[HN Gopher] OpenAI closes funding round at an $852B valuation
___________________________________________________________________
OpenAI closes funding round at an $852B valuation
https://openai.com/index/accelerating-the-next-phase-ai
Author : surprisetalk
Score : 510 points
Date : 2026-03-31 20:07 UTC (1 days ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| podgietaru wrote:
| "This is not just product simplification. It is a distribution
| and deployment strategy."
|
| I am so sick of AI writing.
| alex_duf wrote:
| corporate speech existed long before AI
| EdNutting wrote:
| Mmm, it's almost like OpenAI built statistical models using
| pre-existing corporate speech as the target data... ;)
| baal80spam wrote:
| Get used to it. All PR statements nowadays get AI treatment
| before going public.
| verbify wrote:
| The snowclone is annoying, but comparisons are sometimes
| necessary. The problem here is the actual content is sloppy.
| rvz wrote:
| No mention of "AGI" this time. Since we all knew it was a scam.
| But this is the most damning of them all:
|
| > The OpenAI flywheel is simple. More compute drives more
| intelligent models. More intelligent models drive better
| products. Better products drive faster adoption, more revenue and
| more cashflow.
|
| FTX had a "flywheel". It fell off. Being saddled with hundreds of
| billions of debt makes this situation ten times worse.
| aanet wrote:
| > The OpenAI flywheel is simple. More compute drives more
| intelligent models. More intelligent models drive better
| products. Better products drive faster adoption, more revenue and
| more cashflow. That gives us the ability to reinvest and deliver
| intelligence more efficiently to consumers, enterprises, and
| builders around the world.
|
| -x-
|
| In short, the musical chairs are still playing... Keep on walkin'
| round, y'all, till the music stops.
|
| /s
| nemo1618 wrote:
| I'm old enough to remember when companies worth $1 billion were
| called "unicorns." Now we have a company _raising_ 122 times
| that? Valued at nearly 1000 times that...?
|
| At least they're throwing consumers a bone via the ARK deal. It's
| crazy how little AI exposure is available to anyone who isn't
| already wealthy and/or connected.
| nine_k wrote:
| I think this is reality-distortion field rivaling that of
| Jobs', and a crisis of faith. Nobody apparently believes that
| capital is worth investing into anything but AI.
| randomNumber7 wrote:
| > Nobody apparently believes that capital is worth investing
| into anything but AI.
|
| This is the main reason we see this insane investment into AI
| imo. If you imagine having lots of money, where should you
| invest that currently?
|
| Housing market: Seems very overvalued (at least in germany).
| Also with the current uncertainty and inflation its hard to
| make an investment that pays back over 20-30 years. So
| building is also difficult.
|
| Stocks are very volatile currently. Not only since Iran. To
| me it seems since the financial crisis 2008 investors don't
| enjoy stocks as before.
|
| Gold: Only if you are paranoid about collapse of society. It
| doesn't make sense to invest into s.th. without interest
| rates.
|
| Crypto: Same as gold, but better if you like gamling. I would
| assume most people who are very rich don't gamble with most
| of their fortune.
| nine_k wrote:
| Looking around, and especially forward, it would be
| military tech, e.g. [1], and its supply chain, e.g. [2] :-\
| Valuations are not as crazy, but I bet there'll going to be
| a lot of demand in the coming decade, unfortunately.
|
| Chip production, too, of course, but it's overflowing with
| money already, apparently. It's growing though, because
| there are real actual _shortages_ of stuff like RAM and
| SSDs, there 's money to be made immediately if you can.
| Chinese RAM manufacturers are building out like crazy.
|
| [1]: https://www.ultimamarkets.com/academy/anduril-stock-
| price-ho...
|
| [2]:
| https://www.marketscreener.com/quote/stock/RHEINMETALL-
| AG-43...
| teeray wrote:
| > Looking around, and especially forward, it would be
| military tech, e.g. [1], and its supply chain, e.g. [2]
|
| Only viable if you're okay with the ethical implications
| of funding war.
| nine_k wrote:
| Would you be fine with the ethical implications of
| funding the industry to fight WWII? Would you consider
| funding Ukrainian military unethical? Or Taiwanese?
|
| This is, sadly, not theoretical, and I'm afraid we'll
| soon see more of such choices, not fewer.
| zer00eyz wrote:
| > it would be military tech
|
| Anduril is the only company in this sector in the US that
| has any promise and they aren't even public. Most of us
| are not going to get our hands on this.
|
| Traditional defense sector looks more like Jeep, or
| Kodak...
| nine_k wrote:
| The demand for more Patriot missiles is large, now that
| much of the stockpiles have suddenly been spent. Raytheon
| should do fine just based on that.
| iririririr wrote:
| this admin will probably source patriots made in china
| class3shock wrote:
| Anduril has yet to deliver anything of consequence. I
| hope they shake up the industry but to say they are the
| next hot thing and write off the primes at this stage is
| premature.
| nine_k wrote:
| Invest in the Ukrainian drone producers which proved
| themselves on the literal battlefield! Some of the Gulf
| states already did.
| lotsofpulp wrote:
| > Stocks are very volatile currently. Not only since Iran.
| To me it seems since the financial crisis 2008 investors
| don't enjoy stocks as before.
|
| These returns do not qualify as "enjoying stocks"?
|
| https://investor.vanguard.com/investment-
| products/etfs/profi...
|
| The returns are higher than before 2008, the previous 15
| years are unprecedented.
|
| https://www.macrotrends.net/2526/sp-500-historical-annual-
| re...
| triceratops wrote:
| > To me it seems since the financial crisis 2008 investors
| don't enjoy stocks as before
|
| Maybe in Europe. The US stock market has nearly tripled
| since then. Literally the best period of stock growth in
| history.
| jacquesm wrote:
| "The Roaring Twenties roared loudest and longest on the
| New York Stock Exchange. Share prices rose to
| unprecedented heights. The Dow Jones Industrial Average
| increased six-fold from sixty-three in August 1921 to 381
| in September 1929. After prices peaked, economist Irving
| Fisher proclaimed, "stock prices have reached 'what looks
| like a permanently high plateau.'"
|
| https://www.federalreservehistory.org/essays/stock-
| market-cr...
| triceratops wrote:
| Ok second best :-) I wasn't alive in the 1920s though
| jacquesm wrote:
| True, but it is close enough in time that we should heed
| the lessons learned lest we repeat the experience.
| hunterpayne wrote:
| Do you know the actual lessons of that crash? Because we
| don't allow retail investors to go 10:1 on leverage
| anymore. There are a lot more lessons and none of them
| apply to this situation (even Glass-Steagall). This is
| much closer to the dot com crash in 2001 in how it looks,
| just a lot more concentrated and probably a bit bigger.
| If all you got is "number go up too much" then you
| probably shouldn't be investing your own money.
|
| The good news is that its almost all rich folks money on
| the line here and a small amount of dumb money. That's
| very different than, 2008 where it was mostly the indexes
| that got hit and that's more middle class/upper middle
| class concentrated.
| timr wrote:
| You can argue that current market multiples are higher
| than 1929 [1] - and they're certainly high - but this
| also ignores the mechanism that drove that crash,
| focusing only on the _symptoms_. We simply aren 't doing
| the kind of consumer margin buying that drove the '29
| crash. It isn't even close. Average schlubs were
| leveraged to the stratosphere to buy shares of boring
| industrial stocks.
|
| [1] https://www.multpl.com/shiller-pe
| jacquesm wrote:
| > The US stock market has nearly tripled since then.
| Literally the best period of stock growth in history.
|
| The only thing I meant to point out was that a very high
| stock price by itself is no guarantee that there isn't a
| crisis around the corner. We plugged a lot of holes after
| 2008 and then reversed a lot of those fixes, I hear
| retail investors talking about their stocks at birthday
| parties again. Deja vu... of course this time it will be
| different. Or not. Let's just say that with the
| proverbial bull in the earthenware goods store on the
| loose if we _only_ end up with another financial crisis
| that might actually not be so bad.
| triceratops wrote:
| I actually calculated wrong. It went up 7.5x, not 3x.
|
| In the roaring twenties stockbrokers allowed clients 10:1
| margin. Investors were not as well-informed as they are
| today. There was no deposit insurance.
|
| The SEC wasn't nearly as powerful as it was in 2024 and
| there was way more shady shit going on. In that respect,
| and the repeal of Glass-Steagall we're reverting to the
| pre-depression era.
| heathrow83829 wrote:
| you gotta have some of all the above actually.
| roncesvalles wrote:
| It's the result of too much echo chambered bullshit floating
| around daily about how capable LLMs really are. It's
| literally crypto/blockchain all over again. It's one big lie
| that a lot of people have bought into which causes it to
| self-perpetuate, like religion.
| bandrami wrote:
| But they're really cagey about actually handing money over to
| them today
| dlev_pika wrote:
| I wonder what is not getting invested in bc AI has been
| crowding out everything else since 22.
|
| It has to be brutal out there for everybody else, if all the
| money is going to AI.
| burnt-resistor wrote:
| That's the tao of hyper-financialization. It must keep
| growing irrational exuberance big and up forever like stonks
| or it bursts like DotCom and tulip mania. It's funny money
| that cannot be liquidated for real value for more than a tiny
| fraction of the imaginary trillions being thrown around.
| Similarly, Nvidia $4T mkt cap makes absolutely no sense when
| it has but a few incestuous customers-parters-investors
| throwing around tens of billions each per year devoid of
| fundamentals like essential service offerings that turn a
| profit. Those handful of whale customers will make their own
| chips or cease buying large qtys at any time.
| woah wrote:
| OpenAI is making $24b a year. It's a 32x revenue multiple.
| High, but not insane. Spinning this as a story of
| overinvestment doesn't make sense.
| duchef wrote:
| Are you conflicting price to earnings to price to revenue?
| satvikpendem wrote:
| And not even actual capital either, as much of the investment
| amounts into AI have been through cloud and GPU credits so
| that AWS or Microsoft Azure don't actually have to hand over
| billions in straight cash.
| gavinray wrote:
| > At least they're throwing consumers a bone via the ARK deal.
|
| I had to look this up. There's a venture fund you can invest in
| with as little as $500 as a consumer -- though it's limited to
| quarterly withdrawals.
|
| https://www.ark-funds.com/funds/arkvx
|
| The fund is invested in most of the hot tech companies.
| squirrellous wrote:
| ARK was all the rage around early pandemic time when
| wallstreetbets was in the news a lot. Most people probably
| know it from then.
| bluecalm wrote:
| ARK funds has cult like following but then again they are a
| typical high beta player who outperforms in hot markets and
| heavily underperforms in cold ones. Fees are high. The CEO
| (CIO) is a women who looks for investment advice in the Bible
| and asks God for his thoughts (I am not joking).
|
| If anything being associated with ARK in any form is a big
| negative signal.
| rvz wrote:
| > At least they're throwing consumers a bone via the ARK deal.
| It's crazy how little AI exposure is available to anyone who
| isn't already wealthy and/or connected.
|
| It is deliberate. Period.
|
| It's always been known that you make money in the private
| markets and pre-IPO companies and retail is the final exit for
| insiders and early investors.
|
| Retail is not allowed to be early into these companies (Because
| that would ruin the point of being an insider) and this
| "exposure" has to be at the near top.
| monkeydust wrote:
| There are ways now for retail to get in to these companies
| including, check out hiive or equityzen...just beware of
| massive dilution.
| lotsofpulp wrote:
| Who are "these" companies? Did retail get into Google,
| Facebook, Amazon, Tesla, etc before the top?
|
| Also, aren't AI businesses losing a lot of money each year?
| Pretty sure there is some risk involved that is not good for
| retail.
| chilipepperhott wrote:
| I would not call an effective 2.9% expense ratio "throwing a
| bone".
| munk-a wrote:
| Also, the valuation for such a debt laden company should be
| viewed with great skepticism. I'm afraid a lot of mutual
| funds will end up holding the bags.
| mizzao wrote:
| It's not that far off from the standard 2% mgmt fee and 20%
| of excess performance?
| a13n wrote:
| VCX (Fundrise) has way more exposure than ARKVX
| xlbuttplug2 wrote:
| It's also trading at a huge premium. Probably worth a read if
| you're considering it:
| https://www.morningstar.com/funds/fundrise-innovation-is-
| not...
| carlosjobim wrote:
| The money is worth much much less than it was before, we live
| in times of global hyper inflation.
| frankfrank13 wrote:
| An ARK ETF is a smell to me. Besides, based on their holdings,
| i would never invest. 18% of the fund is SpaceX
| torginus wrote:
| Even a billion dollars is crazy money. If you have a company
| with a subscription service that costs $100 yearly, you have
| ~2m customers, with a 50% profit margin. Your company makes
| ~100m every year in profit. Imo that's what is actually worth a
| billion dollars, maybe even a bit less.
| hunterpayne wrote:
| That company is probably worth about $8b, FYI. Obviously
| that's an estimated average but a P/E ratio of 80 give you
| that valuation.
| _diyar wrote:
| Are there any Polymarket / Kalshi bets on the over-under for the
| price? I wonder when the music will stop.
| tfehring wrote:
| https://polymarket.com/event/openai-ipo-closing-market-cap-a...
| aurareturn wrote:
| I don't gamble but if I did, I'd bet a lot on $1.6t.
| brcmthrowaway wrote:
| Wow. I doubt Anthropic can raise that. Are they more efficient,
| can they do with less?
| strongpigeon wrote:
| Given how all of Big Tech (except Google obviously) is going
| all in on Claude Code, I wouldn't be surprised if Anthropic
| becomes profitable first.
| rvz wrote:
| Anthropic doesn't have anything else other than the Claude
| models.
|
| But notice that _no-one_ , not a single mention of Deepseek
| tells me that they are preparing to scare everyone again. Which
| is why Dario continues to scare-monger on local models.
|
| Sometimes you do not need hundreds of billions of dollars for
| inference when it can be done locally with efficient software;
| and Google proved that. But where is the money in that? So
| continues the flawed belief in infinitely buying GPUs to scale
| which Nvidia needs you to do.
|
| Only a matter of time for local models to reach Opus level. We
| are 1 or at most 2 years behind that and Anthropic knows that.
| p12tic wrote:
| > Only a matter of time for local models to reach Opus level.
| We are 1 or at most 2 years behind that and Anthropic knows
| that.
|
| Can confirm. Kimi K2.5 is pretty intelligent and most of the
| time there's no difference between Opus and Kimi.
| randomNumber7 wrote:
| Local models just make no economic sense since the GPU will
| idle 99% of the time.
| zozbot234 wrote:
| You have a GPU already (at least an iGPU and an NPU on most
| newer platforms) as part of your computer, might as well
| get some use out of it with local inference. And trying to
| do inference on a larger model with an undersized GPU will
| have you idling a lot less than 99% - but that still makes
| a lot of sense for most casual users who will only rarely
| need a genuine "Pro" class answer from AI. Doing that
| locally is way less hassle than paying for a subscription
| or messing with API spend.
| amazingamazing wrote:
| False on a team that's distributed
| railgunmerlin wrote:
| didn't they just raise last month?
| ares623 wrote:
| I think that runway has run out /s
| strongpigeon wrote:
| This has to be just an extension of their previous raise, right?
| This was a month ago: https://openai.com/index/scaling-ai-for-
| everyone/
| ricardobeat wrote:
| Doesn't look like it, that previous round was entirely Softbank
| + Nvidia + Amazon, while this one is VC + private investors.
|
| The valuation seems odd though, you'd expect $840B post-money
| from that earlier round?
