[HN Gopher] OpenAI raises $110B on $730B pre-money valuation
___________________________________________________________________
OpenAI raises $110B on $730B pre-money valuation
https://openai.com/index/scaling-ai-for-everyone/
https://x.com/sama/status/2027386252555919386
https://xcancel.com/sama/status/2027386252555919386
Author : zlatkov
Score : 272 points
Date : 2026-02-27 14:56 UTC (8 hours ago)
(HTM) web link (techcrunch.com)
(TXT) w3m dump (techcrunch.com)
| gigatexal wrote:
| [flagged]
| lnsru wrote:
| It's not craze. It's technology shift. Bitcoin and 3D printing
| were craze. It's like a move from analog photography to
| digital. I am telling you this as a very conservative person.
| Even for me it's helpful.
| mikkupikku wrote:
| > _3D printing were craze_
|
| That's certainly a take, industry loves it. Sure, all that _"
| everybody will print widgets at home instead of going to the
| store"_ stuff was never going to happen, but 3d printing is
| nonetheless here to stay.
| consp wrote:
| I do not long back to the days of reused boxes and ducktape
| as homes for my electronics. It's here to stay.
| wooger wrote:
| It's a manufacturing technique that is helpful for
| prototyping and makes sense some types of small scale
| manufacturing.
|
| But it's not magical, and not much different to injection
| moulding or something in concept.
|
| Almost everything created with home level 3d printers is
| plastic junk you can buy for a few dollars on aliexpress
| (without weird rough edges).
| qsera wrote:
| So how much are you willing to pay for it?
| whynotminot wrote:
| Personally at this point my combined AI spend is the most
| expensive recurring monthly subscription I have, and that's
| even with my company also paying for the AI tools I use at
| work.
|
| If it weren't subsidized I would pay more. Wouldn't be
| happy about it but I would do it.
|
| At this stage in the game I don't really understand where
| this skepticism of the value these tools provides comes
| from.
| qsera wrote:
| Actually it is not about this stage. It is about the
| sustainability of this when training data runs out and
| there is less and less human generated content.
|
| An echo cannot go on forever!
| whynotminot wrote:
| > Actually it is not about this stage. It is about the
| sustainability of this when training data runs out
|
| This is an argument from 2024. Somehow, the models have
| continued to improve.
|
| If they stopped improving today they are good enough as
| they already are to generate profound change.
|
| The wave front is already visible, we're just on the
| shore waiting for the impact.
| qsera wrote:
| When training data runs out, they usefulness will
| diminish quickly. They will still be useful for searching
| documents etc, but I guess they are not good at that even
| now.
| AnimalMuppet wrote:
| When training data runs out, their usefulness will _stop
| growing quickly_. Why should their usefulness diminish?
| qsera wrote:
| Because they would not be up-to date with programming
| languages, tools, best practices etc.
|
| May be there is some way to keep the model up-to date in
| less dramatic ways. But I think something gotto give..
|
| I mean, even now the vibe coded stuff is reprehensible.
| beernet wrote:
| > At this stage in the game I don't really understand
| where this skepticism of the value these tools provides
| comes from.
|
| Fear
| whynotminot wrote:
| I get it. I'm scared too. I'd be lying if I said I
| wasn't.
| viking123 wrote:
| 20 bucks a month
| boelboel wrote:
| 3D printing has a CAGR of 18-25%, not exactly 'were craze'
| afavour wrote:
| It can be both a craze and a technology shift. AI isn't going
| away, it will transform some industries. But right now it's
| overhyped, overfunded and due a trip back to reality.
| rob74 wrote:
| 3D printing is helpful too. The infrastructure created during
| the dot-com bubble of the late 1990s was also helpful. The UK
| is still profiting from the railway infrastructure created
| during the railway craze of the 1840s
| (https://en.wikipedia.org/wiki/Railway_Mania). The question
| is just how much of the valuation of AI companies is because
| they are useful and how much is speculation...
| nalekberov wrote:
| > Bitcoin and 3D printing were craze.
|
| What bitcoin gave us essentially? Huge pump and dump schemes
| coordinated by big hands? Crypto investments which made 95%
| of investors poorer? What's left? Maybe 0.01% of it was
| beneficial.
| lstodd wrote:
| Freedom from overregulated and antiquated retail banking
| especially wrt cross-border transfers.
|
| I guess it isn't that noticeable from inside US, but the
| rest of the world is grateful.
| baal80spam wrote:
| > the rest of the world is grateful.
|
| Maybe speak for yourself? As part of the rest of the
| world, I am not grateful.
| lstodd wrote:
| And I do. Speak, that is.
| rvz wrote:
| > It's not craze. It's technology shift.
|
| It is a bubble with extreme levels of debt + funding from too
| many promises from companies that are in these sort of
| rounds.
|
| People being consumed by the hype will also be completely
| consumed by the crash.
|
| Comments like this is exactly how a 2000 and a 2008 style
| crash will happen.
| skeeter2020 wrote:
| It most definitely COULD be a craze from the perspective of
| scope of investment, societal impact and timing. No one
| surfing the crest of this wave could be described as
| "conservative".
| baggachipz wrote:
| "This time it's different!"
| dang wrote:
| " _Don 't be curmudgeonly. Thoughtful criticism is fine, but
| please don't be rigidly or generically negative._"
|
| https://news.ycombinator.com/newsguidelines.html
| zippyman55 wrote:
| Wow! This is circular financing. Sharknado, Altnado....
| illnewsthat wrote:
| This should probably change to https://openai.com/index/scaling-
| ai-for-everyone/ which has more details.
|
| > Today we're announcing $110B in new investment at a $730B pre-
| money valuation. This includes $30B from SoftBank, $30B from
| NVIDIA, and $50B from Amazon.
| tosh wrote:
| The tweet storm has a bit more substance
|
| e.g. it talks about running NVIDIA's systems (?) on AWS
|
| > NVIDIA has long been one of our most important partners, and
| their chips are the foundation of AI computing. We are grateful
| for their continued trust in us, and excited to run their
| systems in AWS. Their upcoming generations should be great.
| coredog64 wrote:
| Probably something like NVLink Fusion. AWS has been doing
| deals with suppliers for which the smallest unit of
| deployable compute is a 44U rack (e.g. Oracle), so this is
| more of the same.
|
| https://www.nvidia.com/en-us/data-center/nvlink-fusion/
| dang wrote:
| Thanks, I've added that link to the toptext as part of merging
| a bunch of these threads.
|
| We try to avoid having corporate press releases as the top-
| level link, though of course there are exceptions sometimes.
| tosh wrote:
| > We continue to have a great relationship with Microsoft. Our
| stateless API will remain exclusive to Azure, and we will build
| out much more capacity with them.
|
| This sounds a bit like going forward (some) OpenAI APIs will also
| run on platforms other than Azure (AWS)?
|
| Anyone knows more?
| rob74 wrote:
| I guess Amazon would have a hard time justifying their
| investment if OpenAI remained Azure-exclusive...
|
| https://openai.com/index/amazon-partnership/
| sidewndr46 wrote:
| Unless I'm mistaken wasn't someone at Microsoft suggesting they
| would just develop their own models soon?
| zmmmmm wrote:
| Curious what is meant by "stateless".
|
| OpenAI desperately needs to be available outside Azure. We are
| exclusively using Anthropic atm because it is what is available
| in AWS Bedrock and it works. These things are solidifying fast.
| hedora wrote:
| This time, does the $100B actually exist?
|
| https://www.inc.com/leila-sheridan/nvidia-is-wavering-on-its...
|
| What's the statue of limitations for securities fraud? The
| current administration won't last forever.
| tartoran wrote:
| Circular economy money
| hedora wrote:
| Normally, there's at least a locked suitcase full of
| newspapers racking up frequent flier miles...
| rand846633 wrote:
| 1,000 metric tons do not fit in a airplane...
| reactordev wrote:
| Fits evenly on a blockchain...
| tempodox wrote:
| 1,000 metric tons of hot air is a lot of volume.
| JKCalhoun wrote:
| Definitely with regard to Nvidia.
| bflesch wrote:
| If you make a billion but only pay $2M for a pardon it might be
| worth it: https://www.independent.co.uk/news/world/americas/us-
| politic...
| rvz wrote:
| > This time, does the $100B actually exist?
|
| Nope. That 100B is in "promises" for over several years in
| total.
|
| They have $15B out of the $50B from Amazon right now.
|
| > The current administration won't last forever.
|
| This is why OpenAI must IPO and when it does, I won't be
| surprised that a crash is followed up before 2030.
|
| By then, they will "announce" "AGI" (Which actually means an
| IPO)
| tempodox wrote:
| > By then, they will "announce" "AGI"
|
| It's already a joke to call the slop generators "AI", so
| giving it another fake name won't really make much of a
| difference any more. Nothing short of a miracle will be able
| to top the "creative marketing" we already have.
| hedora wrote:
| Oh; good point. The great economic crash of 2029+ will be
| caused by the democrats cleaning up Trump's mess. (Sort of
| like "Biden's" inflation.)
| jryio wrote:
| Without circular investments and valuations what would Open AI be
| worth? 100B? 300B? Entirely on revenue alone it seems like 20B.
| Current valuation appears to be two orders of magnitude off.
| thefounder wrote:
| Let the retailers decide this year at IPO! The heavy bags must
| be carried by someone
| 2OEH8eoCRo0 wrote:
| Is this really the con? Be part of the in-group and buy pre-
| IPO shares to dump them on joe-six-pack shortly afterwards?
| JKCalhoun wrote:
| Always has been? (Well, with pyramid schemes anyway.)
| thefounder wrote:
| At least they don't SPAC their way into the public market
| but the answer to your question is yes!
| vonneumannstan wrote:
| >Without circular investments and valuations what would Open AI
| be worth? 100B? 300B? Entirely on revenue alone it seems like
| 20B. Current valuation appears to be two orders of magnitude
| off.
|
| They just passed $20B in revenue, you can't really expect a
| company with this much hype and traction to have a 1x
| multiple.. that's not to say a 35x multiple makes sense either.
| newyankee wrote:
| What would really help is knowing the details of such funding.
| The hierarchy of who gets paid first in event of going under is
| very illuminating and while I am not a banker I always wonder if
| there are caveats too complicated even for the large investors to
| understand
| mikkupikku wrote:
| SoftBank? The music must be stopping soon, hold onto your butts.
| whynotminot wrote:
| What? SoftBank has been investing in them repeatedly for years
| now.
| clouedoc wrote:
| What's the meme with SoftBank? Just that they're super bad at
| investments?
| reducesuffering wrote:
| Ya. The WeWork debacle and investing $300 million into Wag,
| an imploded Uber for dog walking, surely wasn't helping.
| vimda wrote:
| Kind of leaving out a lot of detail there:
|
| - Amazon's $50B is only $15B, with the rest being "after certain
| conditions are met", whatever that means (probably an IPO, which
| isn't happening)
|
| - The $30B each from softbank and NVIDIA is paid in installments
|
| So this is more a $35B fundraise, with a _promise_ of more,
| maybe, if conditions are met. Not _bad_, but yet more gaslighting
| from Mr Altman. Anyone reporting this as a closed fundraising
| deal is being disingenuous at best.
| moralestapia wrote:
| Not to nitpick but to expand, many funding deals (pretty much
| all above 100M) are structured like that.
|
| You'll never get a billion dollar check from anyone.
|
| I've even seen startups raise like 500k pre-seed with tranches
| in it, lmao!
| skeeter2020 wrote:
| nit: I think you mean tranches
| moralestapia wrote:
| Whoops, typo. Thanks!
