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Posted by zlatkov 9 hours ago

OpenAI raises $110B on $730B pre-money valuation(techcrunch.com)
https://openai.com/index/scaling-ai-for-everyone/

https://x.com/sama/status/2027386252555919386

https://xcancel.com/sama/status/2027386252555919386

257 points | 381 commentspage 2
redleader55 1 hour ago|
Everyone thinks this bubble will continue until AGI(bulls) or until someone calls them on it(bears). I think it will continue until someone finds a quick way to make cheap energy(bullish) or until we can't build more power plants to support AI growth(bearish).

While nothing fancy has happened yet in the area of cheap energy, there is still enough power around the world to build AI data centers. The problem is this power exits in countries that the West has decided, many times for good reasons, they don't want to deal with their leaders.

I'm predicting that over 2027, either the US will become more aggressive in making war with these countries or company CEOs will start developing "reality-distorsion-fields" around them and decide having enough power for the next datacenter is more for the good of humanity. Before that Europe will decide that AI training on human faces(eg. of non-Europeans) is not really a problem and will allow US companies to train their models in EU countries.

jryio 9 hours ago||
Without circular investments and valuations what would Open AI be worth? 100B? 300B? Entirely on revenue alone it seems like 20B. Current valuation appears to be two orders of magnitude off.
medi8r 2 minutes ago||
Well technically "Open""AI" is a SaaS company. It should be worth almost nothing due to AI being able to code AI (AI training is probably the simplest enterprise code).
thefounder 9 hours ago|||
Let the retailers decide this year at IPO! The heavy bags must be carried by someone
2OEH8eoCRo0 9 hours ago||
Is this really the con? Be part of the in-group and buy pre-IPO shares to dump them on joe-six-pack shortly afterwards?
JKCalhoun 9 hours ago|||
Always has been? (Well, with pyramid schemes anyway.)
thefounder 7 hours ago|||
At least they don’t SPAC their way into the public market but the answer to your question is yes!
vonneumannstan 8 hours ago||
>Without circular investments and valuations what would Open AI be worth? 100B? 300B? Entirely on revenue alone it seems like 20B. Current valuation appears to be two orders of magnitude off.

They just passed $20B in revenue, you can't really expect a company with this much hype and traction to have a 1x multiple.. that's not to say a 35x multiple makes sense either.

aurareturn 9 hours ago||
HN told me OpenAI was on the verge of collapse.
bandrami 3 hours ago||
I don't know that OpenAI specifically is the weak link but this definitely adds to the argument that the entire sector is a wash with the same three or four companies passing around the same $50B over and over. OpenAI is just the link that seems most likely to break first.
aurareturn 3 hours ago||
I've subscribed to a few AI tools for the last 3 years now. I'm someone who almost never subscribes to anything.

I'm sure that $50b has my money in there somewhere.

g-mork 2 hours ago||
Yep same, I'd sooner starve than cut my Anthropic sub
rvnx 1 hour ago||
If tomorrow Claude pricing changes and they start charging real API costs like 2000+ USD, and there is another service: "NotReallyClaude" that is a bit less good but 200 USD, then what would you do ?
wongarsu 8 hours ago|||
I've seen this sentiment (OpenAI collapse imminent) a lot on Youtube and Reddit, but it somehow evaded me on here

Bad comments about OpenAI's long-term viability I've seen plenty here. But that's not the same as the people predicting one of the hottest companies right now will somehow suddenly run out of cash all on its own

hogwasher 2 hours ago||
Its hottest service by far is completely free, the vast majority of users of its free service aren't converting to users of its paid services (and often stop using the free service too because they were just tourists seeing what all the fuss was about, or they were compelled to use the free service by their employer), and its data center plans are an impossible money pit.

The fact it's become a household name internationally (giving it the appearance of success) can't save it from spending dramatically more money than it makes. It's been coasting on investments, but it's not even close to being actually profitable.

Huge or well-known companies have collapsed before, even though - because people become so used to them existing - it never quite feels like it will actually happen until it does.

giancarlostoro 9 hours ago|||
If nobody invested in OpenAI how long could they keep the lights on? They're not profitable yet, and a lot of the wealth that Sam Altman seems to be making revolves around strange circular deals.