| babelfish wrote:
| Maybe? Previous valuation is $730B + $122B raised in this
| announcement = $852B valuation in this announcement (no actual
| increase in valuation)
| strongpigeon wrote:
| Previous was $730B _pre_ money. This one is $852B _post_
| money. So yeah it 's the same one. Good catch.
| ta988 wrote:
| yup and begging for retailers money.
| podgietaru wrote:
| I can't help but think building an "everything" app is so.. both
| unbelievably ambitious, and a folly. I am not personally
| convinced that people want all the things that this super app
| purports to do.
|
| I am from a generation that still sits behind a desktop computer
| when making "big purchases." I can't even buy a flight on my
| phone. I am so much less likely to want to have an AI agent do
| that for me.
|
| Then the idea that daily consumption of these products will drive
| people to use them more at work... I have a very different life
| outside of work. My use of AI outside of work is exceedingly
| different to what I use it for at work.
|
| I sometimes feel wildly out of touch. But sometimes I view this
| as the VR moment. To me there are some things that I think may
| always be preferable to do outside of that ecosystem. And for me,
| a lot of tasks that 'agents' enable are small enough or important
| enough that I want to do them myself.
|
| I don't think I'll ever be comfortable allowing an agent to call
| me a taxi, or order food on my behalf. Because the convenience of
| asking for food isn't worth the chance it'll mess up, and opening
| an app and looking at a menu is simpler.
|
| I also think we're coming to a moment where we can start
| identifying the markers of AI generated content on sight. And I
| think there's a growing animosity to it. I might be comfortable
| asking AI something, but when I am looking for or searching for
| other content, seeing AI content markers make me angry at this
| point.
|
| To finish, I do just sort of straight up hate the idea that we're
| comparing this moment to the invention of electricity. It's on
| the face of it absurd.
| oidar wrote:
| >> To finish, I do just sort of straight up hate the idea that
| we're comparing this moment to the invention of electricity.
| It's on the face of it absurd.
|
| Do you feel that any technology is comparable in it's impact?
| EdNutting wrote:
| Most of modern medicine, by which I mean each discovery and
| invention in their own right, stand alongside electricity.
| Particularly vaccines.
|
| AI isn't there yet. You could turn off AI tomorrow and
| there'd be a shock but people would quickly switch back. You
| could not do the same for electricity, medicine, combustion
| engines (or steam engines/turbines), computers, the internet,
| modern building materials, etc. You try to swap back off any
| of those and the modern world (literally and figuratively)
| collapses. Turn off AI, and there'd be a financial collapse
| but afterwards everything would return relatively easily to
| an earlier way of doing things (ye know, the way from just 4
| years ago, and which is still 99% of how people do things :)
| )
| chuckadams wrote:
| I think the Internet is the more apt analogy. But even with
| electricity, you could have taken it away within the first
| couple decades of its popularity and society would have
| shrugged it off. Once they got used to that telegraph
| thing, not so much.
| EdNutting wrote:
| Yeah, I agree, but AI isn't there yet. It's too early to
| call it one way or the other. There's plenty else that's
| as important as electricity in my view, and maybe AI will
| join those ranks in 15 years or so when it's gone through
| the hype loop and when the economy has recovered from the
| now-basically-inevitable AI- and war-fueled turmoil of
| the next decade.
| rpdillon wrote:
| That's primarily a function of the time for adoption,
| though, not the utility of the technology. In 20 years,
| people would not be able to so easily say that they could
| turn off AI with no impact.
| EdNutting wrote:
| That..what..no. The question was whether there are any
| comparable to electricity, of which I have put forth a
| number of examples. And also offered my opinion that it
| is too early to judge whether AI will be as significant
| or not.
|
| There are loads of technologies that, despite being
| decades old, do not qualify. So, no, it's not "primarily
| a function of time". It absolutely is about the utility.
| We can only be in a position to judge utility when
| sufficient time has passed, and AI ain't had enough time
| yet to prove its utility. Given enough time, it might
| prove as useful as electricity, or it might just sit
| alongside computer operating systems - never quite making
| it onto anyone's "this changed the world" list, even if
| it has as much utility as an OS.
| jonah wrote:
| Sure, but compare this to "turn[ing] off" combustion
| engines a mere four years after commercial adoption rather
| than 162 years later (now). Back then, going back to horses
| wouldn't have been as big of a deal as it would be now.
| simianwords wrote:
| I think you lack imagination. This is going to be the future
| because it is legitimately a step up from the previous ways of
| doing things. I can do things that were way more difficult
| before.
|
| It doesn't have to be AI all the way - no one's asking AI to
| book things on its own and make the payments on their own. What
| does work is, make AI do the research and you verify and you do
| the payment. Human in the loop.
|
| To me this is clearly the future - AI has access to all the
| data sources and can translate your intent by accessing these
| tools in a loop and use intelligence to automate things.
| podgietaru wrote:
| Maybe there's a scenario where that is useful. But again, I
| don't know why I'd want an AI to do this research for me. I
| hop on Skyscanner. I type my location, and where I'd like to
| go. It presents me with a list of options, and I can then use
| the filters to find times that work best for me.
|
| I see a flight that isn't in my time frame, but is actually
| like 400 euros cheaper. And I decide in that moment that
| waking up at 5am is worth the savings.
|
| I'd have not typed that into a prompt. I made that decision
| at the moment I saw the possibility. I didn't even know that
| it was an option prior to that moment.
|
| Then I go look at hotels. I have a list of requirements, but
| I see that one of the hotels that I just glanced at has a
| really nice long pool, and the amenities look nicer from the
| images. I change my mind at that exact moment, I can walk 15
| minutes more to the beach.
|
| Now it should be even clearer why this is important for food.
| HWR_14 wrote:
| You had me going until you said this is even clearer why it
| is important for food. Food is cheaper and has less impact
| on your life. I'm much more tolerant of a mistake or
| suboptimal experience with food.
| podgietaru wrote:
| Yeah, sure, but you also have many more options. More
| intolerances. And opening a menu to look at some food
| takes a minute.
| esafak wrote:
| Think of personal assistants that rich people have. They
| learn your habits and take care of business, like making
| your travel plans. The promise is to give you that for much
| less.
| kace91 wrote:
| I've worked for 3 different startups where the CEO at one point
| gave us the talk of "we're building a super app".
|
| Admittedly openAI is in a better position to do it, but not by
| much.
|
| Everyone wants to be WeChat in china. No user wants that from
| them.
| dlev_pika wrote:
| _cries in Musk_
| try-working wrote:
| WeChat is not a super app. It's a browser. Tencent WeChat is
| the equivalent of Google Chrome.
| Rohansi wrote:
| Is it a browser or _like_ a browser? I 've never actually
| used it but from what I understand WeChat's mini programs
| are _like_ web apps but not something you can open up in a
| typical browser.
|
| Alternatively, you could say browsers are the original
| super app.
| yanhangyhy wrote:
| its a super app.
|
| I think the core issue isn't what underlying technology
| is used, but rather the service providers. They package
| their services into mobile apps or WeChat mini programs,
| and restrict functionality on browsers. For many ordinary
| people, this provides convenience, but for those who care
| more about privacy, it's quite problematic.
|
| WeChat in China covers almost every aspect of life. Even
| someone like me, who doesn't want to use it often, can't
| avoid it. Some restaurants' online ordering systems only
| support scanning via WeChat--that is, WeChat mini
| programs. People can pay utility bills, call taxis, shop,
| and make financial investments all within WeChat. Alipay
| offers similar functions as well.
|
| WeChat is also one of the largest content platforms in
| China, similar to Medium. Countless creators set up
| subscription accounts on WeChat and gain more users
| through readers' sharing and reposting.At the same time,
| government information is often released through the
| WeChat platform.
| efreak wrote:
| Medium is not one of the largest content providers
| anywhere, in any form that I'm aware of. There's no users
| sharing and reposting (arguably one of the drivers of
| network effects in modern social networking), no PSA, no
| apps or third-party extensibility, no taking over third
| party platforms in unrelated areas.
| l72 wrote:
| > I don't think I'll ever be comfortable allowing an agent to
| call me a taxi, or order food on my behalf.
|
| I don't let another human do that! When we as a group order
| lunch, I always want to input mine directly or at least double
| check the order.
| sixtyj wrote:
| > Within a year of launching ChatGPT, we reached $1B in revenue.
| By the end of 2024 we were generating $1B per quarter. We are now
| generating $2B in revenue per month.
|
| They raised $122B.
|
| 122 / 12*2 = 5 years to get your money back (I simplify, I know
| revenue <> profit)
|
| They are so big that almost no one can afford to acquire them. It
| is similar as someone would like to acquire MSFT or AAPL.
|
| WCGW?
| mrcwinn wrote:
| Correction: _no one_ can afford to acquire them.
| samdjstephens wrote:
| > The broad consumer reach of ChatGPT creates a powerful
| distribution channel into the workplace
|
| They mention this line in different forms a couple of times in
| the article. It's clear they're pretty rattled about Anthropic's
| momentum in enterprise, I wonder how confident they really are in
| this rationale.
| Ethee wrote:
| Kind of makes me wonder how 'accelerated' the timeline of
| publishing this article was based upon the Claude Code leak
| today. Considering everyone has gotten a sneak peek at what
| Anthropic is working on OpenAI might be a little worried. This
| could also just be coincidence, but this piece really does read
| like self-encouraging fluff.
| changoplatanero wrote:
| The timing of this coming out today is cause today is the
| last day of the month/quarter and has nothing to do with
| Claude.
| Ethee wrote:
| Ah, yeah that makes way more sense, I always forget about
| financial quarter timings.
| serioussecurity wrote:
| 0. These things take an enormous amount of time and
| coordinating to release.
| zmmmmm wrote:
| It's an interesting strategy, I see a pretty big risk from them
| leaning into it like this. We already have a vibe in my circles
| of the old "gmail vs yahoo" type thing where if you saw someone
| had a yahoo mail address you assumed they were technologically
| illiterate. Similarly it's mildly embarrassing already to say
| you used ChatGPT for something. It's not unrecoverable, but
| it's a pretty steep slippery slope they probably don't want to
| be anywhere near if they care about enterprise.
| voganmother42 wrote:
| After the DoD moves? It is not just the technologically
| illiterate, it is part of the US culture war. OpenAI is the
| MAGA brand, like tesla.
| gunsle wrote:
| What an absurd leap. OpenAI is the maga brand because they
| simp for government contracts like any massive company
| would?
| voganmother42 wrote:
| Did you miss the cancel/unsubscribe gpt boycott? It was
| only about a month ago. Many people I know
| cancelled/unsubscribed. To be fair though, most people I
| have talked with needed almost no encouragement to move
| to anthropic or google (better products, easy to switch
| etc). Consumer sentiment can change quickly.
| parineum wrote:
| Many people in your bubble cancelled.
| voganmother42 wrote:
| Perhaps, but it was pretty widely reported on, if you
| care to look.
| maronato wrote:
| Caitlin Kalinowski and other OpenAI employees resigned
| because of it [1].
|
| ChatGPT uninstalls rose by 295%, downloads fell 13% on
| day one and a further 5% the next day [2].
|
| One-star reviews spiked 775% overnight, then doubled
| again the following day [2].
|
| 1.5 million users joined the QuitGPT boycott within days
| [1].
|
| Claude rose to #1 most downloaded app in the App Store
| and US usage rose by 51% [2].
|
| New customers are now choosing Claude over OpenAI 70% of
| the time [1].
|
| And much more. I think it was just _your_ bubble that
| didn't cancel it.
|
| [1] https://letsdatascience.com/blog/altman-called-the-
| pentagon-...
|
| [2] https://www.ibtimes.co.uk/openai-backlash-pentagon-
| partnersh...
| parineum wrote:
| I'm aware that it happened. You seem under the impression
| that this is some kind of mass exodus based on people you
| know.
|
| Uninstalls up 300%! What's the baseline?
|
| > downloads fell 13% on day one and a further 5% the next
| day
|
| Dramatic falloff of new downloads after one day (still
| plenty of new downloads). Day 3 was likely negligible
| and, I bet, it was back to normal less than a week after
| when the story left the news cycle.
|
| > 1.5 million users joined the QuitGPT boycott within
| days
|
| That's both very few people and a completely meaningless
| number since all it requires is checking a box. Did
| anyone verify they were actually human?
|
| > Claude rose to #1 most downloaded app in the App Store
| and US usage rose by 51% [2].
|
| > New customers are now choosing Claude over OpenAI 70%
| of the time [1].
|
| Which has nothing to do with cancellations.
|
| > And much more. I think it was just your bubble that
| didn't cancel it.
|
| Most people in my bubble have no idea any of this
| happened and are just using free chatgpt tier if they use
| it at all. That seems much more representative given your
| provided statistics of the 1.5m person boycott.
| kevinqi wrote:
| I don't know if it's guaranteed to work, but the strategy is
| real. I know Notion won vs. competitors in the space because
| they focused on consumer first, and consumers then brought
| Notion into their workplaces.
| evgen wrote:
| I am amused that you think IT is going to respond to an
| unmanaged LLM tool that operates outside of the LLM policies
| all serious enterprises have set up by now and say 'wow, that
| is cool and maybe we should buy in to this!'
|
| What is going to happen is that the emplyee who tries to
| sneak OpenAI into our org is going to have two meetings set
| up by the end of the day, one with IT to ensure the whatever
| tool they installed is burned out with fire and one with HR
| to ensure they know the company policy and acknowledge that
| another fuck-up like this is a firing offense.
| hrimfaxi wrote:
| What if that employee is in the C-suite?
| 6031769 wrote:
| Then the business was already screwed and this makes
| little difference?
| thmsths wrote:
| Isn't that exactly how the iPhone won though? As another
| commenter said, once the cool gadget becomes a must have
| for executives, IT will be told to find a way to make it
| work.
| interludead wrote:
| I don't read that as "rattled" so much as leaning into the one
| thing they clearly have that Anthropic doesn't: massive
| consumer distribution
| oulipo2 wrote:
| They are trying very hard to convince themselves that it's going
| to work, when we see all the models plateauing... it's clearly
| hitting the ceiling
| thomasahle wrote:
| I don't know anyway using these models everyday who think they
| are hitting a ceiling.
|
| If anything there's a plateau between each model release.
| kace91 wrote:
| I'm seeing diminishing returns, though in fairness we have no
| idea yet how to integrate properly with existing good
| practices and principles. I suspect improvement is going to
| come mainly from improved took usage rather than more
| impressive models.
| maipen wrote:
| I feel that too, every technology has its limits. I use AI
| daily. But I can't see the "intelligence". All I see is fine
| tuning and bigger datasets.
|
| Yesterday I asked claude to fix the color issues of graph. It
| failed miserably. Opus 4.6 wasn't able to figure out why the
| text was grey. It made something up, instead of realizing the
| problem was simple, oklch wrapped inside a hsl color.
| hsl(oklch(...)) I easily figured this out by just looking at
| the css and adding some logs to js.
|
| This is not intelligence. This is a tool that's smart. Not
| sentient. AGI won't be achieved by scaling alone.
| avaer wrote:
| This announcement completes the betrayal of their founding
| principles.
|
| "Our goal is to advance digital intelligence in the way that is
| most likely to benefit humanity as a whole, unconstrained by a
| need to generate financial return." - Not
| advancing digital intelligence - While locking people into
| a superapp - Because they are further constrained to
| generating financial returns
| class3shock wrote:
| Founding principles = initial marketing strategy
| pattt wrote:
| Is there a way out of this though? The seed is already planted
| and everything else is just a PR.