| nszceta wrote:
| *tranche
| Aurornis wrote:
| > - Amazon's $50B is only $15B, with the rest being "after
| certain conditions are met", whatever that means (probably an
| IPO, which isn't happening)
|
| Startup funding is often given in increments depending on
| milestones being met. Most startups just don't announce that
| it's conditional.
|
| For large funding rounds, nobody gets a check for the full
| amount at once.
|
| The funding would not be conditional on an IPO because that
| wouldn't make any sense. The IPO is the liquidity event for the
| investors and there's no reason for a startup to take private
| investment money that only enters the company after IPO.
| dgrin91 wrote:
| This is pretty standard. Usually the conditions are performance
| benchmarks, but may also include IPO. Typically its done in
| multiple tranches, e.g. 15B at the start, 5 more if you gain
| +500m users, 5 more if your profit exceeds X, and the rest for
| IPO (im over simplifying)
| arctic-true wrote:
| The conditions are either an IPO or achieving AGI. I'd be
| curious to know how the contract defines AGI. If I recall
| correctly, the OAI-Microsoft deal just defined it as "AI-shaped
| tech that can generate $100 billion in annual profits", which I
| think is actually close to the correct answer, insofar as we
| will have AGI when the markets decide we have AGI and not when
| some set of philosophical criteria seem to be satisfied.
| staticman2 wrote:
| > If I recall correctly, the OAI-Microsoft deal just defined
| it as "AI-shaped tech that can generate $100 billion in
| annual profits", which I think is actually close to the
| correct answer
|
| So if they hit 100 billion annual then it's AGI but if
| Kellogg's launches "FrostedFlakes-GPT" and steals 30% of the
| market it's no longer AGI at 70 billion?
| bssac045 wrote:
| What are they going to do with it?
| sidewndr46 wrote:
| I this $110 Billion more or just $110 billion historically?
| rvnx wrote:
| More
| user3939382 wrote:
| $30B from Nvidia... so the investments are locked in circular
| dependency. Great for the economy.
| idiotsecant wrote:
| This implies any actual investment took place, which would be
| an innovative break from the typical scenario with AI firms.
| baggachipz wrote:
| Oh the "investment" is definitely taking place on paper.
| Whether any money actually changes hands... doubtful.
| Yizahi wrote:
| Nvidia will get all that money back via GPU purchases, Amazon via
| cloud rental and SoftBank is being typical SoftBank - a rich but
| not particularly bright kid in a class :) .
| AnimalMuppet wrote:
| "I give you $30 billion if you use it to buy $30 billion of
| stuff from me" doesn't sound like a very good investment. Is
| Nvidia expecting _more_ back than it puts in? Enough more to
| make the deal profitable?
|
| Or is it just to keep Nvidia from crashing?
| Yizahi wrote:
| Well, I won't pretend I know the answer :) . But I assume
| that a) they are partially betting on making a normal return
| on investment (i.e. OAI not crashing), b) they profit from
| running a huge expense/revenue cycle (a company making say a
| million of profit and having a billion revenue is favored
| better than the same but with only ten million revenue), and
| c) even if all goes wrong, it is still better to get back
| most of the investment even if not everything and zero
| profit, compared to a possibility of just losing it all like
| SoftBank or other investors.
| vonneumannstan wrote:
| $30B in sales is worth more than $30B in stock
| appreciation...
| rich_sasha wrote:
| In the end it's exchanging GPUs for OpenAI shares. It's not a
| non-trade, and in the current market Nvidia could really sell
| the stuff for cash. The marginal cost is very much sharply
| positive.
| max51 wrote:
| "I give you 30B$ worth of hardware that costs me <10B$ to
| make in exchange for 30B$ worth of shares in your company"
| would be a more accurate description.
| dminik wrote:
| How does this work with private companies? It feels like
| Nvidia could find that the market does not value OpenAI
| stock the same way they did.
| recursive wrote:
| Public or private, there's never a guarantee of being
| able to sell back for some nominal price.
| vb-8448 wrote:
| Burn baby, burn!
|
| BTW, real money or credits?
| aurareturn wrote:
| HN told me OpenAI was on the verge of collapse.
| sethops1 wrote:
| How much revenue have they generated? How about profit?
|
| If investors keep throwing obscene money at OpenAI, sure, they
| can stay afloat forever. Can't argue with that. But if we're
| talking about a sustainable business, I still don't see it.
| giancarlostoro wrote:
| If nobody invested in OpenAI how long could they keep the
| lights on? They're not profitable yet, and a lot of the wealth
| that Sam Altman seems to be making revolves around strange
| circular deals.
|
| By comparison, Anthropic is projected to break even in 2028.
| Google's Gemini is already profitable.
| elephanlemon wrote:
| Interesting. I'm having anything on Gemini being profitable
| though, do you happen to have a source?
| giancarlostoro wrote:
| Here's one, basically AI is driving 15% of Google's profits
| at the end of 2025.
|
| https://advergroup.com/gemini-hits-650-million-users/
|
| I didn't really realize how big Gemini was until I saw that
| Qualia was using it, they apparently used 0.01% of Geminis
| total tokens (100 billion) in about 3 months, they're in
| production with the title and escrow industry, so that's a
| great deal of data going through Gemini, unlike some chat
| subscription this is all API driven, which I doubt Google
| is charging at a loss for.
|
| https://www.qualia.com/qualia-clear/
|
| Unlike OpenAI, Google has an actual business model, not
| just strange circular deals.
|
| Edit: I misswrote "majority of" instead of 15% of Google's
| profits.
| famouswaffles wrote:
| > Here's one, basically AI is driving 15% of Google's
| profits at the end of 2025.
| https://advergroup.com/gemini-hits-650-million-users/
|
| This does not at all tell us Gemini is profitable or
| driving 15% of its profits. The article does not mention
| profits even once. It then goes on to bizarrely compare
| Gemini's monthly active users to Open AI's weekly active
| ones.
| hogwasher wrote:
| Indeed, that article doesn't support a single part of
| that claim.
|
| It kinda feels like an LLM-generated article that another
| LLM picked as a "citation", and then no human bothered to
| check if it actually said what the LLM said it did.
|
| And, really, advergroup.com? Who sites an advertising
| agency as if it's a reliable resource?
|
| https://advergroup.com/digital-marketing/
|
| "AdverGroup Web Design and Creative Media Solutions is a
| full service advertising agency that delivers digital
| marketing services. We manage Google Ad Word campaigns
| and/or Meta Ad Campaigns for local clients in Chicago,
| Las Vegas and their surrounding suburbs."
|
| So credible a resource on Gemini's
| performance/profitability... /sarc
|
| But yeah it doesn't even actually say anything about
| profits, let alone attribute any specific percentage of
| profits to Gemini. It just vague marketing copy.
| limagnolia wrote:
| What source do you have the Gemini is profitable? Are you
| referring only to the chat app, or to Google'a AI Ventures
| division? Or including Google Cloud AI related revenue?
| asadotzler wrote:
| Not agreeing with the parent, but that hardly matters.
| Google has a real business, advertising, that brings in
| $400 billion a year and income around $150B. They can
| afford to throw away tens of billions every year while
| still remaining immensely profitable and quite solid as a
| business. OpenAI has no such income to spend so it's as the
| above comments reflect, entirely unsustainable while
| Google's spending on AI is a drop in the bucket for them.
| bjt wrote:
| That's not saying that _Gemini_ is profitable though.
| outside1234 wrote:
| Well, $110B a year doesn't last long if you are losing $40B a
| quarter.
|
| Also Softbank invested, which is never a great signal.
| muddi900 wrote:
| That's mean.
|
| They also invested in Uber
| alecco wrote:
| Nobody saw coming the huge demand for coding agents. Not even
| OpenAI or Anthropic themselves. Those were side projects just a
| year ago and now dominate token demand. And they keep rising.
| whizzter wrote:
| Oh I do think they did see it, considering how good they are
| they've probably been a tuning focus for a while.
|
| The signal the agent usage is sending though is that
| Anthropic is way ahead since all we hear about is Claude
| these days despite OpenAI spending so much more money,
| Antrophic is also out trialling vending machines,etc.
|
| ChatGPT apart from generating text was a bit of a
| query/research tool but now that Google has their AI search
| augmentation shit somewhat together I'm not feeling much need
| for ChatGPT as a research partner.
|
| So now the big question is, with coding and search niches
| curtailed, where will OpenAI be able to generate profits from
| to justify their insane spending?
| phist_mcgee wrote:
| Does anyone see the demand for coding agents that aren't
| subsided 90% by the AI company?
| shimman wrote:
| Or demand that isn't a condition of keeping your job?
| wongarsu wrote:
| I've seen this sentiment (OpenAI collapse imminent) a lot on
| Youtube and Reddit, but it somehow evaded me on here
|
| Bad comments about OpenAI's long-term viability I've seen
| plenty here. But that's not the same as the people predicting
| one of the hottest companies right now will somehow suddenly
| run out of cash all on its own
| hogwasher wrote:
| Its hottest service by far is completely free, the vast
| majority of users of its free service aren't converting to
| users of its paid services (and often stop using the free
| service too because they were just tourists seeing what all
| the fuss was about, or they were compelled to use the free
| service by their employer), and its data center plans are an
| impossible money pit.
|
| The fact it's become a household name internationally (giving
| it the appearance of success) can't save it from spending
| dramatically more money than it makes. It's been coasting on
| investments, but it's not even close to being actually
| profitable.
|
| Huge or well-known companies have collapsed before, even
| though - because people become so used to them existing - it
| never quite feels like it will actually happen until it does.
| nerdix wrote:
| I don't think they are going to collapse. But it was only a
| couple of years ago that many people thought OpenAI had a big
| (some thought insurmountable) lead in a race to dominate a
| winner take all markee. Some people did correctly state that
| OpenAI had no moat in those days so credit there where it's
| due.
|
| Now it's looking like a competitive blood bath where ever
| increasing levels of investment is needed just to main market
| position. Their frontier models are SOTA for 4 weeks before a
| competitor comes and takes the crown. They are standing on much
| shakier ground than they were 2 years ago.
| x0x0 wrote:
| A competitive bloodbath _plus_ OpenAI has investment valuing
| it like it will achieve agi rather than (merely) being a huge
| advancement in computing, but not a fundamental rewriting of
| how all work is done.
| glimshe wrote:
| You'll always find someone claiming X or Y are close to
| collapse at any given time. As even a broken clock is right
| twice a day, eventually one of these predictions will randomly
| be proven correct. That person will then be elevated to a
| genius forecaster and rake in cash for a decade or two.
| 109847 wrote:
| Thiel said around last autumn that AI is a bubble and exited
| Nvidia. Nvidia is now falling despite good earnings.
|
| If OpenAI keeps getting circular financing, of course they
| will not collapse yet.
| hzwanip wrote:
| > Nvidia is now falling despite good earnings.
|
| I think it's still too early to tell. By what measure did
| you even determine that Nvidia is falling?
| muddi900 wrote:
| Actually it is the other way around; every upstart claims
| that their invention is the mostest revolutionariest thing
| ever. 99.9% of them are not. The nay sayers are right most of
| the time.
|
| Recent high-profile examples include Segway, NFT, Crypto as a
| whole, pre-tranformers voice assistants and various "Design
| Thinking" projects like those Amazon prime buttons.
| 131hn wrote:
| My grandma (and my parents, by the way) have never heard of
| Segway, NFTs, or crypto, but they use ChatGPT all the time.
| rvnx wrote:
| They would use Claude or Grok for day-to-day if they had
| heard of it.
| hogwasher wrote:
| And your grandma and parents pay for it, do they?
