reaches a saturation
| point, and people's attention spans are short. Already, I see
| folks piling onto the quantum bandwagon as if LLMs are passe.
|
| Here, the clouds have pulled a trick to inflate their revenues
| with their own cashflows, and have not been punished yet for it
| by shareholders - except meta which is getting asked some
| difficult questions.
| hypeatei wrote:
| We all know this is going to pop at some point but I personally
| think Amazon would be a good investment for the next 6 months or
| so. They just did layoffs, can ride the OpenAI hypetrain, and
| they beat recent earnings. If they beat next earnings with a
| lower headcount and mention "AI" a couple times, I think their
| stock price easily goes to $300.
|
| Not financial advice, obviously, but that's my personal outlook.
| I've said it before: Alphabet is probably the safest play long
| term as they haven't been infected by any NVIDIA or OpenAI deals
| (yet)
| treis wrote:
| OpenAI is an existential threat to Google. They're both solving
| the same problem for consumers. Something like "there's
| information on the Internet that I want but don't know where it
| is". Almost all of Google's value derives from being the
| default solution to that problem. They can't give up that space
| to OpenAI. And, at least IMHO, it's obvious LLMs are the future
| in this area.
|
| The other side to that coin is monetization. Google is dominant
| there as well. OpenAI can't yield that space to Google because
| it's how the value is extracted from the consumer.
| bwfan123 wrote:
| reverse that. Google is the existential threat to openAI.
| Google can price tokens to make openAI never profitable.
| naveen99 wrote:
| Google gave birth to openai by trying to bottle up the gpt
| genie.
| Marazan wrote:
| At this point it is getting beyond parody
| xnx wrote:
| All these stories should have the dollar amounts in quotes as
| they are farcical.
| damnesian wrote:
| Great, can I buy hallucinated products now?
| JCM9 wrote:
| Reading between the lines of Trainium left out of the
| announcement says they tried it, weren't impressed, and wanted
| NVidia chips instead.
| Insanity wrote:
| I don't think that's super surprising though. Nvidia has deals
| with OpenAI as well, so not using Trainium might have as much
| to do with OpenAI keeping Nvidia happy, as with Trainium not
| being on-par.
| JCM9 wrote:
| Didn't stop OpenAI doing a mega deal with AMD.
|
| They just didn't like the chips is the most logical answer.
| Particularly given AWS has been doing everything they can to
| pump up interest, and this huge PR release doesn't even
| mention it at all. That omission speaks volumes.
| Insanity wrote:
| Ah that's true, I missed that AMD announcement.
| Yizahi wrote:
| Only 38 billion dollars? I thought we are in the age of triple
| digit billion sums by now in the LLM space. What is that paltry
| change worth for, a couple seconds worth of OpenAI daily
| expenses?
| jcranmer wrote:
| The main question I have with all of these deals: how much of the
| deal is OpenAI actually required to buy, versus how much of it is
| an option for OpenAI to buy? Because if you tot up all of these
| numbers, it's something like 10x current annual revenue that
| OpenAI is signing deals for, and if OpenAI is actually committing
| to all of that spend... there is a serious cash crunch looming.
| But if OpenAI is merely optioning to spend up to that much, and
| only has to commit to a tenth of those numbers, well, that's not
| as threatening to OpenAI as a going concern.
| JCM9 wrote:
| This does all smell a bit like when WeWork was buying up
| seemingly every available office for rent. When it came time to
| actually pay for said offices... oops.
| mike_d wrote:
| > When it came time to actually pay for said offices... oops
|
| I was at WeWork around the time of its downfall. I have a lot
| of opinions about how that place was ran, but I can assure
| you pre-pandemic they were buying up every office space
| because they were filling them with tenants. Not paying for
| offices was a result of tenants not paying due to the
| pandemic.
| JCM9 wrote:
| And these GPUs aren't sitting idle either. Nobody is
| questioning that they "need" the compute, it's the lack of
| a viable business model to pay for all this long term that
| has folks worried.
|
| That's the same as what happened when WeWork was buying up
| office space pre-pandemic and then using handwavy nonsense
| like "Community Adjusted EBITDA" as part of the smoke and
| mirrors to pretend like there was an actual business there.
|
| The pandemic expedited the pain, but the business model was
| broken and folks called BS long before Covid hit.
| treis wrote:
| >it's the lack of a viable business model to pay for all
| this long term that has folks worried.
|
| They're going to sell ads at the moment people are
| looking to buy stuff. It's the single most viable
| business model we've ever seen.
| jcranmer wrote:
| I know that "ads" is the popular assumption for how
| you're supposed to make money, but most sites don't
| really make all that much money with ads. Facebook and
| Google aren't rich from selling ads, they're rich from
| all of the ad infrastructure and quite frankly their
| ability to follow you around on the internet.