| sharts wrote:
| Not too dissimilar from what most companies that start
| prioritizing growth also do, unfortunately.
| ltbarcly3 wrote:
| They have to focus on the distant future (where they are frankly
| unlikely to exist) because they are falling further and further
| behind in the immediate future.
|
| Their latest desperate bid for relevance is a plugin for Claude
| Code that uses Codex as a second opinion. Please clap.
| nsingh2 wrote:
| This a big exaggeration. Codex is probably one of the top two
| LLM programming tools, along with Claude Code. GPT-5.4 models
| are strong, unlike the initial GPT-5 ones, which were
| comparatively bad, and can hold up against Opus 4.6. In my
| experience, they are better at analytical work.
|
| I cannot really see how they are "far behind," or how some
| plugin for Claude Code is a "last desperate bid." The tools are
| close enough to each other that I regularly use Codex one month
| and Claude Code the next without much disruption, just to try
| out any new models or features that might be available.
|
| I do not have much visibility into the non-code applications,
| so maybe it is stickier there.
|
| If/when the AI bubble pops and takes OpenAI down with it, I
| would not expect Anthropic to come out unscathed either.
| ltbarcly3 wrote:
| They were _years_ ahead. They managed to generate competitors
| (Anthropic is OpenAI refugees) by alienating their own
| employees by being so dishonest and immoral when compared to
| their own founding principals and even legal documents. They
| experienced a coup where the primary technical vision of the
| company was forced out in favor of someone who is
| comparatively a nontechnical dummy. That was the beginning of
| the multiple years of stagnation while they burned tens and
| hundreds of billions of dollars while their competitors
| caught up and then passed them by.
|
| OpenAI is floundering and can't sustain their own burn rate.
| Their competitors are thriving. This is a market and
| technology that OpenAI largely created and just a few years
| in they are behind, losing unprecedented amounts of money,
| and have no clear path to catch up.
|
| Lets be totally clear, they were 3 years ahead _3 years ago_
| and now they are behind. They are literally standing still.
| alyxya wrote:
| > Today, we closed our latest funding round with $122 billion in
| committed capital at a post money valuation of $852 billion.
|
| A couple things that stand out to me about this is the use of the
| phrase "committed capital", which only sounds like a promise that
| could break from various circumstances, and the valuation of
| their funding keeps changing so it sounds like a max rather than
| the valuation every investor invested at.
| snoren wrote:
| good catch! committed capital is not same as we raised.
| ta988 wrote:
| that's why they have to open through banks and other less
| valuable more sliced share system.
| strongpigeon wrote:
| I do wonder how much of Amazon's $50B share (per last press
| release) is in AWS credits rather than money in the bank.
| dheera wrote:
| Probably a lot? It would be much more tax-advantageous to do
| it this way, $50B worth of credits != $50B worth of spend on
| Amazon's part, and they might meet in the middle about how
| much equity that translates to.
| HWR_14 wrote:
| I can see a lot of advantages for Amazon, but I don't see
| why it would be tax-advantageous.
| qurren wrote:
| Situation A:
|
| You're Amazon. You give OpenAI $50B cash investment, they
| then hand you back the $50B over time because they buy
| $50B worth of Amazon AWS services (they would use AWS or
| other equivalent compute anyway). OpenAI pays an
| additional $1-5B in sales taxes on top of their $50B
| compute purchase. Now let's say you have $25B opex for
| said compute. You then have $25B profits, you pay 21%
| corporate taxes on the profits, so you too owe the
| government about $5B. Government collects around $6-10B
| on this whole transaction.
|
| Situation B:
|
| You're Amazon. You let OpenAI use your services by
| handing them API credentials that unlock what would
| normally cost $50B worth of services, but no money
| changes hands. You have zero revenue from the
| transaction, write off the $25B opex as a tax loss on
| your other profits elsewhere in the company. You thus pay
| ~$5B less tax on your other income as a company, and
| OpenAI also doesn't have to pay sales tax because they
| didn't actually purchase anything.
| HWR_14 wrote:
| You have to report barter transactions as income. And
| Amazon already pays 0% corporate income tax.
| stingraycharles wrote:
| Isn't sales tax only for consumers? Ie companies reverse
| charge sales tax or omit it entirely. Or what is this 2%
| - 10% sales tax you're referring to?
| dragonwriter wrote:
| > Isn't sales tax only for consumers?
|
| It depends how you defined "consumers". If you mean
| "those who consume the good subject to the tax, rather
| than people who resell the good", yes, ideally.
|
| If you mean "not businesses" or "individuals but not
| corporations", then, no.
|
| > Ie companies reverse charge sales tax or omit it
| entirely.
|
| Generally, the theory of sales taxes is that people
| (including corporations) pay sales tax on things they
| consume as a final good rather than use as an
| intermediate good in production or simply resell. The
| _exact_ way in which that is determined varies somewhat
| between jurisdictions with sales taxes, but generally
| (assuming paper is subject to sales tax in a
| jurisdiction), if you are buying paper to print books
| that you sell, you don 't pay sales tax, if you are
| buying paper to print internal documents that you use in
| running the business, you do pay sales tax.
| stingraycharles wrote:
| That's interesting, that's not the case in the EU. Here,
| as long as you can argue that it's a business expense,
| you don't have to pay sales tax. Eg the internal
| documents are a necessary expense / cost of doing
| business.
| dragonwriter wrote:
| My understanding is that EU nations all have VAT, not
| sales tax; both are broadly consumption taxes, but they
| function rather differently (VAT charged at each stage of
| production vs sales tax only at final sale to consumer,
| among other differences.). VAT is sort of opposite of
| sales tax for businesses as payers; they pay VAT on goods
| bought as production inputs (and collect it on behalf of
| government on items they sell downstream on the chain of
| production), but do not pay it on what they consume for
| internal operations (in effect, to the extent thise
| internal operations contribute to the value added to the
| product, that is what the people downstream in the chain
| of production are paying VAT for.)
| cmiles8 wrote:
| To then claim that Trainium is "selling" and not a dud? I'd
| bet a lot.
| Aurornis wrote:
| That's typical. Large funding rounds usually aren't delivered
| as one single giant lump sum into the bank account. The capital
| is committed in stages that can depend on hitting milestones or
| goals.
|
| This is done even in smaller startup funding rounds some times.
| alyxya wrote:
| Fair, I think a lot of what I've been perceiving is the
| gymnastics in how funding and valuation and deals get
| reported. There ends up being a ton of asterisks that makes
| the headline news deviate quite significantly from reality,
| e.g. https://arstechnica.com/information-
| technology/2026/02/five-...
| whiplash451 wrote:
| It makes sense for such a huge amount to be "committed", not
| sitting idle in a bank somewhere.
| bko wrote:
| I assure you committed capital is very much common parlance in
| finance
| interludead wrote:
| I think this is more about deal structure than spin
| pmdr wrote:
| The only thing that's really accelerating is how fast you get
| rate-limited on ChatGPT.
| zozbot234 wrote:
| The big AI firms are all heavily compute-constrained, so that
| shouldn't be much of a surprise.
| mrdependable wrote:
| Funny how quickly they have become like every other tech company.
| There is basically no hint of OpenAI the non-profit anymore.
|
| Edit: Why did this go from their press release to a news story?
| pembrook wrote:
| Sir, I'm sorry to be the one to tell you this. But you've been
| in a coma since 2022 after a severe car accident.
|
| It's now the year 2026. That dead horse has already been
| beaten.
| mrdependable wrote:
| They were trying to keep the facade up until they were
| allowed to become a public benefit corporation. At least
| that's the way it seemed to me. Now they are fully mask off.
| interludead wrote:
| Frontier AI + tens of billions in capex was always going to end
| here
| joaohaas wrote:
| > This is not just product simplification. It is a distribution
| and deployment strategy.
|
| iykyk
| maxverse wrote:
| Are you suggesting this was written by AI?
| keybored wrote:
| It's not just a suggestion. It's a demonstration.
| simonreiff wrote:
| It's the demonstration layer
| Lionga wrote:
| agentic demonstration layer
| dgellow wrote:
| And you are so bold for identifying it. You're not just
| passively commenting. You're creating something bigger,
| larger than yourself.
| wmf wrote:
| Why would they not use their own AI?
| dabbz wrote:
| It's a very frequently used structure by LLMs especially ones
| writing for LinkedIn.
| bigwheels wrote:
| "It's not X, it's Y."
|
| A linguistic presentation commonly referred to as
| _constrastive negation_.
| mhl47 wrote:
| Was looking for a precise term for that. Thank you!
|
| Also AI-Linkedin-Bullshit likes to use "just"
| additionally and it's mostly along the lines of Y being
| something much more impactful then X.
| walthamstow wrote:
| Humans may use commas here, but LLMs always use a full
| stop, always.
| sunaookami wrote:
| You are absolutely right.
| rishabhaiover wrote:
| > We are now generating $2B in revenue per month
|
| What??
| ta988 wrote:
| Word on the street is that Anthropic is roughly at half that.
| Hard to know what they include and not, and what their real,
| non-subsidized costs are.
| rglullis wrote:
| They got a very sweet deal from the Pentagon, it seems.
| jsnell wrote:
| What what? Are you surprised it's that low, that high, that
| they can tell what their revenue is, that they report it on a
| monthly rather than annual basis, or something totally
| different?
|
| It's going to be pretty hard to get a good answer to whatever
| you're having difficulties understanding if you can't be
| bothered to write more than a word.
| snoren wrote:
| Money has lost all meaning in tech. 122 Billion raise! This is
| some kind of dream.
| h14h wrote:
| "Despite unprecedented capital investment in our R&D, our core
| product isn't getting meaningfully better so now we're building
| an app."
|
| Doesn't really strike me as the kind of statement that comes out
| of a company that can sustain a ~$1T market cap...
| 0gs wrote:
| isn't it weird that there is no attribution to a human here? i
| mean, eventually, they have to dropkick sama and install GPT
| itself as king, right? EOQ seems as good a time as any
| sidrag22 wrote:
| feels like an insult to readers to try to pretend that their
| revenue per month is comparable to google or apples growth when
| the funding is absurdly different, not to mention inflation
| itself.
|
| I am very much onboard with AI within my workflow. I just don't
| really see a future where openai/anthropic are the absolute front
| runners for devs though. Maybe OpenAI does just have the better
| vision by targeting the general public instead, and just
| competing to become the next google before google can just stay
| google?
|
| What is their next step to ensure local models never overtake
| them? If i could use opus 4.6 as a local model isntead and wrap
| it in someone else's cli tool, i 100% do it today. are the future
| model's gonna be so far beyond in capability that this sounds
| foolish? the top models are more than enough to keep up with my
| own features before i can think of more... so how do they stretch
| further than that?
|
| A side note i keep thinking about, how impossible is a world
| where open source base models are collectively trained similar to
| a proof of work style pool, and then smaller companies simply
| spin off their own finishing touches or whatever based on that
| base model? am i thinking of thinks too simplistically? is this
| not a possibility?
| thomasahle wrote:
| It's hard to train models in the open. All the big players are
| using lots of "dodgy" training data. Like books, video, code,
| destinations. If you did that in the open, the lawyers would
| shut you down.
| simonjgreen wrote:
| Anthropic is definitely gaining ground over OpenAI in the
| business world. Cowork is the absolute hotness right now, and
| even prompted MSFT to drop their own variant yesterday
| strongpigeon wrote:
| Ask anybody you know that works in Big Tech. They're all
| pushing _hard_ for Claude Code adoption.
| operatingthetan wrote:
| Codex and Gemini CLI seem 1-2 months behind Claude Code. They
| will catch up. This race will eventually be won by whoever
| can come up with the cheapest compute.
| a1studmuffin wrote:
| And that's a dangerous game because the cheaper compute
| gets, the more likely consumers are to self-host rather
| than pay a subscription.
| ds2df wrote:
| Apple could figure out a way to neatly package it into
| their ecosystem.
| winrid wrote:
| Not really. Most people won't self host.
| jonah wrote:
| The general public will self-host it's built in to your
| next phone or laptop straight out of the box or maybe
| from the App Store.
| winrid wrote:
| True. I was thinking more of power users. Do you think
| Opus level capabilities will run on your average laptop
| in a year? I think that's pretty far away if ever.
| zozbot234 wrote:
| You can demonstrate "running" the latest open Kimi or GLM
| model on a top-of-the-line laptop at very low throughput
| (Kimi at 2 tok/s, which is slow when you account for
| thinking time) today, courtesy of Flash-MoE with SSD
| weights offload. That's not Opus-like, it's not an
| "average" laptop and it's not really usable for non-niche
| purposes due to the low throughput. But it's impressive
| in a way, and it does give a nice idea of what might be
| feasible down the line.
| delecti wrote:
| I agree that that's what it would take, but compute would
| need to get _very_ cheap for it to be feasible to keep
| models running locally. That 's an awful lot of memory to
| have just sitting with the model running in it.
| ravenstine wrote:
| Though I think these companies are wildly overvalued, I don't
| see LLMs as a service going away in the future. The value in
| OpenAI is that it provides extra compute, data access, etc. My
| money is on local AI becoming more of a thing, while services
| like OpenAI still exist for local AIs to consult with. If a
| local model can somehow know that it's out of it's depth on a
| question/prompt, it can ask an OpenAI model if it's available,
| but otherwise still work locally if OpenAI fails to respond or
| goes out of business. To me that makes a lot more sense than
| the future being either-or.
| clhodapp wrote:
| Models not being able to reliably know if they are out of
| their depth is a foundational limitation of the currently
| generation of models, though.
|
| Best they can do is to somewhat reliably react to objective
| signals that they've failed at something (like test
| failures).
| mlsu wrote:
| You can host a website on any rackmount server for pennies
| compared to AWS. But people still use AWS.
|
| The market for local models is always gonna be a small niche,
| primarily for the paranoid.
| lukan wrote:
| "The market for local models is always gonna be a small
| niche, primarily for the paranoid."
|
| Have you ever heard of industrial espionage? Pr privacy
| regulations? Or military applications?
|
| (Also the US military runs claude as a local model)
| FpUser wrote:
| >"But people still use AWS"
|
| I do not, I self host. My current client is also got rid from
| AWS packing up nice savings as a result
| notnullorvoid wrote:
| The goal of web hosting is to provide low latency wide
| availability to many users.
|
| AI in this context has a very different goal as a tool for
| individual users.
|
| You wouldn't say that hosting instances of Photoshop on
| servers and charging for usage is a long term viable business
| would you? Even if current consumer computers struggled to
| run Photoshop.
| sidrag22 wrote:
| I don't see an issue with the comparison, I don't think it
| is meant to be a 1 to 1 or anything, just an illustration
| of how consumers are overwhelmingly lazy.
|
| I'd take issue with the statement that it is for the
| paranoid, but I guess it might be a defense mechanism
| because of course i am interested in local models. If my
| new workflow is going to be dependent on 3 companies, I'd
| prefer if there is a light at the end of the tunnel that
| breaks us free.
| Aurornis wrote:
| > What is their next step to ensure local models never overtake
| them?
|
| As someone who experiments with local models a lot, I don't see
| this as a threat. Running LLMs on big server hardware will
| always be faster and higher quality than what we can fit on our
| laptops.
|
| Even in the future when there are open weight models that I can
| run on my laptop that match today's Opus, I would still be
| using a hosted variant for most work because it will be faster,
| higher quality, and not make my laptop or GPU turn into a
| furnace every time I run a query.
| zozbot234 wrote:
| If your laptop overheats when you push your GPU, you can buy
| purpose-built "gaming" laptops that are at least nominally
| intended to sustain those workloads with much better cooling.
