From my perspective, I hope that OpenAI survives and can pull of their IPO but I just have that nagging feeling in my gut that their IPO will be rejected in much the same way that the WeWork IPO was rejected.
On the one hand you can look at these companies investing and take it as a signal that there is something there (in OpenAI) that's worth investing in. On the other hand all these companies that are investing are basically getting that investment back through spending commitments and such and are just using OpenAI as a proxy for what is essentially buying more revenue for themselves.
When their IPO hits later this year I hope that it's the former case and there's actually some good underlying fundamentals to invest in. But based on everything I've read, my gut is telling me they will eventually implode under the weight of their business model and spending commitments.
It’s like Toys R Us not having enough money to pay Mattel for Barbie dolls and telling Mattel they can have partial ownership of the company if they just supply them with some more toys.
But the problem is that Toys R Us is spending $15, 20, or maybe even $50 (who knows?) to sell a $10 toy.
Toys R Us continues selling toys faster and faster despite a lack of profit, making Mattel even more dependent on Toys R Us as a customer. It blows up the bubble where a more natural course of action would be for Toys R Us to go bankrupt or scale back ambitions earlier.
Because it’s circular like this, it lends toward bigger crashing and burning. If OpenAI fails, all these investors that are deeply integrated into their supply chains lose both their investment and customer.
I think the HOA still only pays like $10/month/apartment for an entry level that's now defined as 250/250 Mbit/s. Someone must have been unusually savvy with the contracts.
https://newsroom.cisco.com/c/r/newsroom/en/us/a/y1999/m11/ci...
Cisco survived but it took them until late last year to recover their 1999 stock value (that's 26 years).
Nvidia is investing assets into OAI - it has to. Because OAI needs to become successful for Nvidia's story in the long-term to play out, to justify its current stock price.
Doubt Jensen sees himself as a “dealer” but considering the vendor lock-in and margins, he pretty much is the Tony Montana of Ai Chips.
It’s nuts that this type of financing is legal.
I don't understand how this is some kind of cheat code. Let's say I give you $100 on the condition that you buy $100 worth of product from me. And let's say that product cost me $80 to produce. Isn't that basically the same as me giving you $80? I don't see at all how that's me "basically getting that investment back".
NVIDIA gross margins lately are like 75%, so it's more like you give me $100 to buy something from me that cost me $25 to produce, hence I end up with $100 worth of stock in your company and it only cost me $25.
In your accounting, you can claim that you have an investment worth $100 and book $100 worth of revenue. You're juicing your sales numbers to impress shareholders - presumably, without your $100, the investee wouldn't have bought $100 worth of your product. The last thing your shareholders want to see are your sales numbers stop growing, or heaven forbid, start shrinking.
Nvidia is not the first company to "buy" sales of its own product via simple or convoluted incentive schemes. The scheme will work for a while until it doesn't.
> Let's say I give you $100 on the condition that you buy $100 worth of product from me. And let's say that product cost me $80 to produce. Isn't that basically the same as me giving you $80?
Why limit myself to $100 for a product that costs $80? I could just as well give you $1 000 000 to buy this same product from me. That way, I have a $1 000 000 share of your company, and I have $1 000 000 in revenue, and it only cost me $80.
This distorts the market for the product we're trading, and distorts the share price for both my company and yours.
And inflate your revenue by $80.
Laws on competition make this kind of arrangements illegal, so you would have to exerce influence and have the invested in company pretends you happen to have been picked among competitors.
In any case the SEC will be focused on whether the filings aren't made up to fraud investors, so they could reject the IPO, of the invested in company. Your own entity also is at risk.
We all know MS gets away with it, they have good legal goons who find way to make all of it appears fair with regards to the law.
It's a good question, what I think you're missing is that if the market is valuing me (NVIDIA) at 25x revenue then it's more like I traded you (OpenAI) a GPU it cost me $80 to make for $100 worth of OpenAI stock, and I got a bonus $2500 in market cap of my own stock (which existing shareholders like).
IOW for every incremental "$100" in revenue (circular or otherwise), existing shareholders get paid "$2500" in equity (NVIDIA appreciation + OpenAI shares).
This "works" for NVIDIA and its shareholders as long as they/the market keeps thinking $100 of OpenAI stock is a good price for a GPU. If OpenAI tangibly fails to deliver on this valuation then NVIDIA may wind up in the red on these deals.
Caveat: it's a bit more complicated than that as OpenAI doesn't typically buy/operate GPUs directly afaict, rather they team up with the big cloud providers like AMZN (also part of the deal). But it's an useful way to wrap your head around the economics, I think (open to correction, not a domain of professional expertise).