By comparison, Anthropic is projected to break even in 2028. Google's Gemini is already profitable.

limagnolia 5 hours ago|||
What source do you have the Gemini is profitable? Are you referring only to the chat app, or to Google'a AI Ventures division? Or including Google Cloud AI related revenue?
asadotzler 3 hours ago||
Not agreeing with the parent, but that hardly matters. Google has a real business, advertising, that brings in $400 billion a year and income around $150B. They can afford to throw away tens of billions every year while still remaining immensely profitable and quite solid as a business. OpenAI has no such income to spend so it's as the above comments reflect, entirely unsustainable while Google's spending on AI is a drop in the bucket for them.
bjt 3 hours ago||
That's not saying that Gemini is profitable though.
elephanlemon 8 hours ago||||
Interesting. I’m having anything on Gemini being profitable though, do you happen to have a source?
giancarlostoro 8 hours ago||
Here's one, basically AI is driving 15% of Google's profits at the end of 2025.

https://advergroup.com/gemini-hits-650-million-users/

I didn't really realize how big Gemini was until I saw that Qualia was using it, they apparently used 0.01% of Geminis total tokens (100 billion) in about 3 months, they're in production with the title and escrow industry, so that's a great deal of data going through Gemini, unlike some chat subscription this is all API driven, which I doubt Google is charging at a loss for.

https://www.qualia.com/qualia-clear/

Unlike OpenAI, Google has an actual business model, not just strange circular deals.

Edit: I misswrote "majority of" instead of 15% of Google's profits.

famouswaffles 3 hours ago||
> Here's one, basically AI is driving 15% of Google's profits at the end of 2025. https://advergroup.com/gemini-hits-650-million-users/

This does not at all tell us Gemini is profitable or driving 15% of its profits. The article does not mention profits even once. It then goes on to bizarrely compare Gemini's monthly active users to Open AI's weekly active ones.

hogwasher 2 hours ago||
Indeed, that article doesn't support a single part of that claim.

It kinda feels like an LLM-generated article that another LLM picked as a "citation", and then no human bothered to check if it actually said what the LLM said it did.

And, really, advergroup.com? Who sites an advertising agency as if it's a reliable resource?

https://advergroup.com/digital-marketing/

"AdverGroup Web Design and Creative Media Solutions is a full service advertising agency that delivers digital marketing services. We manage Google Ad Word campaigns and/or Meta Ad Campaigns for local clients in Chicago, Las Vegas and their surrounding suburbs."

So credible a resource on Gemini's performance/profitability... /sarc

But yeah it doesn't even actually say anything about profits, let alone attribute any specific percentage of profits to Gemini. It just vague marketing copy.

ai_fry_ur_brain 8 hours ago|||
[flagged]
giancarlostoro 7 hours ago|||
The title and escrow industry is using Gemini (via Qualia Clear) enough so that Qualia accounts for 100 billions of token usage in about 3 months. Just because you don't see who is using it, and how, doesn't mean that when the dust settles, the people actually using AI for real purposes wont keep using AI. I'm not sure which AI models big pharma is using, but there's already at least one new pharmaceutical drug in the secondary testing phase, showing strong results.

There will definitely be room for AI. OpenAI is just not really showing that they care about a particular business model. Probably a strong indicator that Sam Altman is probably the worst person to lead that company. Anthropic will be profitable before OpenAI ever will be.

Gemini is in the green in terms of spending / income ratio FYI. I'm not talking about stocks.

richwater 7 hours ago|||
> Especially when that military is the reincarnation of Nazi Germany , and a fourth Reich (The USA)

I can't believe people who think this actually exist.

milutinovici 6 hours ago||
Have you watched the news recently?
giancarlostoro 5 hours ago|||
Maybe you should get your news from a different source. Personally I prefer raw sources. I watch every official press briefing to hear from the horses mouth. You come to find that regardless of who is president news orgs put their own spin on it and you miss things they dont cover. Its all streamed on official government accounts.
ai_fry_ur_brain 4 hours ago||
Lmao, press briefings from the office of the führer is such a solid source to base your reality off of.

By the way if Kamala, Biden or Newsom was in office id also call them führer.

We live in a technocratic authoritarian state, the worlds largest prison population, the most police executions, we are actively sponsoring multiple genocides, we've killed over one million civilions in the middle east in two decades.

our politicians on both sides will go out of their way to protect pedophilic members of the ruling class...

But you want to tell us we're exaggerating or interpreting a reality that doesnt exist, i think youre the one who's been convinced through the regimes doublespeak that everythings alright.

Please revaluate. The US government is literally the 4th reich and actively committing halocausts on multiple fronts.