| Of course, running your inference on a homelab platform
| deployed for that purpose, without the thermal constraints of
| a laptop, is also possible.
| Aurornis wrote:
| I didn't say it overheats. It gets hot and the fans blow,
| neither of which are enjoyable.
|
| MacBook Pro laptops are preferred over "gaming" laptops for
| LLM use because they have large unified memory with high
| bandwidth. No gaming laptop can give you as much high-
| bandwidth LLM memory as a MacBook Pro or an AMD Strix Halo
| integrated system. The discrete gaming GPUs are optimized
| for gaming with relatively smaller VRAM.
| miki123211 wrote:
| > how impossible is a world where open source base models are
| collectively trained similar to a proof of work style pool
|
| Current multi-GPU training setups assume much higher bandwidth
| (and lower latency) between the GPUs than you can get with an
| internet connection. Even cross-datacenter training isn't
| really practical.
|
| LLM training isn't embarrassingly parallel, not like crypto
| mining is for example. It's not like you can just add more
| nodes to the mix and magically get speedups. You can get a lot
| out of parallelism, certainly, but it's not as straightforward
| and requires work to fully utilize.
| synergy20 wrote:
| well we do need at least two powerful AI companies, so they can
| cross checkout each other when I use them.
| simonebrunozzi wrote:
| No, they didn't raise $122B as the HN title implies. A big chunk
| of that $122B is a "maybe" that depends on various things that
| need to happen in the future.
|
| Oh, man... I can't wait to see where this is going. Might not be
| pretty after all.
| Aurornis wrote:
| Having large funding rounds contingent on meeting milestones is
| common. Always has been.
| ares623 wrote:
| The assumption that's conveniently left out is that the
| milestones are realistic
| jmalicki wrote:
| It just makes comparing funding rounds hard to understand,
| since money in the bank is money in the bank, and a lot of
| the "committed capital if you reach a milestone" is capital
| that would be easy to get if you reached that milestone, if
| it is sufficiently advanced, and has enough outs, etc., that
| you may as well have just raised another round in the future.
| Aurornis wrote:
| That's logically inconsistent. If the company was
| performing poorly enough that they couldn't meet their
| funding milestones from a previous round, they're not going
| to have an easy time raising the same money in a future
| round.
|
| The milestones aren't a hard-stop that forbids the previous
| funding round participants from providing the money if they
| still choose. It's just an out.
| JohnMakin wrote:
| sure they can. that's the whole point of the "pivot"
| jmalicki wrote:
| What I am saying is that if you do meet the milestones
| from your previous round, you're going to have an easy
| time fundraising anyway, so funding contingent on
| milestones isn't that different than just saying "well,
| if we need more money we can do another round"
| Aurornis wrote:
| Fundraising rounds are difficult, laborious, and
| distracting. It would be extremely different to try to
| multiply the number of rounds by 3-5X. There's nothing
| easy about that.
|
| You're also ignoring that the market changes frequently.
| If you only raised as much money as you needed for the
| next 4-6 months with plans to re-raise all the time,
| you'd have to constantly be sizing your growth plans up
| or down based on how the market felt about startup
| investing that month.
|
| Imagine the company having to either do speed hiring or
| large layoffs every few months to adjust to the size of
| the fundraising round they were able to get this time
| around.
|
| Nothing about what you're suggesting would be easier, or
| easy at all
| gehwartzen wrote:
| It seems pretty simple:
|
| Funding Round A: VC "A" invests 200M (100M immediately
| and another 100M if sales grow 10% or whatever)
|
| At 6 months the company will either get the other 100M
| automatically (meaning they grew sales 10%) or they don't
| (meaning they grew less than 10%).
|
| Assuming it's the later they can then do another round
| during which they try to get the other 100M. In all
| likelihood VC "A" won't be interested (or interested at a
| lesser amount). They could go ask VC "B" for an
| investment but it will likely be less than 100M as well
| because they didn't grow as much as "the market"
| anticipated.
|
| Nothing complicated at all.
|
| I'll give you $1 dollar for your banana today and another
| dollar in a week when it has ripened. If it's rotten when
| I come to get my banana I won't give you the other
| dollar. You have your original $1 and you can still try
| to sell your rotten banana to another HN reader but you
| probably won't get another dollar this time.If instead
| you have a ripe banana I'm sure you could easily find a
| buyer.
| nostrademons wrote:
| Note that even that "money in the bank" of traditional
| venture firm is not really money in the bank. VC, PE, and
| hedge fund managers usually don't have all the cash for the
| fund sitting in the bank at all times. Rather, their
| agreement with the LPs that fund the fund is structured as
| a series of capital calls: it gives the fund the _right_ to
| demand that their LPs deposit cash in their bank accounts
| within 10-30 days, which can then be used to fund the
| investments that the VC firm makes. The capital calls are
| backed by legal documents enforceable in court, with pretty
| stiff penalties for failing to meet a capital call.
|
| Such a funding structure here isn't all that different: the
| funding agreement gives OpenAI the right to call on their
| backers to make certain cash deposits, contingent upon
| milestones being met. Deep down inside, "money in the bank"
| doesn't actually exist, it's just mutual agreements backed
| by force of law.
| jmalicki wrote:
| When a startup raises money without contingencies,
| typically they do get a large amount of money in the bank
| all at once.
| Aurornis wrote:
| If investments are not tranched then the money is not
| delivered in tranches, yes.
|
| The first rule of tautology club is...
| wmf wrote:
| Why not announce the funding after the milestones have been
| met?
| apparent wrote:
| It's splashier this way, and is meant to shape the
| narrative, make other companies fear their warchest, and
| make hiring easier. Of course, those who are in-the-know
| won't be fooled, but the perception of the general public
| will be set in stone by the PR framing.
| heyethan wrote:
| Most people won't look at the structure, they'll just
| internalize that OpenAI is massively funded.
|
| That effect kicks in well before the money actually does.
| Aurornis wrote:
| The funds are committed under the terms of the deal (share
| price, things like board seats, and other details). There
| are legal obligations to provide it.
|
| This is a common structure for large investments. It would
| be really inefficient for all of these investors and
| companies to have to have the money sitting in cash to do a
| deal and then transfer it into the company's bank where it
| sits and earns interest for years until they can deploy it.
|
| Even VC firms who raise funds work this way. The capital is
| "committed" but investors don't wire all of the money over
| right away so it can sit in the VC firm's bank accounts,
| waiting. The VCs do what's called a "capital call" through
| which they're legally bound to provide the money they
| committed when requested, under the terms of the deal.
| wesammikhail wrote:
| One of the stipulations is that OpenAI achieves "AGI"... Need
| I say more?
|
| Also a lot of this "money" is in cloud compute and credits
| not cash so...
| caycep wrote:
| that being said, how can Softbank keep throwing around all
| these astronomical numbers after so many bad investments?
| Leftover iPhone money?
| Analemma_ wrote:
| Saudi oil money
| MidnightRider39 wrote:
| Which might not be a thing anymore soon the way things are
| going...
| ds2df wrote:
| cant stop winning!
| bahmboo wrote:
| Other way around - the Saudis are making bank.
| outside1234 wrote:
| well, until the Iranians blow up their refineries.
| saintfire wrote:
| Iranians are also making bank. Why kick a hornets nest
| when you're winning?
| mschuster91 wrote:
| > Why kick a hornets nest when you're winning?
|
| Tell that to Trump and his glorious way of bombing Iran.
| Nothing against the idea itself, the Mullahs all but
| asked for it to happen.
|
| But the execution? That was a level of dogshit I haven't
| seen in the time I was alive lol. Even Russia was better
| prepared with their invasion of Ukraine.
|
| Both Trump and Netanyahu had a somewhat solid perspective
| on not getting utterly wasted in the next elections.
| Instead they go on one of the most ill-prepared wars in
| modern history, with results that may seriously upend the
| global economy if not lead us to WW3 outright.
| phillipcarter wrote:
| Most people know Softbank as the company who lost billions on
| WeWork and not the company who made several _more_ billions
| on the ARM IPO.
| caycep wrote:
| with these swings, I'm not sure how Son-san keeps himself
| from getting an ulcer
| dd8601fn wrote:
| At some point it must just be Monopoly money.
| darth_avocado wrote:
| Sir, it's called investing
| IshKebab wrote:
| Yeah I checked their overall return. It's average. Not
| better than index funds IIRC.
| jelling wrote:
| They borrowed $40B from JP Morgan. They literally did not
| have the money otherwise.
| lefty2 wrote:
| also they need to pay back that in one year, so if OpenAI
| don't IPO this year they are screwed
| roxolotl wrote:
| Was curious about the source here. Seems widely reported
| and I just missed it. This a unpaywalled source I found
|
| https://techcrunch.com/2026/03/27/why-softbanks-
| new-40b-loan...
| Lionga wrote:
| they are Hwanging it
| adventured wrote:
| Their ~$50 million total Alibaba investment turned into ~$70
| billion. As of two years ago they were still liquidating out
| of it.
|
| January 26, 2024 - "Japanese investment holding firm SoftBank
| Group Corp has largely cleared its ownership in e-commerce
| giant Alibaba Group Holding, concluding one of the most
| successful deals in China's internet industry and a holding
| that spanned about 23 years."
|
| "SoftBank, which invested US$20 million into Alibaba when it
| was still a start-up in 2000, said in a corporate filing on
| Thursday that it was set to book a gain of 1.26 trillion yen
| (US$8.5 billion) - about 425 times the value of its initial
| outlay - for the Tokyo-based firm's 2024 financial year after
| divesting its [remaining] shares via subsidiary Skybridge."
|
| https://finance.yahoo.com/news/japans-softbank-concludes-
| run...
| HardCodedBias wrote:
| "As of two years ago they were still liquidating out of it"
|
| I get that people are scared of investing in China. But if
| I still made single stock investments, I would seriously
| consider BABA, it seems well positioned.
| troupo wrote:
| "Here comes another bubble..."
| JohnMakin wrote:
| Don't let reality get in the way of _vibes_
| jredwards wrote:
| Seems like all of OpenAI's "deals" are announcement fodder with
| no real contract, primed to quietly fall through later.
| dang wrote:
| Ok, let's switch to the HTML doc title above.
| apparent wrote:
| I've wondered how many announced fundraising rounds were like
| this. It's in everyone's interest (VCs and entrepreneurs) if
| the message to the outside world is "this company is amazing so
| they've raised a boatload of cash". But VCs might not want to
| give it all up front, or unconditionally.
|
| It makes it hard to say what the valuation of a company is. If
| the milestones are unlikely to be hit, then it's anyone's
| guess.
| Aurornis wrote:
| This is a common structure. It's confusing to people who
| don't know finance or startups when they first see it.
|
| Even VCs don't get all of their fund money delivered into
| their bank account when they raise a funding round. It's
| inefficient and undesirable for everyone involved to have to
| move all of the money up-front, at once.
|
| If you talk to anyone in startup funding or finance they'll
| be familiar with the term "capital call" which describes how
| committed capital obligations are delivered at a later date
| than the initial deal:
| https://en.wikipedia.org/wiki/Capital_call
| johnebgd wrote:
| Gotta hit that high IRR as a fund manager and the clock
| starts when the cash comes in so capital calls are
| appreciated by fund managers. Unless they are emerging
| managers (the startup equivalent in finance) and their LP's
| are less than institutional and ghost them when the capital
| call hits.
| munk-a wrote:
| IRR is so trivial to manipulate - it'd be wonderful if
| more investors began demanding actual metrics on capital
| performance. If you're parking cash with an investment
| firm you want to know about how much of a return you can
| expect when it is withdrawn, and while history is a guide
| and not a guarantee, there are much better ways to inform
| that expected return than IRR. "My million got a return
| of 2% during a year when your reported IRR was 10% -
| where's the other 8%!" is a common cry from those who
| haven't just rolled over their investment, unaware of how
| little it has functionally appreciated.
| apparent wrote:
| I think more people are aware that VCs raise commitments
| for a fund that they can pull in via capital calls than are
| aware that startup funding from VCs come with hurdles to
| clear.
|
| This is perhaps because the most common round to raise is a
| small/early one, and these tend not to have hurdles.
| Founders that only ever raised these rounds wouldn't
| necessarily know what happens in later/bigger rounds.
|
| Also, I wonder if capital calls come with hurdles as well?
| That is, can an LP refuse to put in more money if the VC's
| recent investments have not done well? I would think not,
| since it typically takes many years to determine whether
| investments were good or not.
| pimlottc wrote:
| It's confusing because it's meant to be confusing. Bigger
| numbers are more impressive.
| hn_throwaway_99 wrote:
| I've been involved in many startups, and this type of
| fundraising is _not_ common, or at least it wasn 't common
| before a few years or so ago
|
| The whole concept of talking about "runway" is basically
| calculating how much cash in the bank, that is actually in
| your bank account, will last. And this arrangement is
| different, as there are contingencies. In the past, VCs
| would just give you money in a particular series, and then
| if your business did well, they'd eventually give you more
| money in a later series. But it wasn't like they announced
| it all up front in, say, a Series A, but a big chunk of the
| money would only be delivered if you met milestones.
| ewhanley wrote:
| Sure for like $5-10MM, but no one is landing $100B cash
| in a startup's bank account
| prasadjoglekar wrote:
| $100B isn't a startup. And if there's a $100B deal, you
| better believe the cash is there. Case in point -
| Netflix/Paramount wanting to buy WB. Or the $44B that
| Musk had to raise to buy out Twitter shareholders.
| akerl_ wrote:
| Both your examples are purchases. Musk had to raise
| actual capital to buy Twitter because the people getting
| the money were taking it and walking away.
|
| Funding doesn't work like that. Investors are giving you
| money as part of a longer-term deal where they stick
| around.
| renewiltord wrote:
| Same. I know $100m+ range arrives in the bank account.
| Don't know more than that. But for that sum, I know it
| routinely just arrives.
|
| Obviously this is 1000x as large so I make no claims to
| knowing that sum. But it's routine for startup funding to
| arrive in bank account.
| willis936 wrote:
| Both of CFS B rounds were cash, in recent years, and each
| in the range of "low billions". Sure another 2 orders of
| magnitude is another story, but so is selling hope. I'd
| say the latter is the thing that is unique here.
| throwup238 wrote:
| This was already common in tech for Series C+ fifteen
| years ago when I raised a round. Once you're talking tens
| or hundreds of millions, almost everyone wants milestones
| and tranches instead of giving all the money up front.
| danielmarkbruce wrote:
| No, it's not _common_ for the startup itself to make
| capital calls. The phrase (and your link) refers to capital
| calls made by VC firms to their limited partners. Same
| thing in PE.
| Nevermark wrote:
| > Amazon agreed to invest up to $50 billion in the startup
|
| > Nvidia invested $30 billion
|
| > Microsoft, one of OpenAI's longtime partners, also
| participated
|
| There is a lot of non-cash, never-will-be cash, investment
| here. Credits for compute.
| ifwinterco wrote:
| I think both things are true at once:
|
| 1) For a $100bn round, you won't get a single transfer of
| $100bn into your checking account, this is normal
|
| 2) Sam Altman is a liar and people (correctly) don't really
| believe him when he starts throwing numbers around
| komali2 wrote:
| There's an accelerator here in Taiwan with a model I truly
| don't understand: 100k usd for 10%. 10%!! You've just valued
| the company at only 1 million! And taken a HUGE chunk of
| equity, not much left on the table!