I don't see anything _inherently_ unethical about this as some comments seem to imply. It's definitely riskier than accepting cash, in which case you're free not to play, but it's a calculated risk based on future expectations of growth by OpenAI. Granted there are some sketchy incentives qua existing shareholders that could materialize in pump and dump dynamics.
The issue is that there's no organic force behind those changes and it makes everything hollow. You could create a market inside a deserted area and make it appear like a metropolis.
What if the product only costs you $20 to produce?
Also Nvidia margins are waaay higher than 20%
WeWork was a short-term/long-term lease arbitrage business. The two are nothing alike.
It used to be revolutionary, but now there is a huge difference: plenty of competition, and a growing number of high-quality models that can run offline (for free!) or cheaper (Gemini-Flash for example).
They are in some way the Nokia of AI, "we have the distribution, product will sell", but this is not enough if innovation is weak.
They are even lagging behind (GPT-5 is a weaker coder than Claude, Sora is a toy compared to Seedance 2.0, etc).
One Apple releases the AIPhone, running offline models, with 32 GB of unified memory, with optional cloud requests, then it's going to be super though for OpenAI.
This valuation puts their P/E around 40.
Anthropic $380B valuation on $13B ARR. P/E around 30.
5 years ago Uber was in similar territory. Tesla... Well we won't mention Tesla.
But it can also simply be the financial framing for direct bartering. Which is even more direct than regular financial transactions.
"I will provide these resources you need, in exchange for part ownership", and/or "a limited license to your tech", "right to provide access to our customers on these terms", Etc."
Amazon doesn't need any frothy fake revenue. But they do want to offer their customers the most in demand models, with the best financial terms for Amazon.
Nvidia wants customers, but not at the expense of throwing money away. Their market cap may be volatile, but their books are beyond solid.
I would be a lot more concerned if OpenAI was getting "funding" from a quantum computer startup, and vice versa.
https://www.businessinsider.com/openai-chatgpt-vs-gemini-web...
"What's you number one piece of hiring advice?"
"Hire for slope, not Y-intercept. This is actually my number one piece of life advice."
-@sama, who I’m generally a big fan of. But the job is now harder
If market share is a moat, IBM should still be the biggest tech company.
If it’s not the quality of their answers ?
When they cost more to serve than they bring in, customer switching cost is vanishingly low, your competitor has revenue from other things and you don't.
Google worked as a free service because their backend was cheap. AI models lack that same benefit. The business model seems to be missing a step 2.
It's much more important to look at "paid." Only up to 50M (est.) are paid with a substantial chunk (10M) as enterprise/edu/promotional paid accounts.
ChatGPT has 800 millions monthly active users currently, out of 8 billions humans.
Wrote about both the per-model math and the scaling question:
(1) https://philippdubach.com/posts/ai-models-as-standalone-pls/
(2) https://philippdubach.com/posts/the-most-expensive-assumptio...
EDIT: Removed the dot after et; bc apparently it's an entire word (the more you know..)
This is a decent argument, but it's not the death knell you think.
Models are getting 99% more efficient every 3 years - to get the same amount of output, combined with hardware and (mostly) software upgrades - you can use 99% less power.
The number of applications where AI is already "good enough" keeps growing every day. If the cost goes down 99% every three years, it doesn't take long until you can make a ton of money on those applications.
If AI stopped progressing today, it would take probably a decade or longer for us to take full advantage of it. So there is tons of forward looking revenue that isn't counted yet.
For the foreseeable future, there are MANY MANY uses of models where a company would not want to host its own models and would be GLAD to pay an 4-5x cost for someone else to host the model and hardware for them.
I'm as bullish on OpenAI being "worth" $730B as I was on Snap being worth what it IPO'd for - which it's still down about 80% (AFTER inflation, or about ~95% adjusting for gold inflation).
But guess what - these are MINIMUM valuations based on 50-80% margins - i.e. they're really getting about ~$30B - the rest is market value of hardware and hosting. OpenAI could be worth 80% less, and they could still make a metric fuck-ton of money selling at IPO with a $1T+ market cap to speculative morons easily...
Realistically, very rich people with high risk tolerance are saying that they think OpenAI has a MINIMUM value of ~$100B. That seems very reasonable given the risk tolerance and wealth.
And as the number of things AI is “good enough” at increases, the list of things on the frontier that people will want to pay OpenAI for shrinks. Even if OpenAI can consistently churn out PhD level math, most companies don’t care about that.
So a necessary (but not sufficient) condition for the math to work out is that frontier tasks still exist and are profitable. This is why CEOs keep hyping up AGI. But what they really want is for developers to keep paying to get AI to center a div.