|
| Besides, how are ads on ChatGPT supposed to work? If some
| student is asking it to write their paper for them, is
| ChatGPT going to stop in the middle of it and go "Hey,
| you know what sounds good right now? A nice bowl of
| soup..." Although admittedly that would make for some
| hilarious proof of people using AI for things they
| shouldn't...
| vlovich123 wrote:
| People regularly ask ChatGPT for product recommendations
| of all kinds, explicit and implicit.
|
| ChatGPT will also probably be selling ad infrastructure
| to inject ads just like Google injects ads into search.
| They probably will pay out little to websites that
| include the "ChatGPT" widget to integrate ChatGPT with
| their site that also has ads.
|
| Right now the barriers are technical for injecting ads
| into AI responses.
| XorNot wrote:
| That directly tanks the entire value of AI though.
|
| As an advanced research engine, knowing it will reliably
| only recommend you sponsored products means it's
| worthless - and worse it will be primed to advocate for
| sponsored products.
|
| Then the whole thing becomes a scam engine, because check
| out what Facebook ads look like today.
| vlovich123 wrote:
| That's like claiming that "as an advanced search engine,
| knowing that Google promoted sponsored products and
| reranks its algorithms accordingly sometimes means it's
| worthless"
|
| Regardless of if that's true, it's clearly still a huge
| business opportunity. And you point out Facebook ads are
| a scam yet they bring in $164B/year and growing.
| Regardless of value judgement, there's clearly a lot of
| money to chase.
| jonfw wrote:
| > ChatGPT going to stop in the middle of it and go "Hey,
| you know what sounds good right now? A nice bowl of
| soup..."
|
| Google/facebook do that today, because the content
| they're showing is created pre-ad, and the ads have to be
| injected after the fact.
|
| With AI- the content is being generated in the same place
| that the ads are being injected, which allows us to be
| much more subtle about it.
|
| How much do you think a car company would pay for to put
| special training weight on their marketing materials? I
| would guess big money
| candiddevmike wrote:
| I don't think you'd want to do this at the training
| weight level. That could lead to wildly inappropriate
| references to your product, potentially to the
| determinant of your brand.
|
| "While we're on the topic of self-harm, did you know the
| ABC Co Truck has the highest safety rating?"
| mossTechnician wrote:
| Those ads would also get mixed into content the
| advertisers would probably not appreciate.
| dktp wrote:
| I am also in the camp believing they will sell ads the
| second they find a viable way (churn worth it, base
| infrastructure for it built, enough people trusting ai
| with product recommendations...)
|
| I think the queries will fall into profitable (product
| recommendations) and non profitable (writing an essay or
| code) just the way they do for Google. Probably former
| will have a generous free tier and latter will be largely
| paywalled. I don't know how they'll do that, but I
| imagine they'll find some way
|
| It's a mass consumer (software) product and they need new
| revenue venues and ads have a history of working well.
| Even Spotify, Netflix, Amazon Prime, ... Companies that
| historically don't have the ad infrastructure of Google
| or Facebook have increasingly profitable ad tiers
| Zambyte wrote:
| > Facebook and Google aren't rich from selling ads,
| they're rich from all of the ad infrastructure and quite
| frankly their ability to follow you around on the
| internet.
|
| https://openai.com/index/introducing-chatgpt-atlas/
|
| > Besides, how are ads on ChatGPT supposed to work?
|
| "How do I do XYZ?" "Product ABC can do XYZ for you."
| XorNot wrote:
| Would you use an LLM knowing it will never answer
| honestly and any recommendation is likely a sponsored
| one?
| kemotep wrote:
| Hell is it going to start injecting ads into coding
| output? Ask Codex to generate you a fix for your web app
| and it spits out a number for a web hosting service? Give
| it a Jira ticket and it gives you an ad for a different
| SaaS ticketing system?
|
| Is it going to inject ads for indeed while a recruiter is
| using ChatGPT to summarize a stack of resumes?
|
| If it only ever injects ads for specific requests how
| profitable would that even be? I understand clients would
| want their product to be recommended but if I only get
| the ad answer when prompting a certain way, can I the
| user avoid ads by asking questions a specific way?
| burningChrome wrote:
| Which then begs the question if I was the user: "Am I
| being served an ad or is ChatGPT taking in a bunch of
| product information and giving me an objective answer to
| what I'm looking for?"
|
| This would create a ton of hesitation to use this for
| product recommendations if I knew ChatGPT wasn't using
| its extensive input for products and reviews and coming
| back with an objective answer for me.
|
| I guess at this point would we even know the difference?
| Is it possible this is already happening?
| treis wrote:
| It's what Google does today and they're the 4th most
| valuable company in the world.