|
| Maybe it makes sustainable sense but in the world of venture
| capital it seems the most profitable thing to do is lie
| through a Cheshire grin, every day.
| Saline9515 wrote:
| This is very standard, Ycombinator, which hosts this board,
| does the same: https://www.ycombinator.com/about
| komali2 wrote:
| Not exactly the same...
|
| > YC invests $500,000 in every company on standard terms.
| Our $500K investment is made on 2 separate safes:
|
| > We invest $125,000 on a post-money safe in return for
| 7% of your company (the "$125k safe")
|
| > We invest $375,000 on an uncapped safe with a Most
| Favored Nation ("MFN") provision (the "MFN safe")
| harmonic18374 wrote:
| So YC values the company at $1.8 million. I don't think
| that's so different.
| SilverElfin wrote:
| With NASDAQ and NYSE looking to reduce the timelines for new
| public companies to be included into indices ("fast entry"
| rule), I have a feeling that OpenAI and SpaceX and Anthropic
| are mostly looking to dump their inflated shares into the
| public's retirement accounts by force.
|
| Michael Burry called out this structural manipulation play
| recently:
|
| https://www.benzinga.com/markets/tech/26/03/51248353/michael...
| singpolyma3 wrote:
| Retirement accounts aren't required to buy a stick just
| because it's listed.
|
| ... probably will though
| SilverElfin wrote:
| Retirement accounts already own funds and those in turn are
| often tied to the underlying index. If the time to being
| included in an index is reduced, they end up being
| automatically bought sooner. And that keeps their price
| from collapsing artificially.
| figmert wrote:
| Probably again cancelled or significantly reduced in the near
| future when all the current investors inevitably cash out.
| zx8080 wrote:
| > No, they didn't raise $122B as the HN title implies.
|
| What is this about? The title says "OpenAI closes funding round
| at an $852B valuation". It does not mention $122B.
|
| Edit: the linked page's title is different and indeed states
| $122B.
| satvikpendem wrote:
| Mods on HN sometimes change the titles of submissions to be
| more neutral but they generally start off as the linked
| article's title, which is what the comment you're replying to
| was referring to.
| swiftcoder wrote:
| It's also like... >$50 billion in compute credits and
| discounted hardware between Amazon/Microsoft/NVidia. Which is
| all inside baseball since they simultaneously juice their
| financials with OpenAI's cloud compute bill
| aurareturn wrote:
| $2b/month which is $24b/year. Not as much as I expected
| considering they were at $20b by end of 2025.[0] They only added
| $4b since?
|
| Anthropic had $19b by end of February 2026 and they added $6b in
| February alone.[1] This means if they added another $6b in March,
| they're higher than OpenAI already.
|
| However, I heard that OpenAI and Anthropic report revenue in a
| different way. OpenAI takes 20% of revenue from Azure sales and
| reports revenue on that 20%. Anthropic reports all revenue,
| including AWS's share.[2]
|
| [0]https://www.reuters.com/business/openai-cfo-says-
| annualized-...
|
| [1]https://finance.yahoo.com/news/anthropic-arr-
| surges-19-billi...
|
| [2]https://x.com/EthanChoi7/status/2036638459868385394
| troupo wrote:
| And that is revenue only. In the past 15 or so years most US
| companies (and especially startups) always talk about revenue
| only. Wheras only profit should matter.
|
| E.g. what good is 20 billion per year when "OpenAI is targeting
| roughly $600 billion in total compute spending through 2030".
| That is $150 billion per year?
| merlindru wrote:
| why should only profits matter? if i had a killer product
| today that i just need to sell tomorrow, wouldn't you still
| invest today knowing i'll probably only start to make money
| tomorrow (or perhaps next week)?
|
| the expectation is that they'll eventually make money. they
| can't raise forever. only startups are not profitable for a
| few years. but most companies that have existed for a long
| while have been profitable
|
| and since they're expected to make a LOT of money, everyone
| wants a piece of that future pie, pushing up the valuation
| and amount raised to admittedly somewhat delusional levels
| like here
| Barrin92 wrote:
| not if your product is selling two dollars for one dollar
| and as soon as you'll start to charge more I'll switch to
| one of your twenty competitors
|
| profit isn't a function of having a killer product, it's a
| function of having no competition
| ds2df wrote:
| no competition is a bit extreme. Limited competition yes
| due to competitive advantages.
| aurareturn wrote:
| And why do you think twenty competitors can stay
| competitive for years to come?
|
| Industries always consolidate and winners emerge. SOTA
| LLMs look like a natural monopoly or duopoly to me
| because the cost to train the next model keeps going up
| such that it won't make sense for 20 competitors to
| compete at the very high end.
|
| TSMC is a perfect example of this. Fab costs double every
| 4 years (Rock's Law). It's almost impossible to compete
| against TSMC because no one has the customer base to
| generate enough revenue to build the next generation of
| fabs - except those who are propped up by governments
| such as Intel and Rapidus. Samsung is basically the SK
| government.
|
| I don't see how companies can catch OpenAI or Anthropic
| without the strong revenue growth.
| outside1234 wrote:
| Google has completely caught OpenAI. Anthropic has a
| better coding model, but I'm sure Google is working on
| that too.
| baq wrote:
| > Anthropic has a better coding model
|
| I'll be polite and call this statement 'a very debatable'
| one.
| Barrin92 wrote:
| >Industries always consolidate and winners emerge.
|
| no, most industries just sell boring generic products, a
| few industries favor monopolists. Semiconductors are one
| of them but LLMs are also as far removed from that
| business as is physically possible.
|
| TSMC makes the most complicated machines humans have ever
| built, a LLM requires a few dozen nerds, a power plant, a
| few thousand lines of python and chips. That's why if
| you're Elon Musk you could buy all of the above and train
| yourself an LLM in a month.
|
| LLMs are comically simple pieces of software, they're
| just big. But anyone with a billion dollars can have one,
| they're all going to be commoditized and free in due
| time, like search. Copying a lithography machine is
| difficult, copying software is easy. that's why Google
| burrowed itself into email, and browsers, and your
| phone's OS. Problem for openai is they don't have any of
| that, there's already half a dozen companies that, for
| 99% of people, do what they do.
| komali2 wrote:
| The barrier to replicating TSMC isn't just cost, it's
| supply chain, geopolitics, and talent.
|
| Only one company on Earth can make the UV lithography
| machines TSMC buys for their highest end fabs, and
| they're not selling to anyone else.
|
| The PRC tried to brute force this supply chain backed by
| the full might of the Party's blank check, all red tape
| cut, literally the best possible duplication scenario,
| and they failed.
| purpleidea wrote:
| The PRC didn't fail, they haven't finished succeeding
| yet.
| baq wrote:
| They will succeed eventually since they have proof it's
| possible and their plans span decades. I expect them to
| have working EUV in 10 years. Whether it'll still be
| bleeding edge tech is a different question I dare not
| guess the answer to.
| harmonic18374 wrote:
| Google has already surpassed them both in all areas
| except coding. People on HN only look at benchmarks, but
| Gemini's multimodal understanding, things like
| identifying what a plant is, normal user use cases (other
| than chatting), integration with other tools, is much
| better.
|
| It's believable that Meta, ByteDance, etc. can catch up
| too. It is not certain that scaling will meaningfully
| increase performance indefinitely, and if it stops soon,
| they surely will. Furthermore, other market conditions
| (US political instability) can enable even more labs,
| like Mistral, to serve as compelling alternatives.
|
| Uber, TSMC, etc. have strong moats in the form of
| physical goods and factories. LLMs have nothing even
| remotely comparable. The main moat is in knowledge, which
| is easy to transfer between labs. Do you think all the
| money that goes into training a model goes into the
| actual final training run? No, it is mostly experiments
| and failed ideas, which do not have to be repeated by
| future labs and offshoots.
| otabdeveloper4 wrote:
| > It is not certain that scaling will meaningfully
| increase performance indefinitely
|
| It's certain that it won't. We've already hit diminishing
| returns.
| bandrami wrote:
| > why should only profits matter?
|
| In this case because it's not clear that anybody has
| actually figured out how to sell inference for more than it
| costs
| nl wrote:
| It's well know everyone is making great money on
| _inference_. The cost is training.
|
| _Whether GPT-5 was profitable to run depends on which
| profit margin you're talking about. If we subtract the
| cost of compute from revenue to calculate the gross
| margin (on an accounting basis),2 it seems to be about
| 30% -- lower than the norm for software companies (where
| 60-80% is typical) but still higher than many
| industries._
|
| (They go on to point out that there are other costs that
| might mean they didn't break even on other costs -
| although I suspect these costs should be partially
| amortized over the whole GPT 5.x series, not just 5.0)
|
| https://epochai.substack.com/p/can-ai-companies-become-
| profi...
|
| https://martinalderson.com/posts/are-openai-and-
| anthropic-re... (with math working backwards from GPU
| capacity)
|
| "Most of what we're building out at this point is the
| inference [...] We're profitable on inference. If we
| didn't pay for training, we'd be a very profitable
| company"
|
| https://simonwillison.net/2025/Aug/17/sam-altman/
|
| "There's a bright spot, however. OpenAI has gotten more
| efficient at serving paying users: Its compute margin--
| the revenue left after subtracting the cost of running AI
| models for those customers--was roughly 70% in October,
| an increase from about 52% at the end of last year and
| roughly 35% in January 2024."
|
| https://archive.is/OqIny#selection-1279.0-1279.305 (Note
| this is _after_ having to pay higher spot rates for
| compute because of higher than expected demand)
| bandrami wrote:
| > It's well know everyone is making great money on
| inference.
|
| That is not, in fact, "well known", but based entirely on
| the announcements of the inference providers themselves
| who also get very cagey when asked to show their work and
| at least _look like_ they 're soliciting a constant
| firehose of investment money simply to keep the lights
| on. In particular there's a troubling tendency to call
| revenue "recurring" before it actually, you know, recurs.
| nl wrote:
| > based entirely on the announcements of the inference
| providers themselves who also get very cagey when asked
| to show their work
|
| I mean sure, it's self reported.
|
| But the inference prices somewhere like Fireworks or
| TogetherAI charges is comparable to what Google/AWS/Azure
| charge for the same model an we know they aren't losing
| money - they have public accounts that show it, eg:
|
| https://au.finance.yahoo.com/news/wall-street-resets-
| amazon-...
|
| _Fireworks' gross margin--gross profit as a percentage
| of revenue--is roughly 50%, according to the same person_
|
| https://archive.is/Y26lA#selection-1249.65-1249.173
|
| > In particular there's a troubling tendency to call
| revenue "recurring" before it actually, you know, recurs.
|
| If someone has a subscription then yes that is pretty
| normal.
| bandrami wrote:
| > If someone has a subscription then yes that is pretty
| normal.
|
| Not if you've substantively changed rate limits 3 times
| in the last 5 months while still counting those forecast
| revenues. In most industries that's called rug-pulling.
| baq wrote:
| It doesn't matter how you call it. A recurring
| subscription on the books is a recurring subscription.
| Yes you can cancel anytime (how generous of them), it
| also doesn't matter.
| Swizec wrote:
| > Wheras only profit should matter
|
| Profit is money you couldn't figure out how to spend. During
| growth, you want positive operating margins with nominal
| profits. When the company/market matures, you want pure
| profits because shareholders like money. If you can find a
| way to invest those profits in new areas of growth, that's
| better.
| aurareturn wrote:
| Not sure why you're downvoted.
|
| Everyone wants to treat OpenAI like a car wash business
| where they need to make a profit almost immediately. I
| don't know why people can't understand that the industry is
| in a rapid growth stage and investing the money is more
| important than making a profit now. The profits will come
| later.
| troupo wrote:
| "Profits will come later"
| https://news.ycombinator.com/item?id=47597480
| nutjob2 wrote:
| > The profits will come later.
|
| The nearly $1T hand wave. Forgive me if I ask how. Might
| give it some credence if Anthropic and Google weren't
| pulling even with or surpassing them in various way or
| markets.
|
| Whats worse is they mostly seem to have retail market
| name recognition which is arguably the hardest, or maybe
| the impossible market to make money from.
| aurareturn wrote:
| Whats worse is they mostly seem to have retail market
| name recognition which is arguably the hardest, or maybe
| the impossible market to make money from.
|
| That doesn't seem to be the case at all. Meta and Google
| are two of the most profitable companies in history, off
| the backs of free users.
|
| Apple is another one that focuses almost exclusively on
| retail and is also one of the most profitable in history.
| FatherOfCurses wrote:
| > profits will come later
|
| Holy crap, is it the year 2000 again?
| troupo wrote:
| > Profit is money you couldn't figure out how to spend.
|
| Profit is the money showing your business is sustainable.
| Ever since the ZIRP era US companies keep haemorrhaging
| money at a rate that is physically impossible to recoup.
|
| If OpenAI plans to lose 100+ billion dollars per year for
| half a decade, what profits are you talking about to offset
| the losses?
|
| > When the company/market matures, you want pure profits
| because shareholders like money.
|
| Ah yes. Shareholders like money. And not, you know, basic
| accounting like "we need money to actually pay salaries,
| pay for equipment and offices etc. without perpetually
| relying on seeming endless investor money".
| chronc6393 wrote:
| > what profits are you talking about to offset the
| losses?
|
| You don't need profit to offset the losses.
|
| You can simply reduce spending / expenses.
| CraigRood wrote:
| In principle yes, but all metrics so far suggest they are
| losing money every user interaction. There is very little
| network effect with these tools so It's not like they can
| start cutting back on staff and feature deployment.
| LaGrange wrote:
| lol that's a line so incredibly naive it hurts.
|
| One does not "simply" reduce spending.
| chronc6393 wrote:
| > One does not "simply" reduce spending.
|
| Why does stock price go up after mass layoffs?
| bumby wrote:
| What happens when the only way to reduce spending is to
| reduce your assets? Seems like circular logic at that
| point. I suppose the market isn't expected to be rational
| all the time, but eventually it is.
| justsomehnguy wrote:
| By your logic any company should just layoff everyone and
| profit on the stock price going to the infinity.
|
| Company would no longer function of course but why it
| would matters if the stock price is through the Moon?
| Swizec wrote:
| > Profit is the money showing your business is
| sustainable.
|
| Notice I said you should have nominal profits.
|
| > Ah yes. Shareholders like money. And not, you know,
| basic accounting like "we need money to actually pay
| salaries, pay for equipment and offices etc. without
| perpetually relying on seeming endless investor money".
|
| All of these are costs that reduce your profits.
|
| A maximally profitable business fires all employees
| except shareholders, closes every office, stops all RnD,
| and leases IP or real estate to others on long-term deals
| that never need to be renegotiated.
| badpun wrote:
| A lot of investments gets amortized over many years so even
| if you're investing all your free cash you'll still show a
| lot of profit.
| aurareturn wrote:
| It's not as much as you think. Google is spending $185b on
| data centers this year alone. Amazon is spending $200b this
| year. Total capex for big tech is ~$700b in 2026 and we're
| not including neo clouds, Chinese clouds, and other sovereign
| data centers.
|
| Since everyone is trying to get compute from anywhere they
| can, including OpenAI going to Google, it's hard to tell what
| is used internally vs externally.
|
| For example, it's entirely possible that Google's internal
| roadmap for Gemini sees it using $600b of compute through
| 2030 as well. In that case, OpenAI needs to match since
| compute is revenue.
| hvb2 wrote:
| But if Gemini doesn't end up using the compute because of
| whatever reason, Google has other ways to monetize that
| compute. OpenAI doesn't?
|
| So the same money spent by OpenAI and Google doesn't carry
| nearly the same amount of risk?