Even if true, this still doesn't bend the curve when paying for the next model.
> If AI stopped progressing today, it would take probably a decade or longer for us to take full advantage of it. So there is tons of forward looking revenue that isn't counted yet.
If this is true, it's true for the technology overall, and not necessarily OpenAI since inference would get commoditized quickly at that point. OpenAI could continue to have a capital advantage as a public stock, but I don't think it would if the music stopped.
AI stopped progressing, or LLMs? I really dislike people throwing the term AI around.
The LLM industry has only be around for like 4 years. Extrapolating trends from that is pretty naive.
It's 2x efficiency. Then I'd take 50% less power instead of ridiculous 99% less power.
This is such a poor argument for a number of reasons.
1. Three years ago is basically when the "AI race" really kicked off amongst the frontier companies. You're effectively comparing a car from the 1920/30's to a modern car.
2. Past performance is not an indicator of future performance. You can't just say that LLM's will grow and improve at a fixed rate for all time, that isn't how they or anything else works in the real world.
3. Since it's an open secret that companies like Anthropic and OpenAI are running their models at a loss, a static 99% cheaper every three years arc still puts these companies at a net negative position unless compute, energy and water all somehow start getting 99% cheaper every three years.
How many years total are you basing this on?
Ugh. Someone has to do this: https://xkcd.com/605/
Yes, but there's a chance that actually training is done more or less for free by companies like OpenAI. The reason being that they do a gigantic amount of inference for end users (for which they get paid), but their servers can't be constantly utilized at 100% by inference. So, if they know how to schedule things correctly (and they probably do), they can do the training of their new model on the unutilized compute capacity. If you or I were to pay for that training, it would be billions of dollars, but for them it is just using compute that otherwise would be idle.
Why are we so against, in principle, to the current pre-training scaling laws? Perhaps, we'll require new innovations at some point, but the momentum allows us to reach to newer heights that we've never climbed before.
From latin "et alia", abbreviated as "et al." - it's not a single word but an expression.
Those conditions are an IPO or reaching AGI [1].
Nvidia and SofBank will pay in installments.
Also very interesting that Microsoft decided to not invest in this round. A PR statement was made though [2].
[1] https://americanbazaaronline.com/2026/02/26/amazon-to-invest...
[2] https://openai.com/index/continuing-microsoft-partnership/
The actual quote is this though:
> hitting an AGI milestone or pursuing an IPO
So it seems softer than actually achieving AGI or finalising an IPO.
Incredible, how an entire religion has sprung up around AGI.
Fortunately, OpenAI already wrote theirs down. Well, Microsoft[0] says they did, anyway. Some people claimed it was a secret only a few years ago, and since then LLMs have made it so much harder to tell the difference between leaks and hallucinated news saying this, but I can say there's at least a claim of a leak[1].
[0] https://blogs.microsoft.com/blog/2026/02/27/microsoft-and-op...
[1] It talks about it, but links to a paywalled site, so I still don't know what it is: https://techcrunch.com/2024/12/26/microsoft-and-openai-have-...
Yes and it's actually hilarious: a system that can perform most economically valuable work better than humans, or specifically when the AI generates $100 billion in profits.
AGI is an IPO.
Are they going to get stock for it or is it a PIPE?
Personally, I don’t think I want to get in on this at retail prices.
It can both be true at the same time that AI going to disrupt our world and that being an AI lab is a terrible business.
I'm sure that $50b has my money in there somewhere.
Bad comments about OpenAI's long-term viability I've seen plenty here. But that's not the same as the people predicting one of the hottest companies right now will somehow suddenly run out of cash all on its own
The fact it's become a household name internationally (giving it the appearance of success) can't save it from spending dramatically more money than it makes. It's been coasting on investments, but it's not even close to being actually profitable.
Huge or well-known companies have collapsed before, even though - because people become so used to them existing - it never quite feels like it will actually happen until it does.
Now it's looking like a competitive blood bath where ever increasing levels of investment is needed just to main market position. Their frontier models are SOTA for 4 weeks before a competitor comes and takes the crown. They are standing on much shakier ground than they were 2 years ago.
By comparison, Anthropic is projected to break even in 2028. Google's Gemini is already profitable.
Also Softbank invested, which is never a great signal.
If investors keep throwing obscene money at OpenAI, sure, they can stay afloat forever. Can't argue with that. But if we're talking about a sustainable business, I still don't see it.
I wish I could’ve lived and died one or two decades ago. Or better yet never even been.
Note: I need work, not interviews. ;-)
Such a waste of burnt money that could be used for more useful projects.