|
| Free ChatGPT chat has made the company a household name,
| and helped it to persuade investors, but every single one
| of those free users _costs_ the company money. Most of
| those free users have proved unwilling to convert to paid
| users, and adding ads to the free service promises to
| send it into the same enshittification death spiral so
| many other companies have fallen into.
|
| Also, how on Earth would your grandma and parents not
| have heard of crypto? Crypto is frequently front page
| news, even in print newspapers. There have been crypto
| superbowl ads. Are they living under a rock?
| notatoad wrote:
| the $30b investment from nvidia is instead of a previously-
| announced $100b investment from nvidia, so it's not like this
| is an entirely good-news story for OpenAI.
| captainbland wrote:
| For Nvidia's part they're just giving money to one of their
| largest customers. They make money back even if they "lose" the
| bet
| Vespasian wrote:
| Selling Shovels is quite lucrative whether there is an actual
| mining business or just a gold rush.
|
| At one point Jensen Huang will be out (retired or forced by
| staginating sales) and can definitely look back on a very
| successful career. That much is certain.
| rvnx wrote:
| It's like government XX giving "help" or "grants" to
| countries at war so they can purchase weapons from XX.
| bandrami wrote:
| I don't know that OpenAI specifically is the weak link but this
| definitely adds to the argument that the entire sector is a
| wash with the same three or four companies passing around the
| same $50B over and over. OpenAI is just the link that seems
| most likely to break first.
| aurareturn wrote:
| I've subscribed to a few AI tools for the last 3 years now.
| I'm someone who almost never subscribes to anything.
|
| I'm sure that $50b has my money in there somewhere.
| g-mork wrote:
| Yep same, I'd sooner starve than cut my Anthropic sub
| rvnx wrote:
| If tomorrow Claude pricing changes and they start
| charging real API costs like 2000+ USD, and there is
| another service: "NotReallyClaude" that is a bit less
| good but 200 USD, then what would you do ?
| mikert89 wrote:
| I love how people think the company that basically invented ai is
| going out of business. Clearly OpenAI is a massive success and
| will continue to be
| derwiki wrote:
| That's what my Uber told me last night, not sure how he was
| able to get his hands on some stock!
| bigfishrunning wrote:
| "Basically invented AI" by running on principles that Minsky
| wrote about in the 80s, and improvements Google developed in
| the early 10s, on bigger and bigger computers. But "Basically
| invented".
| maplethorpe wrote:
| > The Information had previously reported that $35 billion of
| Amazon's investment could be contingent on the company either
| achieving AGI or making its IPO by the end of the year. OpenAI's
| announcement confirms the funding split, but says only that the
| additional $35 billion will arrive "in the coming months when
| certain conditions are met."
|
| Incredible.
| konschubert wrote:
| So basically, Amazon is buying into the IPO at an early price.
| Maybe this is the time to divest from MSCI world. I don't want
| to be the bag holder in the world's largest pump and dump.
|
| It can both be true at the same time: That AI is going to
| disrupt our world and that Open AI does not have a business
| model that supports its valuation.
| WarmWash wrote:
| Tesla is a car company with relatively small, and shrinking,
| sales, that is worth $1.5T on the promise of
| [Elons_Promise_of_the_Month]
| sixQuarks wrote:
| You forgot to mention they solved vision based autonomous
| driving, but I guess that doesn't matter if Elon = bad
| zozbot234 wrote:
| SAE level 2 driver assistance is explicitly _not_
| autonomous driving.
| iancmceachern wrote:
| Huh? They did not "solve" vision based driving.
| eviks wrote:
| Of course, but if Elon=great you can ignore that
| SpicyLemonZest wrote:
| It's this kind of dynamic that makes me pull back on my
| otherwise pretty AI-forward stance. There's an entire
| community of people who passionately believe it's obvious
| and undeniable that Elon Musk has solved problems that he
| has not solved and his companies deliver things they
| don't deliver. Tesla is absolutely unambiguous in their
| marketing material (https://www.tesla.com/fsd) that they
| do not have autonomous driving, but you're far from the
| first person I've encountered who's been tricked into
| believing otherwise.
|
| I don't _think_ that 's my relationship with AI, I'm
| hardly an uncritical booster. But would I know if it was?
| albedoa wrote:
| Hope daddy sees this and gives you that lollipop.
| outside1234 wrote:
| Seems not solved:
|
| https://fortune.com/2026/02/26/tesla-
| robotaxis-4x-8x-worse-t...
| soulofmischief wrote:
| Gonna need a citation for that, buck.
| konschubert wrote:
| yea, proving my point that the index funds are maybe not
| the safest place if you want to invest into real value. And
| soon, twitter/Grok/spacex might be doing an IPO
| general_reveal wrote:
| Did it ever occur to you that an entire generation of
| developers are going to retire in less than 20 years? They
| are betting that the software industry will be autonomous.
| Really, think of our industry like AUV phenomena. We're the
| drivers that are about to be shown the door, that's the bet.
|
| World will still need software, lots of it. Their valuation
| is based on an entire developer-less future world (no labor
| costs).
| wongarsu wrote:
| OpenAI has all the name recognition (which is worth a
| couple billion in itself), but when it comes to actual
| business use cases in the here and now Anthropic seems
| ahead. Even more so if we are talking about software dev.
| But they are valued at less than half of OpenAI's valuation
|
| What is somewhat justifying OpenAI's valuation is that they
| are still trying for AGI. They are not just working on
| models that work here and now, they are still approaching
| "simulating worlds" from all kinds of angles (vision, image
| generation, video generation, world generation), presumably
| in hopes that this will at some point coalesce in a model
| with much better understanding of our world and its agency
| in it. If this comes to pass OpenAI's value is near
| unlimited. If it doesn't, its value is at best half what it
| is today
| zozbot234 wrote:
| Obligatory reminder that today's so called "AGI" has
| trouble figuring out whether I should walk or drive to
| the car wash in order to get my dirty car washed. It has
| to think through the scenario step by step, whereas any
| human can instantly grok the right answer.
| SpicyLemonZest wrote:
| I just don't know how to engage with these criticisms
| anymore. Do you not see how increasingly convoluted the
| "simple question LLMs can't answer" bar has gotten since
| 2022? Do the human beings you know not have occasional
| brain farts where they recommend dumb things that don't
| make much sense?
| bigstrat2003 wrote:
| > Do the human beings you know not have occasional brain
| farts where they recommend dumb things that don't make
| much sense?
|
| Not that dumb, no. That's why it's laughable to claim
| that LLMs are intelligent.
| SpicyLemonZest wrote:
| I should note for epistemic honesty that I expected I
| would be able to come up with an example of a mistake I
| made recently that was clearly equally dumb, and now I
| don't have a response to offer because I can't actually
| come up with that example.
| maplethorpe wrote:
| > Do the human beings you know not have occasional brain
| farts where they recommend dumb things that don't make
| much sense?
|
| I completely agree. I'm ashamed to admit, I've actually
| walked to the car wash without my car on more than one
| occasion. We all make mistakes!
| wongarsu wrote:
| The idea/hope is that a video model would answer the car
| wash problem correctly. There are exactly the kinds of
| issues you have to solve to avoid teleporting objects
| around in a video, so whenever we manage more than a
| couple seconds of coherent video we will have something
| that understands the real world much better than text-
| based models. Then we "just" have to somehow make a
| combined model that has this kind of understanding and
| can write text and make tool calls
|
| Yes, this is kind of like Tesla promising full self
| driving in 2016
| reducesuffering wrote:
| What are you talking about? OpenAI's ChatGPT free tier
| (that everyone uses) answers this in the first sentence
| within a couple seconds.
|
| "If your goal is to get your dirty car washed... you
| should probably _drive_ it to the car wash "
| toraway wrote:
| That problem went viral weeks ago so is no longer a valid
| test. At the time it was consistently tripping up all the
| SOTA models at least 50% of the time (you also have to
| use a sample > 1 given huge variation from even the exact
| same wording for each attempt).
|
| The large hosted model providers always "fix" these
| issues as best as they can after they become popular.
| It's a consistent pattern repeated many times now,
| benefitting from this exact scenario seemingly
| "debunking" it well after the fact. Often the original
| behavior can be replicated after finding sufficient
| distance of modified wording/numbers/etc from the
| original prompt.
| reducesuffering wrote:
| I don't understand what occasional hiccups prove. The
| models can pass college acceptance tests in advanced
| educational topics better than 99% of the human
| population, and because they occasionally have a
| shortcoming, it means they're worse than humans somehow?
| Those edge cases are quickly going from 1% -> 0.01%
| too...
|
| "any human can instantly grok the right answer."
|
| When asking a human about general world knowledge, they
| don't have the generality to give good answers for 90% of
| it. Even very basic questions humans like this, humans
| will trip up on many many more than the frontier LLMs.
| waisbrot wrote:
| For example, I just asked ChatGPT "The boat wash is 50
| meters down the street. Should I drive, sail, or walk
| there to get my yacht detailed?" and it recommended
| walking. I'm sure with a tiny bit more effort, OpenAI
| could patch it to the point where it's a lot harder to
| confuse with this specific flavor of problem, but it
| doesn't alter the overall shape.
| reducesuffering wrote:
| This question is obviously ambiguous. The context here on
| HN includes "questions LLMs are stupid about, I mention
| boat wash, clearly you should take the boat to the boat
| wash."
|
| But this question posed to humans is plenty ambiguous
| because it doesn't specify whether you need to get to the
| boat or not, and whether or not the boat is at the wash
| already. ChatGPT Free Tier handles the ambiguity, note
| the finishing remark:
|
| "If the boat wash is 50 meters down the street...
|
| Drive? By the time you start the engine, you're already
| there.
|
| Sail? Unless there's a canal running down your street,
| that's going to be a very short and very awkward voyage.
|
| Walk? You'll be there in about 40 seconds.
|
| The obvious winner is walk -- unless this is a trick
| question and your yacht is currently parked in your
| living room.
|
| If your yacht is already in the water and the wash is
| dock-accessible, then you'd idle it over. But if you're
| just going there to arrange detailing, definitely walk."
| rvz wrote:
| > What is somewhat justifying OpenAI's valuation is that
| they are still trying for AGI.
|
| "AGI" is the IPO.
| whizzter wrote:
| > What is somewhat justifying OpenAI's valuation is that
| they are still trying for AGI.
|
| And that's the dealbreaker for me since they've been so
| adamant on scaling taking them there, while we're all
| seeing how it's been diminishing returns for a while.
|
| I was worried a few years back with the overwhelming
| buzz, but my 2017 blogpost is still holding strong. To be
| fair it did point to ASI where valuation is indeed
| unlimited, but nowadays the definition of AGI is quite
| weakened in comparison.. but does that then convey an
| unlimited valuation?
| lenerdenator wrote:
| > If this comes to pass OpenAI's value is near unlimited.
|
| How?
|
| If we have AGI, we have a scenario where human knowledge-
| based value creation as we know it is suddenly worthless.
| It's not a stretch to imagine that human labor-based
| value creation wouldn't be far behind. Altman himself has
| said that it would break capitalism.
|
| This isn't a value proposition for a business, it's an
| _end of value_ proposition for society. The only people
| who find real value in that are people who spend far too
| much time online doing things like arguing about Roko 's
| Basilisk - which is just Pascal's Wager with GPUs - and
| people who are so wealthy that they've been disconnected
| with real-world consequences.
|
| The only reason _anyone_ sees value in this is because
| the second group of people think it 'll serve their self-
| concept as the best and brightest humanity has ever had
| to offer. They're confusing ego with ability to create
| economic value.