| aurareturn wrote:
| OpenAI doesn't?
|
| Why not? They've openly said they could in theory sell
| compute to others if they can't use it all.
| adgjlsfhk1 wrote:
| this isn't credible though. them not being able to use
| all their compute likely means that the ai bubble has
| popped, so they won't be getting a good price on it.
| hvb2 wrote:
| And who would be buying this from them? Let's say you're
| anthropic, would you give money to your competitor?
|
| I'll also add that Google is already a player in that
| space so more likely to easily sell it off.
| pier25 wrote:
| Give me a billion and I'll have 500M of revenue in no time by
| selling dollars at 50 cents.
| aurareturn wrote:
| Why are we treating OpenAI and Anthropic differently than
| say, Amazon or Uber? Both companies invested in growth for
| many years before making a profit. Most tech companies in
| the last 2-3 decades lost money for years before making a
| profit.
|
| Why are we saying that OpenAI and Anthropic can't do the
| same?
| hirako2000 wrote:
| Two reasons. They somewhat broke even, and kept getting
| investment. The potential for quasi monopoly was obvious.
|
| Openai can't claim either.
| aurareturn wrote:
| How did Uber somewhat break even? They lost $34b before
| making a profit.
|
| Uber was only on a path to monopoly in the US, not world
| wide. It's lost to local competitors in most countries.
| And it can get disrupted by self driving cars soon.
|
| OpenAI's SOTA LLM training smells like a natural monopoly
| or duopoly to me. The cost to train the smartest models
| keep increasing. Most competitors will bow out as they do
| not have the revenue to keep competing. You can already
| see this with a few labs looking for a niche instead of
| competing head on with Anthropic and OpenAI.
| vlovich123 wrote:
| The cost of copying SOTA models though is super cheap and
| doesn't take super long.
| aurareturn wrote:
| How do you distill when OpenAI and Anthropic inevitably
| move to tasks running in the cloud? IE. Go buy this
| extremely hard to get concert ticket for me.
|
| Distilling might only be effective in the chat bot
| dominant era. We are about to move to an agents era.
|
| Furthermore, I'm guessing distilling will get harder and
| harder. Claude Code leak shows some primitive anti
| distilling methods already. There's research showing that
| models know when it's being benchmarked. Who's to say
| Anthropic and OpenAI aren't able to detect when their
| models are being distilled?
| adgjlsfhk1 wrote:
| even ignoring distillation, so long as hardware or ml get
| better over time, training a new model from scratch is
| cheaper the later you do it
| ef3dfd wrote:
| Yep the poster is assuming efficiencies will not come.
|
| Absolutely they will. And this is a huge problem for OAI
| - given Google is targeting vertical integration, they
| will acquire a cost-advantage. As long as the model
| performance is good enough, they will kick OAI and
| Anthropic out in the long-run.
|
| The valuations of OAI and Anthropic are nonsense. A true
| valuation would incorporate failure risk, which is
| natural for startups/fast growing and money losing firms.
| Anyone who takes them serious is incredibly delusional.
| dionidium wrote:
| > How did Uber somewhat break even? They lost $34b before
| making a profit.
|
| It took them ~14 years to lose that $34 billion. Some
| projections suggest that OpenAI has lost a third of that
| in a single quarter. Even the most optimistic projections
| indicate that they're losing that much every 2-3 years.
| There's talk that they might lose ~$150B before
| profitability.
|
| These are just numbers on a page to regular people, but
| $34 billion and $150 billion are very different numbers.
| outside1234 wrote:
| Worse, Google can afford to outspend them in this game
| and basically run them both out of money.
| pier25 wrote:
| It's not even remotely comparable. Uber burnt some $30B
| over a decade or so.
| aurareturn wrote:
| It seems like it is comparable based on what you just
| said.
| mrweasel wrote:
| OpenAI have burned nearly 25 times what Uber did, it has
| more competitors, billions of dollars in obligations and
| no clear way to profitability.
|
| The problem for OpenAI is that the cost of getting them
| where they are now has been to high and competitors can
| now establish themselves for much less money.
| troupo wrote:
| > Why are we treating OpenAI and Anthropic differently
| than say, Amazon or Uber?
|
| The dame Uber that lost close to 30 billion dollars over
| 10 years to subsidize its price dumping?
|
| No, no we are not treating OpenAI differently than Uber
| lmm wrote:
| Amazon had a clear business model. They had positive
| gross margin from, if not day 1, then pretty close to it.
|
| I remain skeptical of Uber.
|
| Sure, _maybe_ OpenAI and Anthropic will make it work. It
| 's not impossible. But it's far from guaranteed.
| aurareturn wrote:
| OpenAI and Anthropic have positive gross margins for
| inference.
|
| Uber generates about $1b in profit yearly now.
| lmm wrote:
| > OpenAI and Anthropic have positive gross margins for
| inference.
|
| Maybe, if you take their word for it, and treat the
| models as capital assets rather than part of the COGS for
| the inference product. That's pretty far off from where
| Amazon was at.
| windward wrote:
| >Most tech companies in the last 2-3 decades lost money
| for years
|
| Yes
|
| >before making a profit.
|
| No
| muzani wrote:
| The startup game is about building assets and then cashing
| out on them during exit.
|
| Assets are harder to measure. Facebook used to say something
| silly like every user was worth $100. That sounded ridiculous
| for a completely free app but over a decade later, the
| company is worth more than that. Revenue is an easier way of
| measuring assets than profit.
|
| Profit doesn't really matter. It gets taxed. But it's not
| about dodging taxes; it's because sitting on a pile of money
| is inefficient. They can hire people. They can buy hardware.
| They can give discounts to users with high CLTV. They can
| acquire instead of building. It's healthy to have profit
| close to $0, if not slightly negative. If revenues fall or
| costs increase, they can make up for the difference by just
| firing people or cutting unprofitable projects.
|
| Also when they're raising money, it makes absolutely no sense
| to be profitable. If they were profitable, why would they
| raise money? Just use the profits.
| nl wrote:
| What is the point - exactly - of profit?
|
| Profit is money you can't find a use for to grow your
| business, so you give some of it to the government in the
| form of tax.
|
| Also there is a big difference between operational expenses
| and capital expenses like building data centers.
|
| I think OpenAI is being _very_ aggressive on the growth vs
| conservative financial management spectrum _but_ just saying
| "only profit should matter" is just wrong.
| bandrami wrote:
| > What is the point - exactly - of profit?
|
| It's what attracts capital investment, which businesses
| need
| nl wrote:
| OpenAI seems to do reasonably well at attracting capital
| investment without profits.
|
| As did Amazon, Google, Meta etc etc.
| bandrami wrote:
| OpenAI is great at attracting people who say "yeah, sure,
| I'll give you capital at some point in the future" who
| then never actually give them the capital (or at least
| haven't yet).
| nl wrote:
| They seem to be spending lot of cash too...
| ngold wrote:
| If I remember correctly, Facebook took 10 years raising
| money before going ipo.
|
| Could be wrong though.
| troupo wrote:
| What's the point - exactly - of a company being
| sustainable?
| nl wrote:
| Being profitable isn't the same as sustainable.
|
| Even a simple shop isn't profitable for months if it
| needs to buy stock up front, and run some ads to let
| people know about it. The money for that comes from the
| shop owners as an investment.
|
| This is the same thing but on a _slightly_ bigger scale,
| over a longer time frame.
| troupo wrote:
| If your shop is unprofitable for years with no chance to
| recoup any of the costs, you close it, as your
| investments run out, and investors and banks stop giving
| you money as you keep losing them.
|
| US tech companies just continue operating because
| "revenue and growth".
| nl wrote:
| > US tech companies just continue operating because
| "revenue and growth".
|
| US tech companies are some of the most profitable
| business in history.
|
| Google made over $130B profit last year, Meta 60B.
|
| I'm old enough to have had exactly the same arguments (on
| Slashdot for Google, here for FB) for both before their
| IPOs.
|
| It's a uninformed argument and people should know better.
| maerF0x0 wrote:
| 30x revenues at 17% revenue growth is... aggressive.
| jsnell wrote:
| Except it's not 100x revenues, and it's not 17% growth. I
| don't know where you got those numbers from?
|
| The numbers OpenAI gave in the post would mean a 30x multiple
| pre-money. And the $20B -> $24B run-rate growth since the
| start of the year could plausibly mean anything from 110% to
| 200% annualized growth rate, depending on whether that
| happened over two or three months. The $24B is a lower bound
| as well, since they only gave use one significant digit for
| the monthly revenue.
| maerF0x0 wrote:
| You're right, I was thinking about 100x revenues and forgot
| to confirm the math. Updated to reflect your point. ChatGPT
| itself provided the 17% number (it's most recently
| available growth rate)...
| YetAnotherNick wrote:
| > 17% revenue growth
|
| I think ads is going to massively change this number.
| manquer wrote:
| They aren't reporting anything yet. What we hearing is just
| from news media who get their leaks/info from investors who get
| some form of IR reports/ presentation.
|
| Both will do public reporting only when they IPO[4] and have
| regulatory requirement to do so every quarter. For private
| companies[1] reporting to investors there are no fixed rules
| really[3]
|
| Even for public companies, there is fair amount of leeway on
| how GAAP[2]expects recognize revenue. The two ways you
| highlight is how you account for GMV- Gross Merchandise Value.
|
| The operating margin becomes very less so multiples on absolute
| revenue gets impacted when you consider GMV as revenue.
|
| For example if you consider GMV in revenue then AMZN only
| trades at ~3x ($2.25T/$~800B )to say MSFT($2.75T/$300B) and
| GOOG ($3.4T/$400B) who both trade at 9x their revenue.
|
| While roughly similar in maturity, size, growth potential and
| even large overlap of directly competing businesses, there is
| huge (3x / 9x) difference because AMZN's number includes with
| GMV in retail that GOOG and MSFT do not have in same size in
| theirs.
|
| ---
|
| [1] There are still a lot of rules reporting to IRS and other
| government entities, but that information we (and news media)
| get is from investors not leaks from government reporting -
| which would be typically be private and illegal to disclose to
| public.
|
| [2] And the Big 4 who sign off on the audit for companies
| prefer to account for it.
|
| [3] As long as it is not explicit fraud or cooking the books,
| i.e. they are transparent about their methods.
|
| [4] Strictly this would be covered in the prospectus(S-1) few
| weeks before going public and that is first real look we get
| into the details.
| aurareturn wrote:
| They aren't reporting anything yet. What we hearing is just
| from news media who get their leaks/info from investors who
| get some form of IR reports/ presentation.
|
| The $24b figure is literally in OpenAI's announcement.
|
| The $19b ARR and $6b added in Feb came directly from
| Anthropic CEO recently.
| bandrami wrote:
| Announcing isn't reporting. Am I the only one old enough to
| remember Enron?
| manquer wrote:
| I am reminded of the "I declare bankruptcy" meme from the
| 2000's TV series Office.
|
| When we say reporting it means there are statutory
| submissions with an auditor signing off, with legal
| liability. As the other reply referenced consequences for
| doing this incorrectly can be severe - Arthur Anderson is
| no more after all because of Enron.
|
| A Press Release (of a private entity) does not have to
| satisfy this high bar.
|
| Press release does mean no constraints, for public
| companies, disclosure of important information by officers
| and other insiders have strong controls. Even if its the
| just a rocket/poop emoji on a casual social media platform.
| Lawyers have to refile with the SEC in the expected format.
| Even private companies have restrictions on not claiming
| things fraudulently to investors, but these are accredited
| investors with lesser controls than retail.
| diatone wrote:
| Until they're using consistent methods of reporting those
| figures, they're not comparable. Same as any other company
| pre vs post IPO
| aurareturn wrote:
| Was referring to this: What we hearing is
| just from news media who get their leaks/info from
| investors who get some form of IR reports/ presentation.
| lelanthran wrote:
| > The $24b figure is literally in OpenAI's announcement.
|
| And? That's not a legislated report; they can use whatever
| mechanism they want to, without disclosure, to produce
| numbers.
|
| Lets wait until they are regulated as a public company,
| then their mechanism has to be both aligned with what
| legislation requires _as well as_ clearly documented in
| their report.
| seanhunter wrote:
| > they can use whatever mechanism they want to, without
| disclosure, to produce numbers.
|
| That would be fraud against whoever participated in this
| round, so no. Just because they aren't regulated doesn't
| mean they are literally free to do whatever they want to
| close the round.
| adgjlsfhk1 wrote:
| it would be fraud only if they're also telling their
| investors the same numbers.
| lelanthran wrote:
| > Just because they aren't regulated doesn't mean they
| are literally free to do whatever they want to close the
| round.
|
| What makes you think their public announcements are
| aligned with what they give prospective investors?
| seanhunter wrote:
| The fact that in all the rounds I have been involved in
| all public announcements related to the round go through
| the legal team to check for possible material
| misstatements that could cause exactly this kind of
| problem.
| lelanthran wrote:
| > The fact that in all the rounds I have been involved in
| all public announcements related to the round go through
| the legal team
|
| _All_ public announcements go through the legal team,
| regardless of whether it 's related to the round or not.
| robonot wrote:
| True. That's reporting and they are also reporting numbers
| internally, which are getting leaked.
| SilverElfin wrote:
| Does the GAAP accounting matter if everyone passively buys
| shares due to the new fast entry rules, which corruptly will
| force us all to buy into these companies? The fundamentals
| and true value seem less relevant than ever:
|
| https://www.benzinga.com/markets/tech/26/03/51248353/michael.
| ..
| manquer wrote:
| Diluting the index entry rules, only devalues the index
| utility. When it becomes a bigger problem, other indices
| with higher quality controls will out compete the current
| ones and be used by asset managers seeking safety.
|
| More likely than not, most of us are already holding stock
| in these companies one way or another. All the Mag 7 hold a
| major chunk of OAI and Anthropic stock anyway, slower entry
| does not make it less risky for us.
|
| Even if the big tech companies did not hold any stock, they
| are still the biggest vendors and their own order books is
| hugely impacted by the AI demand from these two ( and
| others in this space), either way we are all in this
| together.
| minraws wrote:
| I personally find this is the correct solution, since
| indexes are over-inflated either way, this brings much
| needed sanity to the index. Your index is now worth much
| more or much less based on how you view the AI bubble and
| you are forced to understand and correct your forward
| looking investments accordingly.
|
| Passive investments are good, but if taken too far as
| they clearly have been in the last decade they become a
| scam. Everyone is SIPing into it, and there is infinite
| liquidity. Until one big whale finally decides they are
| booking it, then all hell will break loose on the same
| damn day.
| chronc6393 wrote:
| > When it becomes a bigger problem, other indices with
| higher quality controls will out compete the current ones
| and be used by asset managers seeking safety
|
| Doubt it.
|
| The world does not allow perfect competition.
| JumpCrisscross wrote:
| > _world does not allow perfect competition_
|
| What does this have to do with anything?
|
| Plenty of asset managers construct indices to save fees.
| ml-anon wrote:
| lol imagine someone believing in the invisible hand of
| the free market in 2026
| manquer wrote:
| In the short term there are distortions and
| inefficiencies. It may feel like free market is done .
|
| However in the long term, economics usually finds the
| most efficient way.
|
| Maintaining inefficient structures like tariffs or
| monopolies becomes more and more expensive and eventually
| untenable and disruptions will occur.
| farialima wrote:
| In the long term we are all dead. (Keynes)
|
| Really feels like 1928
| gloryjulio wrote:
| Yes gaap absolutely matters.