I'm getting unreasonable amounts of compute for $0/m. I have ChatGPT, Claude, Gemini and Grok in different browser tabs. When one runs out, I switch to the next.
Any other recommendations are welcome.
200 USD at Claude, versus 3000 USD (literally) at Gemini. Well, then it will be Claude.
If tomorrow Claude is 5000 USD, well, then it will be Gemini.
This is what is called the drug dealer tactic. Once you need AI they will all cartel and you will pay half your salary (or your boss does) for it.
Might save you €20 next month.
If you try to cancel they just straight up give you a month for free. Take the VC money....
Use these freebies/relatively cheap tools up 'whilst stocks last'.
I personally managed to create a very high quality marketing promo vid using grok. After spending weeks of enduring a lot of pain. But I saved myself tens of thousands.
I took advantage of 30 Grok premium subscriptions that were given to me via a free trial. There's no doubt the cost of services I took advantage of is in the tens of thousands.
But what do I care? I get what I want and then I get out before the freebies disappear.
LOL at the cry babys down-voting. Get mad bruh, get mad.
Edit: yes, it is true that many people do integrate directly with OpenAI. That doesn't negate the fact that Openrouter users are largely not using OpenAI.
OpenRouter claims "5M+" users; OpenAI is claiming >900M weekly active users.
I don't really think it's possible to learn anything about the broader market by looking at the OpenRouter model rankings.
2. people often use openrouter for the sole purpose of using a unified chat completions API
3. OpenAI invented chat completions; if you use openrouter for chat completions often you can just switch your endpoint URL to point to the OAI endpoint to avoid the openrouter surcharge!
4. Hence anyone with large enough volume will very likely not use openrouter for OpenAI; there is an active incentive to take the easy route of changing the endpoint URL to OAI’s
Is it?
At what point are the models going to all be "good enough", with the differentiating factor being everything else, other than model ranking?
That day will come. Not everyone needs a Ferrari.
Edit: I misread the parent, I think they're saying the same thing.
They just passed $20B in revenue, you can't really expect a company with this much hype and traction to have a 1x multiple.. that's not to say a 35x multiple makes sense either.
All I see everywhere is "OpenAI generated $13 billion in revenue in 2025" and it just cost them $8 billion. $5B loss in 2025 and projections of losing $14B this year.
- Someone in the 16th century, probably
Is the same thing true for corporations? At some point the numbers are so wild the entire economy must help you succeed? I don't mean "too big to fail" exactly, more like "so big eventual success is guaranteed at all costs"
Good times.
On a tangent, I remember companies like Slack triggering the unicorn craze. They said that it was just better to aim for a billion than some number like 900M or 1.2B, because psychologically, it meant more to employees, investors, and customers.
OpenAI is in that place where nobody really cares for these mind games. It's not very reliable. But it is useful enough to pay for. It's cheap enough to be an impulse purchase where some guy decides to just subscribe to ChatGPT because they're working on an important slide or sketching a logo.
Incredible.
It can both be true at the same time: That AI is going to disrupt our world and that Open AI does not have a business model that supports its valuation.
- Amazon's $50B is only $15B, with the rest being "after certain conditions are met", whatever that means (probably an IPO, which isn't happening)
- The $30B each from softbank and NVIDIA is paid in installments
So this is more a $35B fundraise, with a _promise_ of more, maybe, if conditions are met. Not _bad_, but yet more gaslighting from Mr Altman. Anyone reporting this as a closed fundraising deal is being disingenuous at best.
Startup funding is often given in increments depending on milestones being met. Most startups just don’t announce that it’s conditional.
For large funding rounds, nobody gets a check for the full amount at once.
The funding would not be conditional on an IPO because that wouldn’t make any sense. The IPO is the liquidity event for the investors and there’s no reason for a startup to take private investment money that only enters the company after IPO.
You'll never get a billion dollar check from anyone.
I've even seen startups raise like 500k pre-seed with tranches in it, lmao!
> Today we’re announcing $110B in new investment at a $730B pre-money valuation. This includes $30B from SoftBank, $30B from NVIDIA, and $50B from Amazon.
We try to avoid having corporate press releases as the top-level link, though of course there are exceptions sometimes.
e.g. it talks about running NVIDIA's systems (?) on AWS
> NVIDIA has long been one of our most important partners, and their chips are the foundation of AI computing. We are grateful for their continued trust in us, and excited to run their systems in AWS. Their upcoming generations should be great.
This sounds a bit like going forward (some) OpenAI APIs will also run on platforms other than Azure (AWS)?
Anyone knows more?
OpenAI desperately needs to be available outside Azure. We are exclusively using Anthropic atm because it is what is available in AWS Bedrock and it works. These things are solidifying fast.
https://www.inc.com/leila-sheridan/nvidia-is-wavering-on-its...