| treis wrote:
| OpenAI is positioned to be something like Adwords is/was.
| Think free LLM for your app/website/store or as the
| backend for products like character.ai. That will let
| them vacuum up a ton of user data.
|
| Plus like Google search they have a ton of organic
| traffic. Chatgpt has replaced Google search as my
| starting point to investigate anything. Lots of that is
| related to things where I will eventually spend money
| mike_d wrote:
| I was simply addressing the implication that WeWork was
| just buying up office space for fun and not paying for
| it.
| asah wrote:
| WeWork was taking on long term liability commitments and
| paying for them with short term revenue commitments. One
| bad thing and poof. Everybody in the commercial real estate
| market saw this coming.
|
| OpenAI maybe in the same situation, committed to spending
| $1.4T while enjoying a good revenue year this year but then
| One Bad Thing and poof.
| rchaud wrote:
| WW was able to fill those offices by charging well below
| market prices, because they were VC-funded so growth was
| more important than profitability. OpenAI is doing the
| same. 800m users, the vast majority of whom are free users
| who won't convert to paid.
| winstonp wrote:
| won't? i doubt that. can't tell you the last time i paid
| $20/mo for any non-business sub, but i've paid for some
| combo of openai+claude for last year
| jsnell wrote:
| It's actually more like 100x their current revenue; they stated
| last week[0] that they have spending commitments for $1.4T of
| compute.
|
| Or, well, they stated that the TCO of the compute they have
| commitments for is $1.4T, which is a somewhat strange phrasing.
| I assume it's due to it being a mix of self-owned vs. rental
| compute, and what they mean is the TCO _to OpenAI_ rather than
| the TCO _to the owner of the compute_.
|
| [0] https://x.com/sama/status/1983584366547829073
| JCM9 wrote:
| That's absolutely insane.
|
| I get that folks are now just engaged in "keeping up with the
| Jones'" FOMO behavior but none of this is making any sense.
| gooodvibes wrote:
| The real massive revenues that the big tech companies are
| having aren't going to disappear just because OpenAI goes
| away.
| DavidPiper wrote:
| The real revenues of small and mid-sizes tech companies
| might, though. Which might be funny (in a Road Runner &
| Wile E. Coyote way) but only after considerable time and
| distance. Saying that, I think of those guys from The Big
| Short being reprimanded for celebrating their prediction
| of a market crash.
|
| The financial impact if the whole AI space loses even 50%
| of its current "valuation" will be huge. The financial
| impact of the whole AI space continuing at its current
| velocity is... More of whatever is going on now?
| jcranmer wrote:
| I went to 10x revenue because I figured the ~$1 trillion was
| over something like a decade, rather than over a year.
| mkhattab wrote:
| These deal numbers have lost all meaning for me.
|
| There's been some buzz around the official opening of the Grand
| Egyptian Museum, which I visited last month. That project took
| 1.1 to 1.2B USD. Double its original budget estimate but still
| the museum looks fantastic and it feels, tangibly, like it's
| worth a billion.
|
| In contrast with all the money spent on AI, it just feels like
| monopoly money. Where's the monument to its success? We could've
| built flying cars or been back to the moon with this much money.
| whycome wrote:
| I'd rather useful AI tools than a flying car or someone else
| going to the moon.
|
| But I agree that the numbers are increasingly beyond reasonable
| comprehension
| Aperocky wrote:
| I've been using AI and so did many people I knew. It's resulted
| in tangible difference in my life.
|
| It's much less likely that I'd drive a flying car and there is
| 0 chance that I would be the one going to the moon if we spent
| the equivalent money on those things instead.
| malux85 wrote:
| Me too, once you've had a lot of practice with it (like
| anything) and know how to mitigate some of its weaknesses,
| then it's a superpower.
|
| I currently pay 200 USD a month for AI, and my company pays
| about 1,200 USD for all employees to use it essentially
| unlimited - and I get AT LEAST 5x the return on value on
| that, I would happy multiply all those numbers by 5 and still
| pay it.
|
| Domain knowledge, bug fixing, writing tests, fixing tests,
| spotting what's incomplete, help visualising results,
| security review generation for human interpretation, writing
| boilerplate, and simpler refactors
|
| It can't do all of these things end to end itself, but with
| the right prompting and guidance holy smokes does it multiply
| my positive traits as a developer
| pphysch wrote:
| How certain are you that you need to pay $200/mo/seat for
| this value?
| righthand wrote:
| > I currently pay 200 USD a month for AI
|
| > and I get AT LEAST 5x the return on value on that
|
| You make $800 by paying OpenAI $200? Can you please explain
| how your the value put in is 5x and how I can start making
| $800 more a month?