|
| You can just choose not to play the accounting game, and
| only choose the ones that actually gaap viable as
| investment opportunities. For example mag7 - tesla are all
| relatively cheap when they dip.
|
| Some times the best play is just not to play. If you think
| they are too risky, walk away. There are enough good
| oppotunities
| throwaway2037 wrote:
| > mag7 (minus) tesla are all relatively cheap when they
| dip
|
| I asked ChatGPT for a list of Magnificent 7 stocks and
| their most recent price to earnings (PE) ratios.
| Company Ticker P/E Ratio Apple Inc. AAPL ~33
| Microsoft Corporation MSFT ~25 Alphabet Inc.
| GOOGL ~29 Amazon.com Inc. AMZN ~30 NVIDIA
| Corporation NVDA ~38 Meta Platforms Inc. META ~28
| Tesla Inc. TSLA ~378
|
| In the last 50 years, I think the median PE ratio for S&P
| 500 index is about 15. Seven and below is considered rock
| bottom, and 30 and above is very high. These PE ratios
| look pretty damn high to me.
|
| How much do these names need to "dip" for you to consider
| them cheap?
| gloryjulio wrote:
| There are a few things to consider if you are in the
| investment space:
|
| - Growth rate: you can't compare them to the average
| single digit growth companies or dividend focused
| companies. Most of these tech companies revenue are still
| growing at double digit with good moat. Pe is a good
| measure but it's not absolute. If you believe they
| sustain their growth then it's a good bet. And you can
| choose not to buy in their growth stories too. At the end
| of the day investment is about judgement call
|
| - History benchmark: some of their pe is at historical
| low. So they are actually cheaper than before.
|
| - Pe ttm and forward pe: how much pe ttm are they at? how
| much forward pe are they projecting? If forward pe is
| significantly lower, that means the current analysts
| consensus is that they will grow in future
|
| - Pe is the a number but it's not everything. You need to
| consider multiple things to decide if that's undervalued
| for you. It's highly subjective as different
| interpretations are common.
|
| - This post is about if you want to play the gaap game
| with private tech companies. My point is that there are
| still many public companies that are cheap at certain
| point. You just need to be patient and be willing to
| research and wait. For example, meta at around 500 was a
| buy for me, but since then it has rebounded it's still
| good but not as undervalued as a few days ago
| throwaway2037 wrote:
| For other readers, I want to add some context here. NASDAQ
| is pondering whether or not to change their NASDAQ 100
| index membership rules for IPOs. Currently, there is a
| three month waiting rule for IPOs. They are proposing (not
| sure if passed/agree/completed yet) to remove this waiting
| rule for IPOs.
|
| Real question: What is the real impact of this rule change?
| To me, it seems so minor. Three months is just a blip in
| time for any long term investor. > which
| corruptly will force us all to buy into these companies
|
| Why is this "corrupt"? That term makes no sense here.
|
| Also, if you don't like the NASDAQ 100 rules, then you
| don't have to invest in securities that track it. You can
| trade the basket yourself minus the names that you don't
| like.
|
| Finally, I would say that S&P 500 index is _far_ more
| important than NASDAQ 100. To join the S &P 500 index, the
| name must be profitable for the most recent year. (four
| quarters). Recall that Uber IPO'd in 2019, but was not
| profitable until 2023. OpenAI probably will not be
| profitable when it goes public; thus, it will not join the
| S&P 500 immediately.
|
| I think the bigger story is SpaceX. It will likely IPO very
| close to a 1T USD market cap (with a small float: ~10%).
| And, thanks to StarLink, I assume that SpaceX is now wildly
| profitable.
| Fripplebubby wrote:
| > Also, if you don't like the NASDAQ 100 rules, then you
| don't have to invest in securities that track it.
|
| Isn't the idea with the indexes that they allow you to
| intentionally not take an activist position in the
| market? The exposure is not tied to any underlying market
| hypothesis. In other words, if we make people form a
| market hypothesis in order to decide whether or not to
| hold this index, it has failed in its purpose.
| nixon_why69 wrote:
| The "corruption" allegation is that for, yes, SpaceX,
| index funds will effectively be "forced" to buy in right
| away at their IPO price, rather than seeing where they
| settle before getting the money in. Given that most
| people have most of their money in index funds, it's
| sort-of an automatic buy and raises some hackles about a
| fixed game.
|
| Saying "you can trade the basket yourself minus the names
| you don't like" is not a real counterargument. Most of us
| are not going to do that, I'm not going to do that and
| I'm writing this post right now. John Doe is certainly
| not doing that.
| master-lincoln wrote:
| what would force you? I guess if you are a greedy bastard
| you might feel that way...
| dmix wrote:
| Still a huge amount of revenue for any company. Those $20/month
| fees are going to triple in a couple yrs. But the VCs expect
| much much more.
| willio58 wrote:
| Friends of mine working in AI companies are saying we'll be
| lucky if they only triple. More like 10-20x long term,
| especially for enterprise
| mrweasel wrote:
| Oh, I read it as the number of subscribers would triple,
| but you're suggesting the price will?
|
| That makes a little more sense, because the number of
| subscribers are so low that tripling won't really make much
| difference in terms of turning a profit.
| Bombthecat wrote:
| It's for companies to replace people. Works out ok for
| them. Even four times isn't that much
| ef3dfd wrote:
| Its simply not going to happen. People like Nadella call
| it 'tacit knowledge' - the reality is the work people do
| is much broader than what is producible by LLMs alone.
| Without the human, there is no work done. Unlike classic
| machinery, LLMs are not comparable in that you cant
| simply reduce labour input by X and be fine. Sure in the
| short term the consequences will not show up, but in the
| long term they will.
|
| Altman and co. get down on their knees and pray that
| proposition is only transitory in the short run.
|
| LLMs wont disappear, but they wont be large profit
| generators either. Especially not so whilst there is
| fierce competition and every dollar of profit is re-
| invested. The value of an asset is derived upon its
| potential cash return, net of reinvestment, taxes et al.
|
| Altman is hoping to survive long enough to finance R&D to
| figure out how to encode the entirety of what humans do,
| to be able to come good on the asinine aspirations he has
| put forth that justify its valuation. But it will end in
| disaster.
| Bombthecat wrote:
| Of course there will be humans, just way less of them.
|
| Instead of ten, you just need two or three
| ef3dfd wrote:
| You haven't put forward a compelling argument besides
| fluff.
|
| This is so surface level and boring.
|
| Most of you aren't really clued up on subject areas like
| Finance to talk about this stuff frankly. As long as a
| firm is beating its cost of capital, it will reinvest
| money to generate more growth. What does that mean? Oh.
| Hiring more people.
| riskable wrote:
| This assumes that these companies aren't going to use
| smaller providers or hosting models themselves. THAT is the
| great big assumption going into all the Big AI funding.
|
| I think it's a very, very bad assumption. After trying
| GLM-5 and Qwen3 on Ollama Cloud, not only were they
| _faster_ than OpenAI 's offerings (by a huge amount) it was
| _just as good_ if not better at doing what I asked of it.
|
| Claude Code is still superior to anything else but GLM-5
| and Qwen3 are easily just as good as GPT-5.X (for coding).
| duped wrote:
| People working in AI companies are the last people I'd
| trust on price forecasting
| natas wrote:
| OpenAI is a few years behind Anthropic, and it's unlikely
| they'll catch up at this point.
| mrklol wrote:
| Where exactly are they behind?
| PunchTornado wrote:
| everywhere, but most important in ethics
| serf wrote:
| _your_ ethics.
|
| let's not forget that these major LLMs are all the
| children of corporate hyper-piracy en masse, none of them
| are ethical even in origin unless you're talking about
| the pre-product company charter kind of ethics, like
| google .
| PunchTornado wrote:
| You can't put anthropic and openai in the same basket
| regarding ethics. One accepted Department of War's
| conditions and the other not.
| Teelo wrote:
| How is anthropic training their models? Surely they're
| not using other people's work without their permission,
| right?
| Agentus wrote:
| What origins of ethics?
|
| You use the term piracy, which potentially hints at ur
| biases.
|
| American IP laws aren't universal, and last I checked
| neither is it popular in Silicon Valley.
|
| Institutions surrounding dealing with IP Piracy is an
| American strong arm attempt to own the unownable and to
| use Russel conjugates to make the flagrant attempt seem
| just.
| baq wrote:
| They're about even in general, but for me OpenAI is slightly
| or significantly ahead in the areas I care about the most.
| E.g. claude code is a backend slop cannon if you don't tell
| codex/gemini to review the outputs.
| muskstinks wrote:
| I'm following this very closly and i'm stunned. Any infos on
| why you think they are behind antrophic in years?
|
| I do see less quality from reasoning at chatgpt compared to
| Gemini but otherwise i'm not seeing a year or years gap.
| empath75 wrote:
| Anthropic is _unquestionably_ ahead product wise because of
| their agentic coding tools, but they are not _years_ ahead.
| In particular, their advantage is in the harness, which is
| not hard to replicate!
| rafaelmn wrote:
| Lol if CC is the advantage that's the larges indictment of
| AI coding there is. Don't get me wrong CC gives me good
| results, but I very much doubt their tooling is great, they
| just spew tokens at the model and the model is quite good
| at making sense of it and following through.
|
| I suspect they have better RL setup for coding that makes
| their models better at coding than GPT/Gemini in practice.
| 0xy wrote:
| It's not just the CC harness. The models are fundamentally
| better.
| interludead wrote:
| I'd be pretty cautious comparing those numbers directly
| alvis wrote:
| With $122B what are you going to build next? Spaceships?
| topspin wrote:
| All the high performance RAM, frontier node wafer capacity,
| flash and disk drives on Earth. Also, all the gas turbines.
| Traubenfuchs wrote:
| Universal paperclips. And here I am asking ChatGPT which type
| of onion to use dor coq au vin.
| zozbot234 wrote:
| If they buy all the jet engines too (to turn them into gas
| turbines) they can be carbon neutral. More gas burned, but
| less jet fuel. It's a win-win.
| bigwheels wrote:
| Rather than advancing the state of the art, they'll use it to
| slow down competition by starving them of resources. In the
| style of a monopoly.
| paxys wrote:
| Nah, you'll get a few days worth of inference.
| jillesvangurp wrote:
| Google makes money like that in their sleep from mostly just
| advertising.
|
| OpenAI charges about 20$/month to tens of millions of users
| right now. 240/year. About 12 billion per year. That's a market
| that could grown to billions of people with a long tail
| probably not paying a lot but being served ads; and a fat high
| end paying a lot more than that for an ad free/premium
| experience. They should be able to reach billions of users.
|
| It's why Google is matching investments in AI like this
| entirely from the profit from ads.
|
| Going to space isn't that expensive. SpaceX bootstrapped with a
| lot less than that.
| cmiles8 wrote:
| This all smells fishy. They didn't "raise" $122B. Raise means
| someone put funds in your bank account and said send us the next
| quarterly report to tell us how our investment is doing.
|
| They have pieces from paper of folks saying they may put up funds
| or goods and services in that amount. But it's important to
| remember that:
|
| 1. While they are "raising" commitments others are backing out of
| deals (see Disney, various data center things). Big deals
| announced to major fanfare are falling through.
|
| 2. They slashed capital expenditure for the future after
| previously boasting about all the commitments. This is turning
| into bonkers math of X + Y - X + Z + W - 1/2 of Y = ? On trying
| to keep track of what's actually "raised / real" vs what was PR
| puffery that folks ran away from later.
|
| 3. Circular financing still seems to be going on. Big difference
| of here's cash, have fun and various "commitments" and balance
| sheet games that seem to still be going on.
|
| Net net this all still looks very scary and iffy at best.
| zitterbewegung wrote:
| Are we truly arguing semantics on HN which is a news aggregator
| for startups and everyone truly knows what a "raise" is and it
| is obviously not funds in your bank account? I don't disagree
| with the rest of your comment and the core thesis is valid that
| OpenAI is very much doing circular financing.
|
| Edit: A raise comes with stipulations on what you can use the
| money for. I don't know if I was being too mean about
| responding to a parent but before you comment just google what
| a raise has..
| sanex wrote:
| Other than funds in a bank account I do not know what it
| would mean.
| zitterbewegung wrote:
| Stipulations on what you can use the funds for.
| iAMkenough wrote:
| *hypothetical future funds
| fer wrote:
| Right because, what does even "buy" mean?
|
| https://thedeepdive.ca/openai-locked-up-40-of-global-ram-
| wit...
| zozbot234 wrote:
| So when my coworker tells me he got a "raise", they're not
| talking about money that will end up in their bank account?
| zzrrt wrote:
| It's a different definition of the word for one thing, and
| anyway, unless their compensation is prepaid this would
| only suggest that "raise" doesn't mean liquid money in an
| account, because an employee's raise is a promise to pay an
| amount over the remainder of the year with the stipulation
| the employee continues at the job.
| pier25 wrote:
| If OpenAI goes down their investors will lose any chance at
| getting their money back. They need to keep pretending things
| are going great for as long as possible.
| victorbuilds wrote:
| [flagged]
| nenadg wrote:
| Don't know why so many down votes for something that's clearly
| just another opinion
| winrid wrote:
| Probably because it reads a little like an LLM and also has
| an emdash
| aurareturn wrote:
| I've seen a lot of anti AI people use ChatGPT to write why
| AI bubble is about to pop.
|
| Ironic, isn't it?
| toraway wrote:
| > I ship code every day. I use Claude, I use GPT, I run
| llama locally.
|
| An "Anti AI" person...
| dang wrote:
| Please don't post generated text to HN. We ban accounts that
| keep doing this.
|
| https://news.ycombinator.com/newsguidelines.html#generated
|
| https://news.ycombinator.com/item?id=47340079
| Jaskhy wrote:
| The title is incorrect. The $122B includes previous _promises_.
| They raised an additional $12B of _promises_ :
|
| "The round totaled $122 billion of committed capital, up from the
| $110 billion figure that the company announced in February.
| SoftBank co-led the round alongside other investors, including
| Andreessen Horowitz and D. E. Shaw Ventures, OpenAI said."
|
| This IPO, if anyone underwrites it, is going to fleece retail so
| hard. Better make it a SPAC with the help of Chamath and Cantor &
| Fitzgerald.
| ds2df wrote:
| Nah this raise (commitment) is... blah.
|
| Last announcement I reckon pre-IPO and the inevitable collapse.
| MinimalAction wrote:
| I hate to read this line when academics and graduate students who
| work in basic and hard sciences have their funding cut. The grand
| funding that pays minimum wage to grad students is a burden for
| this society, yet for a company that took all the valuable data
| from sources that never got credit, raises billions of dollars.
| Open says the name, but closed it is by operation. Sorry for this
| rant, but the priorities of this world suck.
| DrewADesign wrote:
| Or all of the people that they didn't ask, let alone
| compensate, that made all of the stuff they munged up for
| training data, so they could sell cheap knockoffs in the same
| markets.
| danny_codes wrote:
| We're all feeling it. Unfortunately our country is run by a
| dude with dementia and a carnival of Fox News hosts.
|
| But I suspect that'll u-turn hard when the economy implodes
| shafyy wrote:
| Looking forward to the movie about this absolute scammer Sam
| Altman when this is all said and done.
| BloodyIron wrote:
| Inflation is a hell of a drug.
| josefritzishere wrote:
| Thsi is the most blatant pump & dump scam I've ever seen. It's
| going to crash like a meteor.
| __alexs wrote:
| I thought they needed $7 trillion or they'd be unable to keep
| training new models?
| ekropotin wrote:
| Are we going to see a trillion dollar IPO?