What's the statue of limitations for securities fraud? The current administration won't last forever.
Nope. That 100B is in "promises" for over several years in total.
They have $15B out of the $50B from Amazon right now.
> The current administration won't last forever.
This is why OpenAI must IPO and when it does, I won't be surprised that a crash is followed up before 2030.
By then, they will "announce" "AGI" (Which actually means an IPO)
One of them wanted to have some fun, so said to the other - "I'll give you $100 if you take a big bite of that turd".
His colleague figured $100 was a good chunk of cash, so did the deed. Feeling thoroughly humiliated, he pocketed the $100 and they carried on.
Further down the street they came upon another turd.
The angry economist now wanted revenge so made the same proposal back to his colleague, who also agreed and took a bite of the turd, earning back his $100.
Later one of them said to the other "you know, I can't help but feel we both ate shit for no reason."
His collegue replied "what do you mean? We raised the national GDP by $200."
Money was just the means of the transaction.
Seeing this phenomenon, a silicon valley entrepreneur get an idea with the following sales pitch:
"Turd-bars that will make you the fittest version of yourself , answer all your deepest questions, and take you to the promised land (mars)."
Surprisingly, the turd-bars sell well, and GDP rockets up. Meanwhile VCs with fomo are funding its competitor: the shit-sandwich.
In practice, people don't tend to pay people to eat shit without gain. You are paying people to help you. Money gaslights everyone into helping each other, the most selfish people become the most selfless.
Of course, real capitalism is much more complex and much uglier than this fantasy. When certain people end up with long-term control of large piles of money, the whole thing gets distorted. They get to make lots of money on interest without doing anything, and making other people eat more shit for scraps. That's the "capital" part of capitalism.
But the toy world-model that this joke is making fun of, is actually the one core positive aspect of capitalism and brings all the prosperity we have: tricking people into helping each other.
$30B at $380B post-money for Anthropic announced two weeks ago
This does not increase my confidence in OpenAI's future
> Sam Altman says OpenAI shares Anthropic's red lines in Pentagon fight
90% chance it's all PR but who knows
It's clear that the stock market cannot be considered normal anymore, held up on hopes at prayers at best.
So much human potential given to such a tiny group of incompetent morons.
When the history books are being written, this era will make the robber baron/gilded age pale in comparison.
Or is it just to keep Nvidia from crashing?
To me it feels like one of those throw some play money into it and see what happens sort of situations. Expect it will return negative due to the raw financials and outlook, but small chance the brand carries enough weight with the public that it spikes.
I'd love to hear other thoughts though
But at such numbers it's nonsense.
I don't see any moat. LLMs are commodities.
Enterprise is on Gemini/NotebookLM and Copilot as it's a natural extension of the Google and Office suite they use.
Devs are in Anthropic camp, but they will jump as soon as they can save 90% of the money for 99% of the output.
If OpenAI fails, you just change the endpoint URL and API key in your software.
While nothing fancy has happened yet in the area of cheap energy, there is still enough power around the world to build AI data centers. The problem is this power exits in countries that the West has decided, many times for good reasons, they don't want to deal with their leaders.
I'm predicting that over 2027, either the US will become more aggressive in making war with these countries or company CEOs will start developing "reality-distorsion-fields" around them and decide having enough power for the next datacenter is more for the good of humanity. Before that Europe will decide that AI training on human faces(eg. of non-Europeans) is not really a problem and will allow US companies to train their models in EU countries.
Right now the US seems to not have a lot of inflation and the FED has every reason to print. So don't expect a burst, but this can change in a blink.
s/breathing/investment/g s/balloon/bubble/g s/air/money/g
Very interesting, I will follow it closely, mostly to see how you ROI 110 Billions in a couple of years.
- Anthropic owes to AWS for their enterprise growth. Yes, their own talent as well.
- AWS investing for a purpose - solving problems with multi-agent systems - "exclusive third-party cloud distribution provider for OpenAI Frontier, which enables organizations to build, deploy, and manage teams of AI agents.". I think the multi-agent landscape will be production-ready in 2026 for solving really complex problems. AWS saw something in Codex and OpenAI's models.
- On Circular investments - if you make $100B of your revenue from ecosystem of players who spend $50B on your infra... where else would you go?
I work for another cloud provider, not AWS.
there is no way openai - and players who are vested them can afford market to tank before it.
What is mechanism of getting returns?
BTW, real money or credits?
It is bad enough AI sucked up so much investment money, hitting companies that do make profitable things hard if AI bubble collapses would be bad...