| zozbot234 wrote:
| "End of human-based value creation" is tantamount to
| post-scarcity. It "breaks" capitalism because it
| supposedly obviates the resource allocation problem that
| the free-market economy is the answer to. It's what Karl
| Marx actually pointed to as his utopian "fully realized
| communism". Most people would think of that as a pipe
| dream, but if you actually think it's viable, why
| wouldn't you want it?
| zozbot234 wrote:
| Even the rise of high-level languages did not lead to a
| "developer-less future". What it did was improve
| productivity and make software cheaper by orders of
| magnitude; but compiler vendors did not benefit all that
| much from the shift.
| rishabhaiover wrote:
| A high-level language or a compiler wasn't automating
| end-to-end reasoning for a programming task.
| outside1234 wrote:
| But Anthropic is the one that is disrupting software
| development? So why are we not piling into that?
| konschubert wrote:
| It can both be true that
|
| a) AI is going to replace a Bazillion-Dollar Industry and
| that
|
| b) being an AI model provider does not allow to capture
| margins above 5% long-term
|
| I am not saying that this is what will happen, but it's a
| plausible scenario. Without farmers we would _all be dead_
| but that does not mean the they capture monopoly rents on
| their assets.
| maplethorpe wrote:
| Around 6 months ago, the company I work for bought Cursor
| subscriptions for everyone. I thought to myself, "this is
| it".
|
| The majority of my coworkers now push AI-generated code
| each day, and it has completely absolved me of any fear
| whatsoever that AI will take my job.
| RobotToaster wrote:
| Exactly, the dot com bubble didn't mean that the internet was
| just a fad.
| stavros wrote:
| I'd love to know how they define AGI.
| baal80spam wrote:
| Altman Gets Investment?
| zozbot234 wrote:
| They've previously defined AGI as an AI that can directly
| create $100B in economic value.
| stavros wrote:
| Hmm interesting, thanks. I wonder how much value it's
| already created.
| bigfishrunning wrote:
| That number is probably negative
| etyhhgfff wrote:
| Obviously in a way they get the $35B.
| boringg wrote:
| I'm curious how they define AGI technically. Seems like you
| would want that to be a tight definition.
| uluyol wrote:
| It just needs to be anything that will force OpenAI to IPO.
| lm28469 wrote:
| Didn't they already define it as "a system capable of
| generating at least $100 billion in profit"
| outside1234 wrote:
| Hopefully Microsoft is selling parts of their share of this
| trash into these funding rounds...
| yakkomajuri wrote:
| I guess no GPT on Bedrock still it seems
| throw03172019 wrote:
| They announced more OpenAI models coming to bedrock.
| pier25 wrote:
| > _Amazon will start with an initial $15 billion investment,
| followed by another $35 billion in the coming months when certain
| conditions are met._
|
| Those conditions are an IPO or reaching AGI [1].
|
| Nvidia and SofBank will pay in installments.
|
| Also very interesting that Microsoft decided to not invest in
| this round. A PR statement was made though [2].
|
| [1] https://americanbazaaronline.com/2026/02/26/amazon-to-
| invest...
|
| [2] https://openai.com/index/continuing-microsoft-partnership/
| konschubert wrote:
| So they're getting in on the IPO.
|
| Are they going to get stock for it or is it a PIPE?
|
| Personally, I don't think I want to get in on this at retail
| prices.
|
| It can both be true at the same time that AI going to disrupt
| our world and that being an AI lab is a terrible business.
| rvnx wrote:
| But will you have a choice once they enter the indexes ?
| People are automatically going to invest into that (circular)
| pyramid scheme.
| bpp wrote:
| I'd assume the real trigger here is "reaching AGI," which would
| help OpenAI shrug off some of their Microsoft commitments thus
| making OpenAI models available on Amazon Bedrock. Which is what
| Amazon is really after.
| Netcob wrote:
| Once they "reach AGI", will they have a big party on a carrier
| with a "Mission Accomplished" banner?
| echelon wrote:
| They don't need to reach AGI. They just need to put all of
| the engineers on HN out of work.
|
| A year ago I would have said that was crazy. In the last
| month, I've been using Claude Code to write 20kloc of Rust
| code every day (and I review all of it).
|
| A week is now a day. If that figure doubles, I have no idea
| what will happen to us. And I think it's coming.
| candiddevmike wrote:
| > They just need to put all of the engineers on HN out of
| work.
|
| I think you've crossed the line from being an AI maxi to
| just rage baiting. This comment is a pointless anecdote at
| best, please take your ridiculous FOMO takes elsewhere.
| hn_acc1 wrote:
| So you now have 400Kloc of Rust code? Doing what? How much
| of that is "new"?
|
| I can't get Augment / Opus 4.5 to edit a few C++ files from
| within VSCode without going off on a wild goose chase or
| getting stuck in an infinite loop after I tell that it
| should be doing this: "oh, you're right, I need to do X",
| "To do X, I must understand how to do Y", "I see now that
| to do Y, I should look at at Z". "Let me look at Z",
| followed by: "oh, you're right, I need to do X"..
| Aperocky wrote:
| > write 20kloc of Rust code every day (and I review all of
| it)
|
| Only one of this can be true. It's not a shame to say you
| don't bother reviewing it, in the future that may well be
| the norm.
| techpression wrote:
| That's the same definition of reviewing code as saying
| watching the movie is the same as reading the book it's
| based on. No human has ever reviewed 600k lines of code in
| a month, ever. It's hard to find someone who can even read
| and understand that amount in that time.
| bigfishrunning wrote:
| > 20kloc of Rust code every day (and I review all of it).
|
| Reviewing 1k lines of code an hour is a breakneck pace, are
| you spending 20 hours a day reviewing code?
| xienze wrote:
| It's clearly code so flawless you can tell at a glance
| that it's correct.
| Cipater wrote:
| What does all this code do? What software are you writing?
| xienze wrote:
| I'm convinced these "guys you gotta believe me I'm a
| seasoned veteran and this shit is the real deal" posts that
| show up in every AI thread are either coming from Sam
| Altman or a bot.
| throwaway173738 wrote:
| To do what, exactly, and are people paying you for your
| output or are you just making things for yourself?
|
| Building things at a mature company with a market is a lot
| different than hacking together your own tools. There are a
| lot more people you can let down at scale.
| oersted wrote:
| It'd be interested in seeing how exactly the lawyers figured
| out how to define AGI. It must be a fairly mundane set of KPIs
| that they just arbitrarily call AGI, the term will probably
| devalue significantly in the coming years.
|
| The actual quote is this though:
|
| > hitting an AGI milestone or pursuing an IPO
|
| So it seems softer than actually achieving AGI or finalising an
| IPO.
| paxys wrote:
| Very convenient to put "AGI" in all these agreements because
| the term is fundamentally undefinable. So throw out whatever
| numbers you want and fight about it and backtrack later.
| bwfan123 wrote:
| > fundamentally undefinable
|
| Incredible, how an entire religion has sprung up around AGI.
| ben_w wrote:
| The problem with AGI is not that it's undefinable, but that
| everyone has a different one. Kinda like consciousness in
| that regard.
|
| Fortunately, OpenAI already wrote theirs down. Well,
| Microsoft[0] says they did, anyway. Some people claimed it
| was a secret only a few years ago, and since then LLMs have
| made it so much harder to tell the difference between leaks
| and hallucinated news saying this, but I can say there's at
| least a claim of a leak[1].
|
| [0] https://blogs.microsoft.com/blog/2026/02/27/microsoft-
| and-op...
|
| [1] It talks about it, but links to a paywalled site, so I
| still don't know what it is:
| https://techcrunch.com/2024/12/26/microsoft-and-openai-
| have-...
| copx wrote:
| The definition used to be "passes the Turing test" .. until
| LLMs passed it.
| asadotzler wrote:
| All the major investments in these big rounds have come in
| tranches, right?
| eikenberry wrote:
| Has OpenAI laid out the specific definition of what an AGI is
| for this case? The one from their mission is quite vague and
| the general community has nothing close to a universal common
| definition... which means they will most likely just define it
| as what they already have when the timing is right.
| CSMastermind wrote:
| At least in their Microsoft contract it means $100 billion in
| profit, though they don't need to have actually made that
| money, they just need to show they're on track to do so.
| ViewTrick1002 wrote:
| Taking the circular deals up another magnitude?
| snitch182 wrote:
| 730 Billion certainly is a bubble that will pop sooner or later.
| thinkingtoilet wrote:
| Only $730B? Why stop there? As long as we're making stuff up,
| let's go big. What about $10T?
| sunaookami wrote:
| Rookie numbers, I say $100T. Go big or go home.
| frizlab wrote:
| https://paintraincomic.com/comic/first-date/
| muzani wrote:
| They have to save the big T for IPO.
|
| On a tangent, I remember companies like Slack triggering the
| unicorn craze. They said that it was just better to aim for a
| billion than some number like 900M or 1.2B, because
| psychologically, it meant more to employees, investors, and
| customers.
|
| OpenAI is in that place where nobody really cares for these
| mind games. It's not very reliable. But it is useful enough to
| pay for. It's cheap enough to be an impulse purchase where some
| guy decides to just subscribe to ChatGPT because they're
| working on an important slide or sketching a logo.
| outside1234 wrote:
| Remember when it was a huge milestone when gigantic companies
| like Apple and Microsoft were striving to be the first $1T
| company backed with decades of building actual businesses with
| actual profit?
|
| Good times.
| etyhhgfff wrote:
| You have to make it look semi-realistic
| wongarsu wrote:
| $110B at $840B post-money valuation for OpenAI vs
|
| $30B at $380B post-money for Anthropic announced two weeks ago
|
| This does not increase my confidence in OpenAI's future
| rustyhancock wrote:
| Well Anthropic has said (a fairly weak but clear) no to DoW, I
| wonder who will say yes?
| lm28469 wrote:
| https://www.axios.com/2026/02/27/altman-openai-anthropic-
| pen...
|
| > Sam Altman says OpenAI shares Anthropic's red lines in
| Pentagon fight
|
| 90% chance it's all PR but who knows
| qoez wrote:
| Never believe anything sam says
| amarcheschi wrote:
| Never believe anything <insert tech ceo here> says
| beernet wrote:
| Sam in very particular here. This guy will say whatever
| for status and "power".
| _fat_santa wrote:
| IMO this looks largely like another circular investment. Amazon's
| investment is tied to OpenAI using AWS for their Frontier product
| and I assume Nvidia's conditions are that OpenAI continue buying
| hardware from them. Then there's SoftBank though given that those
| are the same guys that invested heavily in WeWork, I assume this
| is just very brash bullishness on their part.
|
| From my perspective, I hope that OpenAI survives and can pull of
| their IPO but I just have that nagging feeling in my gut that
| their IPO will be rejected in much the same way that the WeWork
| IPO was rejected.
|
| On the one hand you can look at these companies investing and
| take it as a signal that there is something there (in OpenAI)
| that's worth investing in. On the other hand all these companies
| that are investing are basically getting that investment back
| through spending commitments and such and are just using OpenAI
| as a proxy for what is essentially buying more revenue for
| themselves.
|
| When their IPO hits later this year I hope that it's the former
| case and there's actually some good underlying fundamentals to
| invest in. But based on everything I've read, my gut is telling
| me they will eventually implode under the weight of their
| business model and spending commitments.
| system2 wrote:
| I am expecting OpenAI stock to be the most volatile in history.
| The first 3-6 months will be fun.
| leonflexo wrote:
| How far the volatility ripples out will give us a real look
| into just how self-reinforced the financials truly are.