|
| > holy smokes does it multiply my positive traits as a
| developer
|
| But it's not you doing the work. And by your own admission,
| anyone can eventually figure it out. So if anything you've
| lost traits and handed them to the Llm. As an employee
| you're less entrenched and more replaceable.
| paxys wrote:
| What percent of the world is going to set foot in this museum
| in the next few years? What percent has used or will use AI
| tools?
| ahmeneeroe-v2 wrote:
| >it feels, tangibly, like it's worth a billion
|
| Lot of feeling going on in this comment, but that's not really
| how money works.
| throw_m239339 wrote:
| I wouldn't be surprised if a few weeks later, Amazon was
| investing $38B in NVIDIA for new server processors... like
| nothing to see here folks, totally not a giant circular bubble...
| Insanity wrote:
| And so the bubble grows.
|
| I'd be happy if the industry/stock market proves me wrong, but I
| can't see this ending any other way than with a major crash that
| makes the dot-com boom seem like a minor blimp.
| PeaceTed wrote:
| I really don't know with this. By that I mean all logic says
| that, yes this is absolutely a bubble. But the markets have
| been irrational for a very long time now, just look at Tesla
| stock and it wild valuations for years now as an example. This
| could go on for a lot longer than anyone would think
| reasonable.
| burningChrome wrote:
| I lived through the first dot com bubble and bust and it was
| pretty nasty. I was working for a telecom company at the time.
| The building we were in were chocked full of bright eyed, bushy
| tailed startups who were pushing the edge on all kinds of
| things. Less than a year later, they were all gone.
|
| We used to have lunch at the bar across the street and just
| about once or twice a week for several months, we'd walk in and
| there would be a table with about 15-20 people sitting around
| drinking and reminiscing about how they were going to change
| the world.
|
| A lot of developers I know just completely left the industry
| and never came back.
|
| If this crash exceeds that one? We're in for some seriously
| tough times.
| semiinfinitely wrote:
| I can't see a prediction like this as anything other than a
| description of what would be maximally emotionally satisfying
| for you personally.
| Insanity wrote:
| Why? The numbers don't make sense for the expected revenue..
| they are significantly disconnected. And I have yet to see a
| "killer app" that can be monetized.
| random9749832 wrote:
| What is the end goal? GPT-5 wasn't even a step up from o3.
|
| ChatGPT has 800 million weekly users but only 10 million are
| paying.
| vessenes wrote:
| GPT 5 codex is definitely a step up from o3. I could use o3
| still for chat, but prefer 5-thinking. Do you still use o3?
| JCM9 wrote:
| OpenAI is generating $13B a year in revenue. Let's be generous
| and say $20B. They've signed commitments to spend something like
| $1.4 trillion on compute. An asset that to date has proven to
| have a hyper-depreciation cycle.
|
| Someone has to come up with $1.4 trillion in actual cash, fast,
| or this whole thing comes crashing down. Why? At the end of all
| this circular financing and deals are folks that actually want
| real cash (eg electricity utilities that aren't going to accept
| OpenAI shares for payment).
|
| If the above doesn't freak you about a bit at how bonkers this
| whole thing has become then you need a reality check. "Selling
| ads" on ChatGPT ain't gonna close that hole.
| hluska wrote:
| Is there a reason you're posting so often on this thread?
| Everyone gets your point.
| JCM9 wrote:
| Fair enough. I guess I'm just like those guys at the
| investors conference in The Big Short and can't believe what
| I'm seeing.
| gretch wrote:
| Why does it matter if everyone else knows or cares?
|
| If you were actually the guys from the big short and you
| have strong conviction, you should short the market
| (literally like the guys from big short) and get really
| rich.
|
| Money is the language they understand, so hit them where it
| hurts.
| Uehreka wrote:
| People always talk about shorting like it's an efficient
| and reliable way to make money being right when everyone
| else is wrong. But it isn't.
|
| When you go long, you can still make money by being "sort
| of right" or "obliquely right" or "somewhat wrong but
| lucky"or by just collecting dividends if the market stays
| irrational long enough. If you short something you have
| to be exactly right (both about what will happen and
| precisely when) or your money will end up in the hands of
| the people you're betting against. It's not a symmetrical
| thing you can just switch back and forth on.
| WA wrote:
| Correct and the reason is that borrowing stock for
| shorting isn't free. You gotta pay interest on that. Or
| if you go the option route, your options lose value
| because of time.
| lesuorac wrote:
| I think the main issue with your theory is that it's $38B
| in today's dollars. In the 1970s we saw a lot less
| independence between the Fed and White House and as a
| consequence severe inflation. Trillions of dollars of
| liabilities is not going to sound so bad after 4 years of
| double-digit inflation ...