| mrkramer wrote:
| Good luck competing with Google which has "unlimited" budget.
| mbgerring wrote:
| Each passing day the lie that markets efficiently allocate
| capital is further exposed
| jmward01 wrote:
| There is a lot of talk about the AI bubble. I think there are
| comparisons to the late 90's/early 00's here with early stars
| rising quickly but, ultimately, falling. Since essentially
| everything touches the internet now it is clear that the
| 'internet bubble' was more of a shakeup of companies than a real
| over-hype of the internet. That, I think, is at play right now
| too with the 'AI bubble'. AI isn't going away but some of the
| early stars may not make it.
|
| So, the real question here is: Is OpenAI Netscape, or are they
| Google?
| aurareturn wrote:
| I don't care if OpenAI is Netscape or Google.
|
| What I want to know is are we in 1994 of the AI bubble or 1999?
|
| Because even after the dotcom bubble popped, it was still much
| better than it was in 1994.
| jmward01 wrote:
| I think the cycle is way faster than it used to be so even if
| we are in 1994, the pop is probably pretty close.
| aurareturn wrote:
| Given that Nvidia's forward earnings in 2026 is 19, which
| is lower than the average for S&P500, what do you think a
| "pop" will do to Nvidia stock?
|
| Wallstreet is already pricing Nvidia to have no growth
| above the average S&P500 company.
|
| More importantly, do you think that a "pop" means supply of
| compute is suddenly more than demand?
| eiskek wrote:
| What the heck are you talking about? Nvidia's value of
| growth assets are already priced in.
|
| You've written so many posts with glaring flaws. Are you
| trying to come across as smart? Lmao
| aurareturn wrote:
| Priced in as how?
|
| What are the flaws?
| ex-aws-dude wrote:
| What is their moat?
|
| It seems like its just consumer name recognition at the moment
| bentt wrote:
| Intuitively, it just doesn't feel like OpenAI has a trillion
| dollar moat.
| Gagarin1917 wrote:
| Alphabet is worth $3.5 Trillion. What's their moat?
| MinimalAction wrote:
| Much more than Google search. Cloud, Waymo, Verily, Deepmind,
| stake in Claude. So many bets other than just ads.
| outside1234 wrote:
| God help us if all of our retirement index funds are forced to
| buy this bankruptcy bomb.
| TheAlchemist wrote:
| "Commited capital" - is this the same commited as the $500B for
| the Stargate project ?
|
| Not gonna lie, I hate those announcements lately. It's full
| bullshit mode, worse than the Dot-com bubble. Numbers don't make
| any sense, any more, and yet journalist don't ask any real
| questions...
| jacquesm wrote:
| Fortunately, I was afraid that this was another bubble. /s
|
| I wonder what the bet is here, long term that valuation is going
| to have to go up even further for this investment to make sense
| so they're clearly betting that at IPO time they'll be able to
| convincingly demonstrate AGI or something extremely close to it.
| That's a pretty risky bet, and meanwhile, whatever they come up
| with will be a commodity within a year. And that's besides OpenAI
| no longer being seen as the dominant player _or_ the player with
| the best edge.
| outside1234 wrote:
| Google is totally going to run this company out of money aren't
| they?
| whalesalad wrote:
| This is so bad. OpenAI has already singlehandedly destroyed the
| global flash memory market with their war chest, this will just
| give them more power.
| dzonga wrote:
| does Softbank run of out money i.e announce these deals but never
| follow up ?
| iheartbiggpus wrote:
| Would be nice to have this seperated from, i-owe-you, vs actual
| funding that's liquid!
| rkagerer wrote:
| Ugh, does this mean I should say goodbye to what little RAM and
| other hardware remains available on the consumer market?
| ghm2199 wrote:
| Does anyone know if this, like the spacex/xAI stock -- will list
| on nasdaq? And will it be part of every market cap weighted index
| fund like VOO(S&P) etc or just for nasdax-100 etfs?
|
| The exchanges are bending head over heels to accommodate these
| IPOs[1] and make our retirement index funds the exit-liquidity
| strategy to the thievery of pump and dump actors that buy it low
| and then sell high? As i understand the way thievery works is:
|
| 1. List at many multiples of market valuation on an exchange. So
| if you company is just 10 billion$ nasdaq and theives collude and
| say "can make it 100 billion..".
|
| 2. Lots of institutional investors and rich billionaires get
| stock options.
|
| 3. All market weighted index funds -- aka all *your* low expense
| ratio ETF money -- have to re-balance and buy them, raising their
| value: the exit-liquidity event
|
| 4. Rich A**** get richer by making an profit by selling higher.
|
| [1] https://www.economist.com/leaders/2026/03/31/index-
| providers...
| danny_codes wrote:
| It does seem likely. Iirc SpaceX wants to waive the year long
| holding period before their stock enters the indexes.
|
| Which to me seems like a very naked attempt at getting 401k to
| bag hold
| HWR_14 wrote:
| They are pushing hard to be part of the nasdaq 100. You can
| shift your retirement funds from the nasdaq to the Dow or s&p
| colwont wrote:
| This is going to be bad
| shreyssh wrote:
| $852B and we still don't have an IAM layer for AI agents.
| whatsakandr wrote:
| I do not understand how these companies can have such high
| valuations when minimax m2.7 is going to be open weight.
| y1n0 wrote:
| Pardon my ignorance, but how can a company that spends almost $2
| for every $1 it brings in be worth anything?
| cat-turner wrote:
| Standby for tiered information.
|
| Have a question on health symptoms? You must subscribe to openAI
| health
|
| Have a question on math? You must subscribe to openAI math
|
| The only way they can manage this type of monetization is a lot
| of compute to process outputs.
| blobbers wrote:
| I get the appetite for frontier models. But why not just invest
| in Google. Do they really expect the return profile of OpenAI to
| be vastly different than Google's Gemini?
| Gagarin1917 wrote:
| I imagine they get a bigger slice of the pie with OpenAI than
| they do with Google, an extremely mature company who's had
| investors buying in for 30 years.
|
| Alphabet's market cap is $3.5 trillion, compared to OpenAI's
| $850 billion reported here.
| flowerthoughts wrote:
| Google has little need for more money, so the price will be
| much higher. OpenAI being a separate entity also means Google's
| competitors (Microsoft, Amazon) can invest there without
| looking silly.
| cowl wrote:
| it's not really investing though. Amazon will provide 50B worth
| of compute and Nvidia will provide 30B worth of chips etc.
| Google doesnt need any of those.
|
| The only one that is really investing is SoftBank who is
| pushing for a faster IPO so they hope to make a profit on that
| and again Google does not offer that opportunity
| convexly wrote:
| Feels like the number is more about FOMO than fundamentals at
| this point.
| nickphx wrote:
| the hype machine knows no bounds. it should be illegal to publish
| such farcical claims when they are intended to manipulate
| markets...
| Aeroi wrote:
| thats a really large number
| natas wrote:
| Microsoft will buy OpenAI for $500B, rebrand it as Microsoft AI.
| rhubarbtree wrote:
| This is where they are headed. But the real price will be a lot
| less.
| dartharva wrote:
| With what, Azure credits?
| Jaco07 wrote:
| With $122 billion at your disposal, what do you plan to build
| next--spaceships?
| daemin wrote:
| What if all the people currently using these "AI" services are
| the entire market for those services? I'm pretty sure everyone
| that wants to use LLMs is already doing so and already paying for
| the service.
|
| That would mean the only way to increase growth would be to
| charge more per token and to get the existing people to use more
| tokens. Both of which seem to be only what mature companies do
| when trying to squeeze the cash cow for all it's worth.
|
| It also explains why they're trying to stuff AI into everything,
| to keep the numbers up, and to get everyone to try and pay them
| money.
| mxkopy wrote:
| The market hasn't been built out yet. There's that post from a
| couple days ago where someone frontloaded the entire UX of an
| operating system onto an LLM, so you just tell the hardware
| what you want to do and it does it.
| https://news.ycombinator.com/item?id=47557165
|
| The growth is there but it's going to be a marathon, not a
| sprint. I don't know why everyone's in such a goddamn hurry all
| the time
| natas wrote:
| Give it a year or two, and apple or any other hardware will
| have unified memory OR AMD will have a good offering to run all
| that stuff locally. It won't be as good as Claude, but it'll do
| for 90% of the things. It will be expensive as first, just like
| the first mainframes, then give it another 5 years or so, and
| it'll be affordable.
| citizenpaul wrote:
| I'd argue this has already happened. The highest end mac pro
| is $10k and down from there. We might be returning to the
| appliance business model.
|
| Its just a matter of Productizing the software to plug and
| play light office admin work.
| michelb wrote:
| I think there is a massive market in waiting for something that
| uses a way better UI/UX. I'd say chat is only great for
| developers/technical people.
| tkgally wrote:
| When I show people personal projects I've vibe-coded with
| Claude Code, they often seem impressed and envious. They come
| up with ideas for things that _they_ would like to do, too. But
| they have full-time jobs outside of IT, and when I mention they
| might need to use the terminal to do what I'm doing now their
| eyes glaze over.
|
| A couple of such people, after they learned about Claude
| Cowork, signed up for Anthropic subscriptions and are now using
| it in their jobs. But overall my impression is that there is
| still huge potential demand from regular people who use
| computers for agentic systems with less barrier to entry, and
| that many will be willing to pay for such systems when more
| mature and user-friendly ones arrive.
| cornholio wrote:
| On the other hand, the productivity gains from AI automation
| are so large that you are forced to use it to compete in the
| workplace, even if you strongly dislike the terminal, you
| will dislike homelessness more.
| jillesvangurp wrote:
| Most of humanity hasn't figured out they need to adapt yet.
| It's a bit like email and the internet in the mid nineties.
| People had heard about it but hadn't really embraced it yet.
| Five years later most people with white collar jobs had email
| addresses. Fifteen years later, billions of internet capable
| smartphones were in circulation.
|
| The AI revolution is following a similar adoption curve.
| Right now many of the tools are only really usable if you are
| a developer or at least not too shy making AI agents use
| developer tools on your behalf. That's not going to stay like
| that for very long. It's going to be a messy transition that
| will likely take much longer than some people seem to think.
| But eventually most people doing knowledge work will be
| leaning heavily on all sorts of AI agents to do their thing.
| And quite a few will have to learn new skills as most of the
| stuff they still do manually today just goes away as a thing
| that you do manually.
|
| Like the mid nineties, these are amazing times for people
| with a slight head start over everybody else. Which is why
| there is such an investment frenzy around AI right now. Lots
| of possibilities where lots of money might be made. And lots
| of things that won't work out. And lots of people really not
| seeing the forest for the trees as well. And generally
| behaving like headless chickens. But the internet in the end
| proved to be not a fad and it didn't all go back to normal
| after the hype died and the .com bubble burst.
|
| IMHO, the bubble around AI is not so much the technology but
| things like data center and energy pricing. The cost of data
| center production is long term a fraction of current cost
| (dominated by GPUs costing tens of thousands of dollars).
| Likewise cheap and plentiful energy to power them is going to
| eventually cost a lot less. Short term scarcity eats up a lot
| of billions right now. But you'd be mistaken to confuse that
| for long term structural cost. Cost is going to come down and
| that will drive adoption. And that's before you consider edge
| compute on commodity phones and laptops. There will be
| billions of devices running small AI agents. Add robotics to
| the mix and it's a whole new world.
|
| In short, companies like OpenAI and Anthropic are valued so
| high because all of that is happening right now. Yes, it's a
| bit of a bubble. But stuff will definitely happen.
| quantummagic wrote:
| > only way to increase growth would be to charge more per token
|
| Or spend less per token (ie. increase profit margin without
| raising prices).
| maxglute wrote:
| Think about all the "people" AI services can displace in due
| time. There's a fuckload of pencil pushers / knowledge workers
| with 100k student loans whose lifetime contribution can
| probably be measured in a few hundred dollars in tokens. And
| TBH normalizing AI crutch for kids is going to make large % of
| future cohorts even more replaceable. Skill atrophy among youth
| is declining hard, but AI is basically crippling future
| workforce quality to make their displacement even easier.
| There's even less reason to hire entry level in 4 years not
| just because models get better but human capita is going to be
| so much worse.
| camillomiller wrote:
| Almost a trillion for a company that hasn't proved it can reach
| any form of profitability, all on the promise of an elusive
| messianic concept of machine superintelligence through
| probabilistic algorithms. Basically like praying cancer away.
| Peak magical thinking, peak America.
| tsoukase wrote:
| Fortunately, OpenAI's naming didn't cause a wave of greedy and
| predatory new companies, like OpenHealth, OpenEnergy,
| OpenCompute. The non-sexy name of their product using the
| originating algorithm (GPT) is punishing them. It could be
| anything else more attractive that would bring more customers.
| Because, for me, a good, inspiratory, engaging name is half the
| success.
| slashdave wrote:
| https://www.opencompute.org
| _HMCB_ wrote:
| Amazing. Reporting two mercurial numbers as if they were
| cornerstones.
| Chyzwar wrote:
| This leak and looking into source code gave me an impulse to try
| OpenCode with codex models. I am very impressed with how well it
| works, and the UI is beautiful.
| ilaksh wrote:
| What will happen first? The Singularity arrives, and hyper-
| intelligent AI causes such rapid technological change that the
| world becomes unrecognizable overnight?
|
| Or OpenAI pays off it's investors? Lol.
|
| I am not sure if I believe in the Singularity or not. But it's
| kind of the best story ever to support the game of musical chairs
| that is Silicon Valley investing.
| jongjong wrote:
| People won't be able to afford to leave their beds because food
| prices will be too high to justify the energy cost of standing
| up.
|
| Every joule of human energy is energy that could have been better
| spent to produce AI slop for other AI agents to consume.
| iririririr wrote:
| the _only_ lesson the common man should take from these
| valuations: start to protest against AI conpanies being included
| in the sp500!
|
| unless you're a private investors in these preIPO, the whole plan
| is to get big enough, get forced entry into indexes, and leave
| early with everyone else holding the bag.
| motbus3 wrote:
| I lost track when business analysts stopped analysing CEO-level
| commitments and outputs and performance. right now, it seems that
| whatever promise is taken as certain and company puffery (using
| the language invented by themselves) is taken lightly to tricky
| investor in throwing money.
|
| the whole thing did not yet crash because it seems they can still
| promise even more without actually delivering definite results
| lazyguythugman wrote:
| I still don't get how a non profit can become a for profit entity
| on a whim.
| interludead wrote:
| "Not yet profitable" doing a lot of heavy lifting here for an
| 852B valuation
| spicymaki wrote:
| LLMs are definitely a game changing technology, but there is just
| so much fake money in the market right now (circular deals, paper
| valuations, etc.) that I cannot take this seriously. At some
| point the musical chairs will stop and we will all be saying how
| could we let this happen? Where are the regulators (rhetorical
| question)?
| limaoscarjuliet wrote:
| As with every bubble, we, the people, will pay for it. There
| will be recession, inflation and general "one step back" to
| hopefully move "two steps forward" one day in the future.
| apparent wrote:
| I think AI will actually produce price deflation in some
| areas. There could be inflation based on mechanisms you
| describe, but it's obviously making it cheaper to make some
| products/services.
| 1970-01-01 wrote:
| You do know that not all of these AI companies can become be
| trillion dollar companies, right? Easy come, easy go has no
| limit.
| sharadov wrote:
| I can understand why Amazon, MS and Nvidia invested - nefarious
| circular deals, but Softbank? I mean who the heck is giving
| Masayoshi Son money to invest? Behooves me!
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