| ChadNauseam wrote:
| > On the one hand you can look at these companies investing and
| take it as a signal that there is something there (in OpenAI)
| that's worth investing in. On the other hand all these
| companies that are investing are basically getting that
| investment back through spending commitments and such and are
| just using OpenAI as a proxy for what is essentially buying
| more revenue for themselves.
|
| I don't understand how this is some kind of cheat code. Let's
| say I give you $100 on the condition that you buy $100 worth of
| product from me. And let's say that product cost me $80 to
| produce. Isn't that basically the same as me giving you $80? I
| don't see at all how that's me "basically getting that
| investment back".
| rafaelmn wrote:
| In exchange for 100$ of your stock AND making your revenue
| numbers look insane for the next cycle ?
|
| Also Nvidia margins are waaay higher than 20%
| Alex3917 wrote:
| For both Amazon and Nvidia, their marginal costs are probably
| much lower than their fixed costs.
| SecretDreams wrote:
| > I don't understand how this is some kind of cheat code.
| Let's say I give you $100 on the condition that you buy $100
| worth of product from me. And let's say that product cost me
| $80 to produce. Isn't that basically the same as me giving
| you $80? I don't see at all how that's me "basically getting
| that investment back".
|
| What if the product only costs you $20 to produce?
| hirako2000 wrote:
| That's like giving them* $20.
|
| And inflate your revenue by $80.
|
| Laws on competition make this kind of arrangements illegal,
| so you would have to exerce influence and have the invested
| in company pretends you happen to have been picked among
| competitors.
|
| In any case the SEC will be focused on whether the filings
| aren't made up to fraud investors, so they could reject the
| IPO, of the invested in company. Your own entity also is at
| risk.
|
| We all know MS gets away with it, they have good legal goons
| who find way to make all of it appears fair with regards to
| the law.
| bradfa wrote:
| I give you $100 cash and you give me $100 worth of stock in
| return. Now you give me $100 cash to buy something from me
| that cost me $80 to produce. I end up with $100 worth of
| stock in your company which cost me only $80. No?
|
| NVIDIA gross margins lately are like 75%, so it's more like
| you give me $100 to buy something from me that cost me $25 to
| produce, hence I end up with $100 worth of stock in your
| company and it only cost me $25.
| Sleaker wrote:
| Aaaannd get to claim the 100 as revenue to show investors
| that the company is performing better than if I had not
| made the deal, which also means that demand for the product
| stays inflated which also means I can keep my margins
| higher by not needing to discount my product.
| rvnx wrote:
| Urgently need an IPO so losers can chip in. If the
| sandcastle plummets before, funds and other AI companies
| lose a lot, so better bet again and again, even if this
| is nonsensical.
| ben_w wrote:
| > I give you $100 cash and you give me $100 worth of stock
| in return. Now you give me $100 cash to buy something from
| me that cost me $80 to produce. I end up with $100 worth of
| stock in your company which cost me only $80. No?
|
| Sure, but how's that a cheat code? If you normally sell
| something for $100 that costs $80 to make, and then use
| that $100 revenue to buy $100 of stock, this is an
| identical outcome for you.
| danielheath wrote:
| They wouldn't have bought $100 worth of product if the
| deal weren't offered, because they didn't have $100 to
| spend.
| ben_w wrote:
| If they couldn't borrow $100, or get $100 from any other
| investor, that just puts you in the position of being an
| investor, and even then the difference between bradfa's
| version and mine is simply when you became an investor,
| not that you became one.
|
| Again, this is not a cheat code: if you sell $80 of cost
| for $100 of stock, the stock you now own can go up or
| down, and if you overvalued it then down is the more
| likely direction.
| ethbr1 wrote:
| The primary cheat code here would actually seem to be (a)
| getting preferential access to Nvidia's production
| through these deals and (b) creating a paper story of
| increasing OpenAI private valuation.
| ethbr1 wrote:
| > _hence I end up with $100 worth of stock in your company
| and it only cost me $25._
|
| You also lost out on $75 worth of cash revenue (opportunity
| cost from selling the same thing to a different customer),
| so really you just took stock in lieu of cash.
|
| It'd be different if Nvidia (TSMC) had excess production
| capacity, but afaik they're capped out.
|
| So it's really just whether they'd be selling them to
| OpenAI and getting equity in return or selling to customers
| and getting cash in return.
|
| If OpenAI thinks their own stock is valued above
| fundamentals, it's a no brainer to try and buy Nvidia
| hardware with stock.
| _fat_santa wrote:
| How I see it is the companies want to jack their revenue and
| in turn jack the price of their stock and please
| shareholders. Those are the two main goals which this
| accomplishes, regardless of the underlying fundamentals.
| skydhash wrote:
| I'm not a finance expert, but it may be because investment
| and purchase are are taxed differently (I don't know). You
| gave $100 away as investments, got $100 back as revenue.
| Meanwhile you establish that your product are worth $100
| (while costing $80) and you have $100 worth of shares.
| Without considering side effects, you gave away $80 worth of
| product for $100 (supposed) worth of shares. But shares are
| subject to side effects and those side effects can be quite
| nice (making the news, establishing price,...).
|
| The issue is that there's no organic force behind those
| changes and it makes everything hollow. You could create a
| market inside a deserted area and make it appear like a
| metropolis.
| coliveira wrote:
| The reason this doesn't make sense is that this is the math
| of monopoly creation! The government should be making sure
| companies don't go around throwing money at circular deals
| that will make them and their friends a fortune while
| cornering the market, but it seems that capitalism rules
| don't exist anymore in the US.
| overfeed wrote:
| > Isn't that basically the same as me giving you $80?
|
| In your accounting, you can claim that you have an investment
| worth $100 _and_ book $100 worth of revenue. You 're juicing
| your sales numbers to impress shareholders - presumably,
| without your $100, the investee wouldn't have bought $100
| worth of your product. The last thing your shareholders want
| to see are your sales numbers stop growing, or heaven forbid,
| start shrinking.
|
| Nvidia is not the first company to "buy" sales of its own
| product via simple or convoluted incentive schemes. The
| scheme will work for a while until it doesn't.
| tsimionescu wrote:
| The problem is here:
|
| > Let's say I give you $100 on the condition that you buy
| $100 worth of product from me. And let's say that product
| cost me $80 to produce. Isn't that basically the same as me
| giving you $80?
|
| Why limit myself to $100 for a product that costs $80? I
| could just as well give you $1 000 000 to buy this same
| product from me. That way, I have a $1 000 000 share of your
| company, and I have $1 000 000 in revenue, and it only cost
| me $80.
|
| This distorts the market for the product we're trading, and
| distorts the share price for both my company and yours.
| bandrami wrote:
| It's not "continue" buying as much as this is NVIDIA fronting
| the money for (most of) the hardware OpenAI has already ordered
| from them. It's like borrowing rent money from your drug
| dealer.
| nelsonic wrote:
| Great analogy. ;-)
|
| Doubt Jensen _sees_ himself as a "dealer" but considering the
| vendor lock-in and margins, he pretty much is the Tony
| Montana of Ai Chips.
|
| It's nuts that this type of financing is legal.
| Aperocky wrote:
| It is legal because Jensen isn't selling drugs, payday
| loans are legal too!
| lotsofpulp wrote:
| It's legal because both sides have armies of lawyers and
| are voluntarily entering into contracts where each party
| gets consideration.
|
| How someone can compare the above situation to a person
| getting a payday loan to put a roof over their head or
| food on their plate is beyond me.
|
| The "it's like <insert wild and inappropriate analogy to
| stoke emotion>" is a tired trope.
| coliveira wrote:
| It's like credit cards loaning money to people who are
| unemployed and will default on payments. It's a risky
| business that is legal and can be very profitable, but may
| also be disastrous in the future.
| nradov wrote:
| I don't see the problem as long as materially significant
| transactions by publicly traded companies are properly
| disclosed to investors. If someone loses money by buying
| NVDA then they have only themselves to blame.
| kace91 wrote:
| >It's nuts that this type of financing is legal.
|
| You need people to burn in house fires for regulation to
| require extinguishers.
|
| We're going to be the next generation's cautionary tale.
| kristjansson wrote:
| Conversely it's equity for an in-kind investment. Dave Choe
| taking the Facebook shares writ large.
| max51 wrote:
| The "circular investment" is mostly start up companies using
| their stocks instead of cash to pay for server hardware and
| cloud computing. There is a few extra steps in between that
| make things look weird and convoluted, but the end results is
| really just big companies giving hardware and getting shares of
| ai companies in exchange for it.
| dangus wrote:
| I think you're just describing how it's circular.
|
| It's like Toys R Us not having enough money to pay Mattel for
| Barbie dolls and telling Mattel they can have partial
| ownership of the company if they just supply them with some
| more toys.
|
| But the problem is that Toys R Us is spending $15, 20, or
| maybe even $50 (who knows?) to sell a $10 toy.
|
| Toys R Us continues selling toys faster and faster despite a
| lack of profit, making Mattel even more dependent on Toys R
| Us as a customer. It blows up the bubble where a more natural
| course of action would be for Toys R Us to go bankrupt or
| scale back ambitions earlier.
|
| Because it's circular like this, it lends toward bigger
| crashing and burning. If OpenAI fails, all these investors
| that are deeply integrated into their supply chains lose both
| their investment and customer.
| SV_BubbleTime wrote:
| OK, so absolutely good faith here what is the end game?
|
| Obviously, there's a scenario of super power AI and then
| it's a matter of continuing course. Electricity and
| silicon.
|
| What if you are right, and the scaling doesn't work. It is
| too much power, time, hardware to improve... does openAI
| fold?
|
| Do they just actual use the models they have?
|
| Does everyone just decide that AI didn't work and go back 5
| years like it didn't happen?
|
| Does the price change so that they have to be profitable
| making AI services expensive and rare instead of today
| where they are everywhere pointlessly?
|
| Or does this insane valuation only make sense with
| information you don't have like insider scaling or
| efficiency news?
|
| Does China's strategy of undercutting US value of models
| pay off bigly?
| Flatterer3544 wrote:
| Why so extreme, most likely just AI winter for a while,
| then when tech and societies has caught up, the
| advancements begins again.
|
| It is not like we threw away the dotcom advances, they
| were just put on hold for a while..
| dfp33 wrote:
| Nope wrong framing.
|
| Nvidia is investing assets into OAI - it has to. Because OAI
| needs to become successful for Nvidia's story in the long-
| term to play out, to justify its current stock price.
| malfist wrote:
| You say calling it circular is wrong framing and the
| immediately proceeded to describe a circle.
| johnbarron wrote:
| Nvidia sells the picks, AWS rents the mine, OpenAI digs, and
| the money just loops around the table...
| mizzao wrote:
| This piece that was on HN yesterday corroborates your gut:
| https://www.ben-evans.com/benedictevans/2026/2/19/how-will-o...
| loeber wrote:
| Comparing OpenAI and WeWork is a nonsensical perspective.
| OpenAI is shipping the most revolutionary product in a
| generation, with 800 million monthly active users. It's the
| fastest revenue ramp ever, at incredible scale -- $20B+ ARR.
| These are real fundamentals. They matter. And the cost of
| inference is coming down all the time.
|
| WeWork was a short-term/long-term lease arbitrage business. The
| two are nothing alike.
| mountainriver wrote:
| It's one of the worst takes I've heard. OpenAI creates the
| fastest growing app ever, spawns a revolution bigger than the
| internet, and this guys take is they are like WeWork...
| hk__2 wrote:
| Being the first doesn't mean you'll win. They have no
| product, only a commodity that you can find at other
| companies or even for free (DeepSeek).