|
| Also, IIUC the guys in The Big Short would've lost
| everything if the government stepped in sooner since the
| banks controlled the price of the CDSs and could've
| maintained the incorrect price if they had a bunch of extra
| cash.
| ceejayoz wrote:
| > Also, IIUC the guys in The Big Short would've lost
| everything if the government stepped in sooner since the
| banks controlled the price of the CDSs and could've
| maintained the incorrect price if they had a bunch of
| extra cash.
|
| Yeah. "Markets can remain irrational longer than you can
| remain solvent."
|
| https://en.wikipedia.org/wiki/Michael_Burry had an
| investor panic and nearly lost everything. He was right,
| but he nearly got the _timing_ wrong.
| confirmmesenpai wrote:
| did the price of NVIDIA made sense to you 2 years ago, when
| a lot of people were screaming it's in an obvious bubble?
|
| if no, and you thought it was a bubble, does that price of
| NVIDIA from 2 years ago (not from today) makes sense to you
| now?
| vessenes wrote:
| You'll have your shot at shorting oAI soon apparently. I'm
| in a lot of these threads on the bull side, and I'll say -
| please be careful if you do, and only short what you can
| afford to lose. I'm sure the stock will be crazy volatile,
| but I don't see signs of anything unsustainable in oAI's
| ops right now, with the sole exception of increasing
| training spend using investor money. We're not in a good
| position outside the company to know if that will pay off.
| The parts we do know about, inference, users, growth,
| revenue growth and net income, are all generationally
| significant, and make shorting really risky.
| hluska wrote:
| You're using a movie to justify this?
| Razengan wrote:
| > _electricity utilities that aren't going to accept OpenAI
| shares for payment_
|
| What if AI invents fusion power?
|
| (Thanks for the downvotes I wanted to keep my karma at 69)
| jdlshore wrote:
| 1. There's no indication that AI is capable of doing so.
|
| 2. Outside of software, inventions have to be turned into
| physical things like power plants. That doesn't happen
| overnight and is expensive.
|
| 3. The industry is already going through a power revolution
| in the form of battery + solar and it's going to take a while
| for a new technology to climb the learning curve enough to be
| competitive.
|
| 4. What if AI gives us all a pony?
| Razengan wrote:
| What if ChatGPT invents the Matrix? Electricity problem
| solved.
| JumpCrisscross wrote:
| > _Thanks for the downvotes_
|
| "Please don't comment about the voting on comments. It never
| does any good, and it makes boring reading."
|
| https://news.ycombinator.com/newsguidelines.html
| jonas21 wrote:
| The $1.4T commitment is spread over multiple years. Let's
| assume 4 -- then that's $350B/year. Coincidentally, Google had
| $350B in revenue in 2024 (and projected to be ~$400B in 2025).
|
| It's certainly possible to imagine OpenAI eventually generating
| far more revenue than Google, even without anything close to
| AGI. For example, if they were to improve productivity of 10%
| of the economy by 10% and capture a third of that value for
| themselves, that would be more than enough. Alternatively,
| displacing Google as the go-to place for search and selling ads
| against that would likely generate at least Google levels of
| revenue. Or some combination of both.
|
| Is this guaranteed to happen? Of course not. But it's not in
| "bonkers" territory either.
| Aurornis wrote:
| > The $1.4T commitment is spread over multiple years. Let's
| assume 4
|
| The Amazon deal is actually spread over 7 years. Other deals
| have different terms, but also spread over multiple years.
|
| Deals like these have cancellation terms. OpenAI could
| presumably pay a fee and cancel in the future if their
| projections are too high and they don't need some of the
| compute from these deals.
|
| The deals also include OpenAI shares. The deals are being
| made with companies that have sufficient revenue or even cash
| on hand to buy the compute and electricity.
|
| The claim above that someone needs to come up with $1.4
| trillion right now or everything will collapse isn't grounded
| in any real understanding of these deals. It's just adding up
| numbers and comparing them to a single annual revenue
| snapshot.
| cmiles8 wrote:
| I don't think the OP is saying $1.4 trillion cash is needed
| "right now." The point being made is simply that with all
| the circular deals and financing for this to make sense
| OpenAI does need to generate $1.4 trillion in cash that can
| eventually work its way through the economy to pay for all
| of this. Hype and inflated valuations can be built on
| numbers on paper but real business are built on cash flow.
| The OP is simply calling out the lack of cash flow.
|
| Even under the most bullish cases for AI the real $
| requires here looks iffy at best.
|
| I think we all know that a big part of the angle here is to
| keep the hype going until there's a liquidity event, folks
| will cash out and then at the like they won't care what
| happens.
| ivape wrote:
| Google is under existential threat. In that case, OpenAI has
| a very legitimate trillion dollar case for carving out a
| piece of Google.