| rvnx wrote:
| They have a product but it's a commodity now.
|
| They are in the business of selling compute / datacenter
| rack spaces. A server where you pay per GBs transferred
| in/out.
|
| If it's Gemini or GPT behind, for most use cases users
| wouldn't care.
| yibg wrote:
| Both can be true. Just because you've created a
| revolutionary product doesn't mean it's a viable business,
| let alone one worth $700+ billion. There is a lot of
| history of the first movers that created revolutionary
| products that eventually faded away into nothing, while
| others capitalized on the innovation.
| DauntingPear7 wrote:
| How will they make money on their product exactly? To the
| tune of being worth nearly a trillion dollars? There is no
| guarantee that inference will go down, we've seen some
| improvement with cheap models, but they aren't what people
| want, and otherwise models stay expensive to run and use
| babelfish wrote:
| Inference is already profitable (training is not)
| nradov wrote:
| So what. In a highly competitive industry they can't keep
| selling inference unless they continually train better
| models. It's like saying my airline is profitable if you
| don't count the cost of buying new airplanes.
| zippothrowaway wrote:
| [citation needed]
|
| OpenAI have made this claim and maybe it is with API pay-
| per-use (there's also good evidence eveb that is not if
| you dive into how much a rack of B200s cost to operate),
| but I'd be very sceptical that the free, $20 or $200 a
| month plans are profitable.
|
| Then the questions are if the market will bear the real
| cost and if so how competitive OpenAI are with Google
| when Google can do what Microsoft did to Netscape and
| subsidize inference for far longer than OpenAI can.
| dfp33 wrote:
| The only reason to draw this comparison is to show SoftBank
| are not as competent as they'd like to appear to be - so
| putting their name in relation to investors of OAI does not
| strengthen the prospects we should share re. OAI.
| rvnx wrote:
| They had a first-mover advantage for sure.
|
| It used to be revolutionary, but now there is a huge
| difference: plenty of competition, and a growing number of
| high-quality models that can run offline (for free!) or
| cheaper (Gemini-Flash for example).
|
| They are in some way the Nokia of AI, "we have the
| distribution, product will sell", but this is not enough if
| innovation is weak.
|
| They are even lagging behind (GPT-5 is a weaker coder than
| Claude, Sora is a toy compared to Seedance 2.0, etc).
|
| One Apple releases the AIPhone, running offline models, with
| 32 GB of unified memory, with optional cloud requests, then
| it's going to be super though for OpenAI.
| engineer_22 wrote:
| Will they maintain an edge over other AI companies long term?
| With so many market participants will it become a race to the
| bottom?
|
| This valuation puts their P/E around 40.
|
| Anthropic $380B valuation on $13B ARR. P/E around 30.
|
| 5 years ago Uber was in similar territory. Tesla... Well we
| won't mention Tesla.
| Nevermark wrote:
| Circular investing can be a smoke screen.
|
| But it can also simply be the financial framing for direct
| bartering. Which is even more direct than regular financial
| transactions.
|
| "I will provide these resources you need, in exchange for part
| ownership", and/or "a limited license to your tech", "right to
| provide access to our customers on these terms", Etc."
|
| Amazon doesn't need any frothy fake revenue. But they do want
| to offer their customers the most in demand models, with the
| best financial terms for Amazon.
|
| Nvidia wants customers, but not at the expense of throwing
| money away. Their market cap may be volatile, but their books
| are beyond solid.
|
| I would be a lot more concerned if OpenAI was getting "funding"
| from a quantum computer startup, and vice versa.
| pdyc wrote:
| and they say its not a bubble! we saw it with oracle deal, big
| announcement and than nothing, same with nvidia and now same
| thing is going again i hpe this is cash infusion and not some
| credit deal.
| randusername wrote:
| There's this saying that if you owe the bank a million dollars,
| you have a big problem, but if you owe the bank 100 million
| dollars, the bank has a big problem.
|
| Is the same thing true for corporations? At some point the
| numbers are so wild the entire economy must help you succeed? I
| don't mean "too big to fail" exactly, more like "so big eventual
| success is guaranteed at all costs"
| advael wrote:
| Those are the same thing. The whole point of saying "too big to
| fail" is to evoke the moment in the housing crash where
| governments largely threw most of their citizens under the bus
| by bailing out banks rather than homeowners for the banks'
| wildly irresponsible decisions. "Too big to fail" means the
| government steps in and bails you out, and that phrase became
| popular because for many it was the final nail in the coffin
| for their trust in government
| Dumblydorr wrote:
| Would the current administration bail out OpenAI?
| hn_acc1 wrote:
| They would give OpenAI anything they want if they proclaim
| the current guy the bestest and biggliest president of all
| time, ever. (edit: I meant, if chatgpt were to consistently
| claim that the current guy is the greatest president ever)
| zvqcMMV6Zcr wrote:
| I wonder if there is "too big for IPO". Saudi Aramco in 2019
| sold shares worth $25.6 billion in IPO. Even offering just 5%
| of OpenAI to public would shatter that record. Well, unless
| public isn't actually interested in investing such huge
| amounts.
| paxys wrote:
| And if you owe the bank a hundred billon dollars the entire
| economy has a big problem.
| ChicagoDave wrote:
| It's Tesla only big tech are the suckers.
| 9cb14c1ec0 wrote:
| There is not a single OpenAI model in the top 10 on openrouter's
| ranking page. The market is saying something about the
| comparative value of OpenAI.
|
| Edit: yes, it is true that many people do integrate directly with
| OpenAI. That doesn't negate the fact that Openrouter users are
| largely not using OpenAI.
| cj wrote:
| > The market is saying something about the comparative value of
| OpenAI.
|
| Is it?
|
| At what point are the models going to all be "good enough",
| with the differentiating factor being everything else, other
| than model ranking?
|
| That day will come. Not everyone needs a Ferrari.
|
| Edit: I misread the parent, I think they're saying the same
| thing.
| alephnerd wrote:
| > At what point are the models going to all be "good enough",
| with the differentiating factor being everything else, other
| than model ranking?
|
| It's already come for vast swathes of industries.
|
| Most organizations have already been able to operationalize
| what are essentially GPT4 and GPT5 wrappers for standard
| enterprise usecases such as network security (eg. Horizon3)
| and internal knowledge discovery and synthesis (eg. GleanAI
| back in 2024-25).
| 9cb14c1ec0 wrote:
| Yes, and that is why I used the phrase comparative value.
| The concept of winning business based on being #1 on the
| benchmarks is dead.
| alephnerd wrote:
| I agree, and most of my peers do as well. This is why
| most of us shifted to funding AI Applications startups
| back in 2023-24. Most of these players are still in
| stealth or aren't household names, but neither are
| ServiceNow, Salesforce, Palo Alto Networks, Wiz, or
| Snowflake.
|
| Foundation Models have reached a relative plateau and
| much of the recent hype wasn't due to enhanced model
| performance but smart packaging on top of existing
| capabilities to solve business outcomes (eg. OpenClaw,
| Antheopic's business suite, etc).
|
| Most foundation model rounds are essentially growth
| equity rounds (not venture capital) to finance infra/DC
| buildouts to scale out delivery or custom ASICs to
| enhance operating margins.
|
| This isn't a bad thing - it means AI in the colloquial
| definition has matured to the point that it has become
| reality.
| nradov wrote:
| Model rankings are irrelevant. No one cares.
|
| The differentiating factor will be access to proprietary
| training data. Everyone can scrape the public web and use
| that to train an LLM. The frontier companies are spending a
| fortune to buy exclusive licenses to private data sources,
| and even hiring expert humans specifically to create new
| training data on priority topics.
| aworks wrote:
| Including paying poets and other experts by the hour to
| improve the models
| https://conversationswithtyler.com/episodes/brendan-foody/
| spott wrote:
| This could just be because everyone is using direct OpenAI api
| keys when using OpenAI.
| poplarsol wrote:
| Or, their customers integrate with them directly.
| esafak wrote:
| Sample bias.
| runeblaze wrote:
| 1. openrouter is API usage. There is obviously consumer side
|
| 2. people often use openrouter for the sole purpose of using a
| unified chat completions API
|
| 3. OpenAI invented chat completions; if you use openrouter for
| chat completions often you can just switch your endpoint URL to
| point to the OAI endpoint to avoid the openrouter surcharge!
|
| 4. Hence anyone with large enough volume will very likely _not_
| use openrouter for OpenAI; there is an active incentive to take
| the easy route of changing the endpoint URL to OAI's
| runako wrote:
| Methodology problems aside, do we have any idea how big
| OpenRouter is as compared to the big providers?
|
| OpenRouter claims "5M+" users; OpenAI is claiming >900M
| _weekly_ active users.
|
| I don't really think it's possible to learn anything about the
| broader market by looking at the OpenRouter model rankings.
| progbits wrote:
| Agreed it's not really good signal (many sampling biases) but
| user count is not relevant, most money is from heavy API
| users. 900M users with free or cheap subscription are nothing
| compared to even 10k heavy API users.
|
| On the other hand, big users don't use openrouter. At $work
| we have our own routing logic.
| sega_sai wrote:
| Okay, I can understand investment from SoftBank, and maybe
| somewhat from Amazon (if they plan to use OpenAI's models), but
| investment from NVidia who will then sell OpenAI the GPUs with X%
| markup doesn't make sense to me.
| chirau wrote:
| If OpenAI is Pied Piper, who is Russ Hanneman in all this?
| bigfishrunning wrote:
| I would vote for Once-CEO-Then-not-then-CEO-Again Hypeman Sam
| Altman
| metalliqaz wrote:
| I like to point out that he was fired for egregious
| dishonesty.
| phist_mcgee wrote:
| Jensen Huang? He put GPUs on the internet!
| benatkin wrote:
| I thought with OpenClaw they'd get more than a 3.67x multiplier
| of what Anthropic raised.
| EdNutting wrote:
| Circular-breathing causes the air to heat up, causing expansion.
| This is how a balloon can expand even when someone is breathing
| air from inside it.
|
| s/breathing/investment/g s/balloon/bubble/g s/air/money/g
| layer8 wrote:
| I performed the suggested substitution. What is the heating up
| of money in that analogy?
| EdNutting wrote:
| Sarcastically, it's "the vibes intensifying".
|
| (Vibes ~ Vibrations ~ Heat)
|
| Tbf it's a reasonable question... I think it's a little
| tricky to pin down the equivalent of "kinetic energy" in
| purely economic terms, though you might look at the rate of
| flow of money as some analogy for the speed/energy of
| particles (speed of individual dollars changing hands). In
| that sense, the more frequent and larger these deals get, the
| hotter the market is. This is not a novel analogy.
| trilogic wrote:
| So let's see if I understood well this one: Got 110 Billions with
| the promise that either AGI will happen soon (:) or going public
| before the end of the year. Eitherway you get to double your 110
| Billions no matter what (who will be left to pay the full bill
| after it, public or public)?
|
| Very interesting, I will follow it closely, mostly to see how you
| ROI 110 Billions in a couple of years.
| paxys wrote:
| Big number gets bigger
| duxup wrote:
| Feels like Nvidia getting in the game here might just put them at
| more risk. If things don't work out they'll be out their money
| and future sales and so on.
|
| It is bad enough AI sucked up so much investment money, hitting
| companies that do make profitable things hard if AI bubble
| collapses would be bad...
| timpera wrote:
| Hopefully this will allow them to continue to provide me
| unreasonable amounts of compute for EUR20/month. Enjoying it
| while it lasts...
| swarnie wrote:
| Have you tried to cancel recently?
|
| Might save you EUR20 next month.