|
| Search engines were never a user friendly app to begin with.
| You had to know how to search well to get comprehensive
| answers, and the average person is not that scrupulous.
| Google's product is inferior, believe it or not. There will
| be nothing normal about seeing a list of search results
| pretty soon, so Google literally has a legacy app out in the
| wild as far as facts are concerned.
|
| So imagine that, Google would have to remove Search as they
| know it (remove their core business) and standup a app that
| looks the same as all the new apps.
|
| People might like one AI persona more than others, which
| means people will seek out all types of new apps. LLMs is the
| worst thing that could have ever happened to Google quite
| frankly.
| dvt wrote:
| Very true. I rarely find myself "Googling" anymore. I'd
| rather just ask ChatGPT. Even if the enshittification (ads,
| etc.) will happen down the line, at least we'll have an
| absolutely _awesome_ product (like Google was to Yahoo) for
| 5-10 years.
|
| OpenAI is at the very least worth at least half as much as
| Google. I foresee Google becoming like IBM, and these new
| LLM companies being the new generation of tech companies.
| rubiquity wrote:
| I find it more likely that the entire "second" level of
| software companies are in OpenAI's cross hairs more so than
| Google. Salesforce, ServiceNow, Intuit, DocuSign, Adobe,
| Workday, Atlassian, and countless others are easier to pick
| off than Google.
| ivape wrote:
| Not every kid born in the last five years will know
| Google as a verb as we do. They'll be adults in 15 years,
| which is a paltry investment timeline for the type of
| Black Swan event we're talking about, which AI is.
|
| I don't disagree with you entirely, but I'd argue the
| second level apps are harder to chase because they get so
| specialized.
|
| Death of Google (as everyone knows Google today) is a
| tricky one. It seems impossible to believe at this exact
| moment. It can sit next to IBM in the long run, no shame
| at all, amazing run.
| JumpCrisscross wrote:
| > _if they were to improve productivity of 10% of the economy
| by 10% and capture a third of that value for themselves, that
| would be more than enough_
|
| This is "if we get 1% of the market" logic.
| vanviegen wrote:
| That type of logic is not inherently flawed, is it?
|
| Of course, you must also make a convincing case for getting
| to that 1%.
| JumpCrisscross wrote:
| > _That type of logic is not inherently flawed, is it?_
|
| Inherently, no. In practice, it's riddled with biases
| deep enough [1] to make it an informal fallacy.
|
| "The competition in a large market, such as CRM software,
| is very tough," and "there are power laws which mean that
| you have to rank surprisingly high to get 1% of a market"
| [2]. Strategically, it ignores the necessity of
| establishing a beachhead in a small market, where "a
| small software company" has "a much better chance of
| getting a decent sized chunk."
|
| [1] https://www.nature.com/articles/s41599-024-03403-9
|
| [2] https://news.ycombinator.com/item?id=45804756
| Aurornis wrote:
| > Someone has to come up with $1.4 trillion in actual cash,
| fast, or this whole thing comes crashing down.
|
| These deals aren't for 100% payment up front. The deals also
| include stock, not just cash. So, no, they do not need to come
| up with $1.4 trillion in cash quickly.
|
| This AWS deal is spread over 7 years. That's $5.4 billion per
| year, though I assume it's ramping up over time.
|
| > At the end of all this circular financing and deals are folks
| that actually want real cash (eg electricity utilities that
| aren't going to accept OpenAI shares for payment).
|
| Amazon's cash on hand is on the order of $100 billion. They
| also have constant revenue coming in. They will not have any
| problem accepting OpenAI shares and then paying electricity
| bills with cash.
|
| These deals are also being done in the open with publicly
| traded companies. Investors can see the balance sheets and
| react accordingly in the stock price.
| mandevil wrote:
| Interestingly, it looks like there is a move away from
| financing these data centers with tech company cash-on-hand
| and moving to Special Purpose Vehicles over the past 18
| months or so. So now there is a lot more debt involved in
| funding DC's than equity, in ways that are a sudden change to
| what was largely a funded-by-equity process at the beginning
| of 2024.
|
| The one I found best documented (1) is a Meta's SPV to fund
| their Hyperion DC in Louisiana, which is a deal that is 80%
| financed by private credit firm Blue Owl. There is a lot of
| financial trickery to getting the SPV to be counted by the
| ratings agencies as debt belonging to a different entity that
| does not count against Meta's books but treated by the market
| as basically something that Meta will back. But xAI's Memphis
| DC is also a SPV, and Microsoft is doing that as well. I'm
| not sure about AMZN, but that we're starting to see that from
| their competitors suggests they will also be going to this
| way.
|
| 1: By the invaluable Matt Levine, here: https://www.bloomberg
| .com/opinion/newsletters/2025-10-29/put... but the other
| major companies have their own SPV's
| brendoelfrendo wrote:
| I saw this, and honestly, it's kind of silly. We all know
| what's going on, so why do the credit ratings agencies play
| dumb to this kind of financial engineering? Why don't they
| just say "actually no, we all know that's debt and it's
| owned by Meta so we will consider it when rating their
| credit."?
| lesuorac wrote:
| IIUC, they ignore it because they're supposed to.
|
| If the market collapses I think Meta can technically just
| walk away and they lose access to those data centers
| (which they no longer want anyways) and the SPV is stuck
| holding $X of assets with $>X liabilities and the issues
| of the credit are on the hook but not Meta.
|
| And investors are fine being on the hook because they get
| a higher return from the SPV bonds than Meta bonds. (risk
| adjusted it's probably the same return).
| rchaud wrote:
| Because in credit ratings game, the customer is paying to
| get their bonds rated. Therefore the customer is always
| right.
| cmiles8 wrote:
| Because, to quote from The Big Short, "if we don't give
| them the rating they want they'll just walk down the
| street and go to [the other ratings agency]."
|
| Does that make any sense? No.
| slg wrote:
| >These deals are also being done in the open with publicly
| traded companies. Investors can see the balance sheets and
| react accordingly in the stock price.
|
| I'm no expert on the specifics of the circular financing
| we're seeing here so the rest of what you wrote might be
| true, but I know enough about how Wall Street and the world
| in general works to know that closing with this as a defense
| shows an incredible naivete that makes me question everything
| else you have said.
| peaseagee wrote:
| Exactly. Enron was a publicly traded company doing weird
| circular financing stuff. It was all in the open for anyone
| who cared to look. Just no one did until the music
| stopped...
| refulgentis wrote:
| We're a bit too far if we assert this. The weird circular
| Enron stuff wasn't all in the open, was by wholly owned
| subsidiaries, and the downfall was massive trading losses
| that could no longer be hidden by shuttling money to and
| from subsidiaries at the right time. A hole in a balance
| sheet is quite different from a purchase done by
| financing, thus "circular financing" when applied to both
| means "things we worry about that involve payments
| between 2 entities"
| refulgentis wrote:
| No need for all that, the idea OpenAI is committed to $1.4
| trillion in pay is a Ed Zitron-sourced number where he
| calculates $400B based on a number he made up for how much
| a gigawatt costs, and the trillion figure by multiplying
| further by claiming every deal is for 2026 and will be
| repeated over next N years.
| epistasis wrote:
| Indeed, a comment above linked to Matt Levine's newsletter
| on the off-books debt that is showing up instead as things
| like JVs, and here's another Bloomberg Reporter, Carmen
| Arroyo, covering it from a more journalistic angle:
|
| https://www.bloomberg.com/news/articles/2025-10-31/meta-
| xai-...
| jgbuddy wrote:
| The obvious answer is that they are going to IPO
| officeplant wrote:
| I hope so just so I can watch the funny line graph of people
| burning money.
| confirmmesenpai wrote:
| token usage is growing exponential at all providers.
|
| it will grow even more with the next generation of models.
| mv4 wrote:
| This circular game is wholly dependent on OpenAI's ability to
| access public funds via IPO.
| rdsubhas wrote:
| The proportion of the utilities involved are a fraction of
| 1.4T.
| jstummbillig wrote:
| Let's actually be generous and assume that all parties involved
| did the math and some due diligence and are not just idiots. If
| we try that approach, what could that plausibly tell us about a
| situation where OpenAI has struck deals with not one, but
| basically _all_ the major chip /infra providers?
| dontlikeyoueith wrote:
| > Let's actually be generous and assume that all parties
| involved did the math and some due diligence and are not just
| idiots
|
| Economic history strongly suggests this would be a bad
| assumption.
| jstummbillig wrote:
| How do you mean? Western economic history is, on average,
| one of success. So on average, that's a pretty good
| assumption.
| cmiles8 wrote:
| The history of bubbles strongly suggests this is precisely
| evidence of a bad decision, not a good one. For a bubble to
| exist and be sustained everyone needs to get on board with
| things that wouldn't normally make any sense.
| jstummbillig wrote:
| See, here the trick is that you assume a bubble and reason
| from there.
|
| But what if, maybe, it ain't so? Of course, _lots_ of AI
| things are going to fail, and nobody is exactly sure of the
| future. But what if, after in depth inspection, the overall
| thing is actually looking pretty good and OpenAI like a
| winner?
| mise_en_place wrote:
| It doesn't freak me out and it's actually completely rational.