| aerhardt wrote:
| I feel the same. I can't believe the amount of shit I am
| throwing at Codex for a measly 20EUR.
| dfp33 wrote:
| This right here is the right attitude.
|
| Use these freebies/relatively cheap tools up 'whilst stocks
| last'.
|
| I personally managed to create a very high quality marketing
| promo vid using grok. After spending weeks of enduring a lot of
| pain. But I saved myself tens of thousands.
|
| I took advantage of 30 Grok premium subscriptions that were
| given to me via a free trial. There's no doubt the cost of
| services I took advantage of is in the tens of thousands.
|
| But what do I care? I get what I want and then I get out before
| the freebies disappear.
|
| LOL at the cry babys down-voting. Get mad bruh, get mad.
| rvnx wrote:
| Welcome to Claude Code;
|
| 200 USD at Claude, versus 3000 USD (literally) at Gemini. Well,
| then it will be Claude.
|
| If tomorrow Claude is 5000 USD, well, then it will be Gemini.
| whoami4041 wrote:
| That's a pretty lofty valuation for a company that has yet to
| demonstrate code generation anywhere near Anthropic's models if
| they're leaning into the engineering angle.
| reducesuffering wrote:
| Many engineers use Codex 5.3 and find it better, including
| Hashicorp's Mitchell.
| brcmthrowaway wrote:
| And the OpenClaw guy
| distrill wrote:
| i find codex 5.3 roughly on par with (though tbh still not
| quite as capable as) sonnet models, which are not even
| anthropic's flagship model family.
| brandly wrote:
| By what measure do you think they're not anywhere near
| Anthropic's models?
| aerhardt wrote:
| "Calvinism makes pretty lofty claims for a religion who has yet
| to demonstrate soul salvation anywhere near Lutheranism if
| they're leaning into the reformation angle"
|
| - Someone in the 16th century, probably
| ruben81ad wrote:
| I dont see much of a difference betwen Claude,Codex and GLM
| with OpenCode. Any on them, nowadaws, works really, really,
| well.
| CuriouslyC wrote:
| My guy, it's a tradeoff of autonomy vs thoroughness. You might
| not enjoy using the codex models, but to say they're way worse
| than claude is an error.
| paxys wrote:
| Two economists were walking down the street when they spotted a
| giant dog turd on the ground.
|
| One of them wanted to have some fun, so said to the other - "I'll
| give you $100 if you take a big bite of that turd".
|
| His colleague figured $100 was a good chunk of cash, so did the
| deed. Feeling thoroughly humiliated, he pocketed the $100 and
| they carried on.
|
| Further down the street they came upon another turd.
|
| The angry economist now wanted revenge so made the same proposal
| back to his colleague, who also agreed and took a bite of the
| turd, earning back his $100.
|
| Later one of them said to the other "you know, I can't help but
| feel we both ate shit for no reason."
|
| His collegue replied "what do you mean? We raised the national
| GDP by $200."
| whatever1 wrote:
| The number is irrelevant. The fact is that work was done and
| was repaid with work.
|
| Money was just the means of the transaction.
| well_ackshually wrote:
| work good even if work literally eating shit
|
| surely that behavior leads to a good society and doesn't
| encourage nefarious behaviors
| oersted wrote:
| I did upvote, it's witty, but it's a bit of a misrepresentation
| of how the economy works.
|
| In practice, people don't tend to pay people to eat shit
| without gain. You are paying people to help you. Money
| gaslights everyone into helping each other, the most selfish
| people become the most selfless.
|
| Of course, real capitalism is much more complex and much uglier
| than this fantasy. When certain people end up with long-term
| control of large piles of money, the whole thing gets
| distorted. They get to make lots of money on interest without
| doing anything, and making other people eat more shit for
| scraps. That's the "capital" part of capitalism.
|
| But the toy world-model that this joke is making fun of, is
| actually the one core positive aspect of capitalism and brings
| all the prosperity we have: tricking people into helping each
| other.
| paxys wrote:
| I scratch your back for a $10M IOU.
|
| You scratch my back for a $10M IOU.
|
| The debts cancel out.
|
| How is the economic gain calculated?
| disqard wrote:
| > the most selfish people become the most selfless
|
| You reminded me of this Stewart Brand quote:
|
| > Computers suppress our animal presence. When you
| communicate through a computer, you communicate like an
| angel.
| bwfan123 wrote:
| > We raised the national GDP by $200.
|
| Seeing this phenomenon, a silicon valley entrepreneur get an
| idea with the following sales pitch:
|
| "Turd-bars that will make you the fittest version of yourself ,
| answer all your deepest questions, and take you to the promised
| land (mars)."
|
| Surprisingly, the turd-bars sell well, and GDP rockets up.
| Meanwhile VCs with fomo are funding its competitor: the shit-
| sandwich.
| ChrisArchitect wrote:
| Source: https://openai.com/index/scaling-ai-for-everyone/
| (https://news.ycombinator.com/item?id=47180302)
| ChrisArchitect wrote:
| Source: https://openai.com/index/scaling-ai-for-everyone/
| (https://news.ycombinator.com/item?id=47180302)
| jppope wrote:
| Interesting story for sure (to be clear I'm not talking about the
| writing by Reuters), but would you buy or skip the OpenAi IPO?
|
| To me it feels like one of those throw some play money into it
| and see what happens sort of situations. Expect it will return
| negative due to the raw financials and outlook, but small chance
| the brand carries enough weight with the public that it spikes.
|
| I'd love to hear other thoughts though
| epolanski wrote:
| If the IPO was at 20B maybe I could throw a 1000$.
|
| But at such numbers it's nonsense.
|
| I don't see any moat. LLMs are commodities.
|
| Enterprise is on Gemini/NotebookLM and Copilot as it's a
| natural extension of the Google and Office suite they use.
|
| Devs are in Anthropic camp, but they will jump as soon as they
| can save 90% of the money for 99% of the output.
| pigeons wrote:
| Does anyone have any ethical concerns using openai regarding
| money donated to the current US administration in one way or
| another? I will search for more accurate details about that
| situation. I know about several other ethical concerns with
| openai that people have, including copyright and other
| considerations regarding the work being trained on, as well as
| lack of action regarding users who are harmed by their usage of
| the product, often regarding mental health, environmental
| concerns, actually quite a few others, but I am interested if
| many people think their political donations are an issue or not.
| irishcoffee wrote:
| Our economy has turned into an ouroboros: a circle of snakes
| shitting in each others mouth until they get so sick we the
| taxpayer will get the privilege of bailing them out. I'm really
| fucking excited to eat shit for the 3rd time in 18 years. Super
| pumped.
| himata4113 wrote:
| Less than a decade ago companies reaching 1 trillion was still
| every much "out there". Now we have an IPO at almost 1 trillion.
|
| It's clear that the stock market cannot be considered normal
| anymore, held up on hopes at prayers at best.
| epolanski wrote:
| Well, it's still VC market right now, and all the investors
| have vetted interest into the music not stopping.
| aurareturn wrote:
| Sure it can. The value of the dollar coincides with stock
| market valuations.
| danny_codes wrote:
| Exactly. A devalued dollar means higher number without
| adjustment
| namuol wrote:
| Hard not to hear the word "bailout" in my head when I see this
| many billions being tossed around.
| criddell wrote:
| At least investors like Amazon can afford to lose their
| investment ($50 billion). That would be like a normal person
| losing a few thousand dollars. It hurts, but life would go on.
| namuol wrote:
| That's still $100B unaccounted for, and I'm pretty sure
| Amazon would expect fair treatment if other investors get a
| bailout. More likely, OpenAI is the one to receive the
| bailout, likely at the behest of the bigger investors, Amazon
| included.
| scuff3d wrote:
| That's why there's been such a massive effort to position LLMs
| as critical to national security. If they can make themselves
| big enough and critical enough (even in just perception) to the
| government they won't let them fail. They'll let individuals
| lose their livelihoods of course, since it's rugged
| individualism for all of us lowley normal people. But corporate
| socialism will keep the big players afloat.
| jameson wrote:
| Does this mean they won't IPO this year?
| LZ_Khan wrote:
| OpenAI's just trading equity for GPU credits at this point?
| holografix wrote:
| Is OpenAI giving employees RSUs? What good are those under these
| astronomical valuations?
| azinman2 wrote:
| Presumably it's all relative. Apple gives me RSUs with a much
| higher valuation (although at least it's on the public market
| already).
| whimsicalism wrote:
| they have PPUs
| xvector wrote:
| No it's RSU now. But idk if anyone would want to join OpenAI
| at these levels. Are they really a $1T business?
|
| At least Anthropic has some runway in terms of valuation and
| isn't bleeding all over some free tier.
| 7777777phil wrote:
| $730B pre-money for a company where each model is roughly 2x
| profitable on its own, but each next model costs 10x the last.
| The whole thing only works if scaling keeps delivering. Research
| (Sara Hooker et al.) is not encouraging on that front, compact
| models already outperform massive predecessors on downstream
| tasks while scaling laws only predict pre-training loss reliably.
|
| Wrote about both the per-model math and the scaling question:
|
| (1) https://philippdubach.com/posts/ai-models-as-standalone-pls/
|
| (2) https://philippdubach.com/posts/the-most-expensive-
| assumptio...
|
| EDIT: Removed the dot after et; bc apparently it's an entire word
| (the more you know..)
| onlyrealcuzzo wrote:
| > each model is roughly 2x profitable on its own, but each next
| model costs 10x the last. The whole thing only works if scaling
| keeps delivering.
|
| This is a decent argument, but it's not the death knell you
| think.
|
| Models are getting 99% more efficient every 3 years - to get
| the same amount of output, combined with hardware and (mostly)
| software upgrades - you can use 99% less power.
|
| The number of applications where AI is already "good enough"
| keeps growing every day. If the cost goes down 99% every three
| years, it doesn't take long until you can make a ton of money
| on those applications.
|
| If AI stopped progressing today, it would take probably a
| decade or longer for us to take full advantage of it. So there
| is tons of forward looking revenue that isn't counted yet.
|
| For the foreseeable future, there are MANY MANY uses of models
| where a company would not want to host its own models and would
| be _GLAD_ to pay an 4-5x cost for someone else to host the
| model and hardware for them.
|
| I'm as bullish on OpenAI being "worth" $730B as I was on Snap
| being worth what it IPO'd for - which it's still down about 80%
| (AFTER inflation, or about ~95% adjusting for gold inflation).
|
| But guess what - these are MINIMUM valuations based on 50-80%
| margins - i.e. they're really getting about ~$30B - the rest is
| market value of hardware and hosting. OpenAI could be worth 80%
| less, and they could still make a metric fuck-ton of money
| selling at IPO with a $1T+ market cap to speculative morons
| easily...
|
| Realistically, _very rich people_ with _high risk tolerance_
| are saying that they think OpenAI has a MINIMUM value of
| ~$100B. That seems very reasonable given the risk tolerance and
| wealth.
| kortilla wrote:
| > Models are getting 99% more efficient every 3 years
|
| The LLM industry has only be around for like 4 years.
| Extrapolating trends from that is pretty naive.
| dfp33 wrote:
| "If AI stopped progressing today, it would take probably a
| decade or longer for us to take full advantage of it."
|
| AI stopped progressing, or LLMs? I really dislike people
| throwing the term AI around.
| grosswait wrote:
| For the purposes of their argument, I don't think the
| distinction matters.
| blmarket wrote:
| > 99% more efficient every 3 years
|
| It's 2x efficiency. Then I'd take 50% less power instead of
| ridiculous 99% less power.