| If both OpenAI and AMZN expect real rates to keep rising while
| inflation spirals out of control, this deal makes a lot of
| sense for both of them. They're just duration hedging.
| JumpCrisscross wrote:
| > _If both OpenAI and AMZN expect real rates to keep rising
| while inflation spirals out of control, this deal makes a lot
| of sense for both of them. They 're just duration hedging_
|
| It can't be the same hedge on both sides of the trade.
| lumost wrote:
| If OpenAI continues on their current revenue growth trajectory,
| they should be larger than AWS by 2027. Burning 2x revenue to
| grow that fast is not really a concern beyond your continued
| ability to attract financing. Given the trajectory of inference
| cost, it unlikely that they would fail to reach profitability.
|
| The big question would be how much of this revenue is
| unjustifiably circular, and how much of it is extractable - but
| those are questions for when the growth slows. Im certain every
| supplier has ways to back out of these commitments if the
| finances look shaky.
| mvdtnz wrote:
| https://xkcd.com/605/
| hiq wrote:
| > Given the trajectory of inference cost, it unlikely that
| they would fail to reach profitability.
|
| Is there evidence that their revenues are growing faster than
| their costs?
| JumpCrisscross wrote:
| "OpenAI CEO Sam Altman sounded exasperated when Altimeter
| Capital founder--and OpenAI shareholder--Brad Gerstner asked
| him the question that Gerstner said was 'hanging over the
| market': how a company generating $13 billion in revenue this
| year would pay for the $1.4 trillion in computing capacity that
| Altman has said the company is on the hook for.
|
| 'Brad, if you want to sell shares, I'll find you a buyer...I
| just--enough,' Altman said on Gerstner's podcast."
|
| https://www.theinformation.com/articles/ilya-saw-mira-murati...
| xnx wrote:
| Can the "bubble" pop/deflate in a way that just takes out
| OpenAI? I don't see Google overextended at all.
| fathermarz wrote:
| Doesn't this mean that some percentage of Microsoft's investment
| is being given directly to their competitor? This feels like a
| bubble moment.
| StarterPro wrote:
| Millions of people run out of money? Govt: "Too bad, have fun
| being homeless"
|
| A few billion dollar businesses run out of money due to
| negligence and greed? Govt:"THEY ARE JUST WITTLE GUYS WHO NEED
| HELP"
| markus_zhang wrote:
| I don't know but this feels more and more like jumping by
| stepping one's own feet...
| system2 wrote:
| If it is a bubble, why are huge companies like Amazon and
| Microsoft feeding it? What do they get by doing this nonstop? All
| I hear is that this is a bubble on the internet, yet big
| companies are making these huge deals. Don't they see what we,
| the uspeasants, see with their highly paid finance departments?
| pfortuny wrote:
| It is not a panic if you are the first out...
| jdlshore wrote:
| Big companies are made out of people, and those people are just
| as fallible as everyone else... and more so, in fact. They're
| prone to group-think and suppressing bad news.
|
| The existence proof is, well, every financial crisis ever.
| Start with the housing bubble and ask, why did huge banks whose
| entire job was financial modeling get caught up in it? What
| makes companies today immune to those same types of decision-
| making errors?
| tacker2000 wrote:
| Tbh these juggernauts could survive an AI bubble bursting and
| pick up the pieces, they are playing with a little bit more
| than their spare change here.
| chaosprint wrote:
| https://founderboat.com/interviews/2025-11-01-openai-sam-sat...
|
| > A central theme of the discussion was the staggering demand for
| computational power. Gerstner highlighted OpenAI's reported
| commitment of $1.4 trillion for compute over the next five years,
| questioning how a company with reported revenues of $13 billion
| could manage such an outlay.
|
| > Altman pushed back forcefully. "First of all, we're doing well
| more revenue than that. Second of all, Brad, if you want to sell
| your shares, I'll find you a buyer," he quipped. He expressed
| profound confidence in the company's trajectory. "We do plan for
| revenue to grow steeply. Revenue is growing steeply. We are
| taking a forward bet that it's going to continue to grow."
|
| This seems to be just the tip of the iceberg; what about the
| rest?
| dude250711 wrote:
| Could they not at least increase their profits by simply
| replacing expensive technical staff with AI?
| bfkwlfkjf wrote:
| LOL Sam Conman trying to rope everybody in.
| TheAlchemist wrote:
| "It's only when the tide goes out that you know who's been
| swimming naked." - Warren Buffett
|
| This bubble is one for the history books !
| nprateem wrote:
| Obviously the plan is to lock Anthropic and others out of AWS.
|
| All financial analysis misses the point. They just need to buy
| enough time and compute to out-last the competition.
|
| All bets are off if China find a way of reducing processing power
| by 50% or more.
|
| If only killing off grok and Gemini was so easy...
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