| sigmoid10 wrote:
| GPT-4 came out 3 years ago and you can run comparable
| models for 1% of the cost nowadays. That is not 2x
| efficiency. That's two orders of magnitude in end-to-end
| compute efficiency.
| swingboy wrote:
| How do we know how much it costs? Or is this just based
| off the token pricing?
| danielparsons wrote:
| you're looking at nearly the entire curve of the tech's
| development. that's like saying lightbulbs became 99%
| more energy efficient and therefore will become another
| 99% more energy efficient. but most techs follow an S
| curve.
| moron4hire wrote:
| We said all the same shit about VR, dude. Even had a global
| pandemic show up to boost everyone's interest in the key
| market of telepresence. Turns out the merry go round _can_
| stop abruptly.
| solumunus wrote:
| Did we?! You and Mark Zuckerberg maybe.
| christoff12 wrote:
| > Models are getting 99% more efficient every 3 years - to
| get the same amount of output, combined with hardware and
| (mostly) software upgrades - you can use 99% less power.
|
| Even if true, this still doesn't bend the curve when paying
| for the next model.
|
| > If AI stopped progressing today, it would take probably a
| decade or longer for us to take full advantage of it. So
| there is tons of forward looking revenue that isn't counted
| yet.
|
| If this is true, it's true for the technology overall, and
| not necessarily OpenAI since inference would get commoditized
| quickly at that point. OpenAI could continue to have a
| capital advantage as a public stock, but I don't think it
| would if the music stopped.
| XenophileJKO wrote:
| I would actually like to see the real math currently.
|
| The market adoption has increased a lot. The cost to serve
| has come down a lot per token.
|
| Model sizes have not increased exponentially recently (The
| high point being the aborted GPT-4.5), most refinement
| recently seems to be extending training on relatively
| smaller models.
|
| When you take this into account together, the relative
| training to inference income/cost ratio likely has actually
| changed dramatically.
| robotpepi wrote:
| ok, but everything depends on your numbers being correct. 99%
| improved efficiency seems kind of a way too optimistic
| prediction.
| ohyoutravel wrote:
| Et is an entire word and doesn't need a period at the end.
| nazgul17 wrote:
| What makes you think this trend will continue? In a situation
| with finite resources (eg the number of parameters), the
| default is to assume things will plateau.
| CrzyLngPwd wrote:
| Puff puff until it pops!
| NoblePublius wrote:
| The round is still open, Amazon is funding in tranches, and Sam
| doesnt get all the cash until he hits unknown metrics. Sounds
| like a down round.
| bentt wrote:
| Someone please explain how OpenAI is not Netscape 2026. They had
| first mover advantage but no network effect, no moat, and are
| racing to stay ahead of infinitely resourced incumbents.
| beernet wrote:
| How are ~1B active users not "moat"? Might have to pull out the
| "Haters gonna hate" like it's 2007
| rvnx wrote:
| But why are these users sticking to ChatGPT specifically ?
|
| If it's not the quality of their answers ?
| Night_Thastus wrote:
| They'll stay as long as it's cheap. The moment any attempt
| is made to raise the price, the number will crater.
| rvnx wrote:
| Maybe: "ok I'm lazy, the app is preinstalled on my phone
| and it's free, there are some ads but ok"
| nickff wrote:
| Isn't that the 'bull case' for Gemini?
| rvnx wrote:
| Have the same feeling, they have Gemma-3 that is
| preparing to be on-device stuff, and getting deployed on
| iPhone if I understand it right.
|
| Then it can be something along the lines of "subscribe to
| Google XXX or Apple +++ and have 'unlimited' cloud
| requests"
| metalliqaz wrote:
| Also when they start seeing real ads.
| duderific wrote:
| Remember when everyone said Facebook would be dead if
| they started running ads
| rvnx wrote:
| It started to get deployed: https://chatgpt.com/pricing/
| it's called "ChatGPT Go" > This plan
| may include ads. Learn more > When will ads
| be available in ChatGPT? We're beginning in the
| US on February 9, 2026 > Starting in
| February, if ads personalization is turned on, ads will
| be personalized based on your chats and any context
| ChatGPT uses to respond to you. If memory is on, ChatGPT
| may save and use memories and reference recent chats when
| selecting an ad.
|
| You pay 8 USD / month and have higher limits and ads
| kingkongjaffa wrote:
| for 99% of normies ChatGPT is the only LLM provider they
| know or have heard of.
| shimman wrote:
| 99% of normies aren't paying for ChatGPT, there's a
| reason why they're pushing heavy for corporate welfare +
| government contracts. They're unable to sell to consumers
| so now they'll selling to governments while trying to
| lock-in contracts that subsequent people can't easily
| dismantle.
| CharlieDigital wrote:
| How do you think this compares to Google and the AI search?
| kortilla wrote:
| Users are not a moat because there is no network effect here.
| monooso wrote:
| Not GP, and not saying I agree with them, but it may be worth
| remembering that Netscape had 90% market share at one point.
| Active user count may not be the moat you imagine.
| mlinsey wrote:
| Adoption of web browsers was also much lower when Netscape
| was dominant. 90% marketshare is less meaningful if you're
| only 1% of the way to the potential market size. Peeling
| away users who talk to ChatGPT every day is very possible,
| but harder than getting someone whose never used an LLM
| before (but does use your OS, browser, phone...) to try
| yours first.
|
| I think the even better analogy than browsers is search
| engines. There aren't any network effects or platform lock-
| in, but there is potential for a data flywheel, building a
| brand, and just getting users in the habit of using you.
| The results won't necessarily turn out the same - I think
| OpenAI's edge on results quality is a lot less than early
| Google over its competitors - but the shape of the
| competition is similar.
| tsunamifury wrote:
| Switching is super easy and people are doing it.
|
| There is no moat
| mlinsey wrote:
| Maybe! Switching search engines is also very easy, and
| the top story on the front page is someone no longer
| using Google, but we know in practice almost nobody does
| that. As technologists we're much more likely to switch
| and know people who would switch.
| rvnx wrote:
| Same strategy as for search. Gemini is going be shoveled
| down the mouth of users and they just won't change the
| default.
|
| On iOS with the Apple agreement, and on Android (though
| the question of hardware remains when considering beyond
| Pixel phones).
| numbers wrote:
| yeah, ~1B active users + when non-tech people think of AI,
| they think of "ChatGPT" not many of the competitors.
| leptons wrote:
| "Anthropic" doesn't exactly roll off the tongue, and I
| think a lot of people would avoid it simply because it
| doesn't have a catchy name like OpenAI or ChatGPT. It's
| also far more fun to say "I did a Google search" than "I
| did a Duck Duck Go search", and one still dominates over
| the other no matter the privacy concerns or how easy it is
| to switch. People can be simple like that.
| tsunamifury wrote:
| 700 million and declining with no clear story to levering
| either the attention economy or paying
| sp4cec0wb0y wrote:
| How many of those users are paying? Where is the profit? How
| many users will be willing to use ChatGPT if they had to pay?
| Might have to pull out the questions like its 2026.
| ac29 wrote:
| > How many of those users are paying?
|
| About 5% according to a news article a few months ago.
|
| Will the other 95% stick around once ads or payments are
| required?
| elictronic wrote:
| Are those users Locked in or are they treating the service
| like a commodity easily changed when the price goes up to
| stop hemorrhaging money.
|
| Google worked as a free service because their backend was
| cheap. AI models lack that same benefit. The business model
| seems to be missing a step 2.
| richardw wrote:
| "In December, Gemini traffic increased by 28.4% month-over-
| month, while ChatGPT traffic decreased by 5.6%"
|
| https://www.businessinsider.com/openai-chatgpt-vs-gemini-
| web...
|
| "What's you number one piece of hiring advice?"
|
| "Hire for slope, not Y-intercept. This is actually my number
| one piece of life advice."
|
| -@sama, who I'm generally a big fan of. But the job is now
| harder
| rwmj wrote:
| Netscape didn't have ridiculously high overheads?
| ReptileMan wrote:
| They are in bed with Microsoft not against them. And Nadela is
| not the sharpest knife in the drawer unlike Bill Gates.
| grosswait wrote:
| I can't. I think they are one viral TikTok away from the
| pendulum swinging to Chat Gemini, which for most people, the no
| cost version is perfectly adequate
| NewEntryHN wrote:
| Netscape had 20 millions active users at its peak, out of 6
| billions humans.
|
| ChatGPT has 800 millions monthly active users currently, out of
| 8 billions humans.
| ohyoutravel wrote:
| Would love to see the numbers on whether there are more
| people "online" now than when Netscape was at its peak.
| lysace wrote:
| Ok, I'm getting out.
| mixmastamyk wrote:
| Depressing to see trillions sloshing around, and yet no jobs to
| be found.
| fillskills wrote:
| Feels like my cheese has been moved
| rvnx wrote:
| I have no idea what your sentence means (as a non-English
| native) but I feel you.
|
| Such a waste of burnt money that could be used for more
| useful projects.
| shimman wrote:
| https://en.wikipedia.org/wiki/Who_Moved_My_Cheese%3F
| mixmastamyk wrote:
| It's a short book giving obvious advice, that one needs to
| embrace change, using a metaphor of mice and cheese. It
| receives a lot of scorn for that, despite many needing to
| hear the message.
|
| I'm ready to embrace change, however in this case no one
| cares. The cheese hasn't just been moved, it has been taken
| to another planet where us mice are not allowed to go.
| sp4cec0wb0y wrote:
| Yeah and who is going to foot the bill when this comes
| crumbling down?
| lotsofpulp wrote:
| Surely some workers are needed to build the chips, hard disk
| drives, datacenter, and power plants.
| teaearlgraycold wrote:
| There seem to be plenty of jobs in SF. Although you'll most
| likely end up working on some AI bullshit.
| mixmastamyk wrote:
| Contact me: https://news.ycombinator.com/item?id=46867010
|
| Note: I need work, not interviews. ;-)
| redleader55 wrote:
| Everyone thinks this bubble will continue until AGI(bulls) or
| until someone calls them on it(bears). I think it will continue
| until someone finds a quick way to make cheap energy(bullish) or
| until we can't build more power plants to support AI
| growth(bearish).
|
| While nothing fancy has happened yet in the area of cheap energy,
| there is still enough power around the world to build AI data
| centers. The problem is this power exits in countries that the
| West has decided, many times for good reasons, they don't want to
| deal with their leaders.
|
| I'm predicting that over 2027, either the US will become more
| aggressive in making war with these countries or company CEOs
| will start developing "reality-distorsion-fields" around them and
| decide having enough power for the next datacenter is more for
| the good of humanity. Before that Europe will decide that AI
| training on human faces(eg. of non-Europeans) is not really a
| problem and will allow US companies to train their models in EU
| countries.
| davemp wrote:
| Amazon hedging $35 billion on an IPO (we know the odds of AGI
| with LLMs are vanishing small) is concerning. The hedge signals
| that they think it's a good "greater fool" investment, otherwise
| they should be happy to take equity in a company they think will
| be stable/profitable.
| mcbits wrote:
| These are geopolitical activities akin to the arms buildup of the
| Cold War, but happening somewhat more openly through the guise of
| private sector investments. The names of the companies involved
| are ephemeral. The numbers "invested" are largely imaginary, just
| play money pumped into the system over the last few years,
| flowing around, searching for a place to park. The result will be
| a certain amount of tangible infrastructure in the form of
| datacenters, power plants, semiconductor fabs. It's a Hail Mary
| move to keep pace with a certain geopolitical competitor. This
| process may propel society to the next level or may collapse it,
| depending on how society chooses to use these resources and how
| successful the competitor is at its own similar endeavor.
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