Mountain_Skies 6 hours ago|||
Do you know any history? You dishonor the people who died from horrible atrocities in WWII to make some glib performative political posturing. It's shameful behavior. Do better. Be better.
rubyn00bie 3 hours ago|||
WWII didn’t start overnight. The Sturmabteilung (SA), also known as “The Brownshirts,” have a strong similarity to what we’re seeing with ICE and CBP. The SA were Hitler’s enforcers before the SS, during the 1920s and early 1930s. They were eventually usurped by the SS during “Night of the Long Knives” where SA leadership were executed by the SS. Largely because Hitler had felt threatened by the power Ernst Röhm had amassed (among other reasons). And the SA, like ICE, was made up largely of untrained sycophants and thugs who enjoy violence. They committed violence, harassed citizens, and had no consequences for doing so. They were also instrumental in laying the foundation for the genocide and atrocities committed by the Nazi party.

It’s not a dishonor to their memories, or the atrocities committed, to call that out. It is not a dishonor to say there are stark and real similarities between the way the US is operating and treating civilians.

I personally find the opposite, IMHO it is dishonors their memories to refuse to acknowledge the similarities.

I’ve posted a comment similar to this one here before, and like how I ended it. I strongly encourage you to read about the history of Nazi Germany and how it came to happen. It wasn’t just a zero to death camps, it was 15 years in the making. That history is deeply shocking, as it is depressing, because the parallels and timelines are too similar for anything besides outright discomfort, sadness, and fear between it and the US. But without knowing it, we are ever more likely to repeat it.

One final thing to note: the US has a history of extreme violence, slave patrols and the treatment of non-whites of the 19th century were an inspiration for Hitler.

nerdix 8 hours ago|||
I don't think they are going to collapse. But it was only a couple of years ago that many people thought OpenAI had a big (some thought insurmountable) lead in a race to dominate a winner take all markee. Some people did correctly state that OpenAI had no moat in those days so credit there where it's due.

Now it's looking like a competitive blood bath where ever increasing levels of investment is needed just to main market position. Their frontier models are SOTA for 4 weeks before a competitor comes and takes the crown. They are standing on much shakier ground than they were 2 years ago.

x0x0 5 hours ago||
A competitive bloodbath plus OpenAI has investment valuing it like it will achieve agi rather than (merely) being a huge advancement in computing, but not a fundamental rewriting of how all work is done.
notatoad 7 hours ago|||
the $30b investment from nvidia is instead of a previously-announced $100b investment from nvidia, so it's not like this is an entirely good-news story for OpenAI.
sethops1 9 hours ago|||
How much revenue have they generated? How about profit?

If investors keep throwing obscene money at OpenAI, sure, they can stay afloat forever. Can't argue with that. But if we're talking about a sustainable business, I still don't see it.

alecco 8 hours ago|||
Nobody saw coming the huge demand for coding agents. Not even OpenAI or Anthropic themselves. Those were side projects just a year ago and now dominate token demand. And they keep rising.
whizzter 8 hours ago|||
Oh I do think they did see it, considering how good they are they've probably been a tuning focus for a while.

The signal the agent usage is sending though is that Anthropic is way ahead since all we hear about is Claude these days despite OpenAI spending so much more money, Antrophic is also out trialling vending machines,etc.

ChatGPT apart from generating text was a bit of a query/research tool but now that Google has their AI search augmentation shit somewhat together I'm not feeling much need for ChatGPT as a research partner.

So now the big question is, with coding and search niches curtailed, where will OpenAI be able to generate profits from to justify their insane spending?

phist_mcgee 2 hours ago|||
Does anyone see the demand for coding agents that aren't subsided 90% by the AI company?
shimman 1 hour ago||
Or demand that isn't a condition of keeping your job?
captainbland 7 hours ago|||
For Nvidia's part they're just giving money to one of their largest customers. They make money back even if they "lose" the bet
rvnx 2 hours ago|||
It's like government XX giving "help" or "grants" to countries at war so they can purchase weapons from XX.
Vespasian 7 hours ago|||
Selling Shovels is quite lucrative whether there is an actual mining business or just a gold rush.

At one point Jensen Huang will be out (retired or forced by staginating sales) and can definitely look back on a very successful career. That much is certain.

glimshe 8 hours ago|||
You'll always find someone claiming X or Y are close to collapse at any given time. As even a broken clock is right twice a day, eventually one of these predictions will randomly be proven correct. That person will then be elevated to a genius forecaster and rake in cash for a decade or two.
muddi900 7 hours ago|||
Actually it is the other way around; every upstart claims that their invention is the mostest revolutionariest thing ever. 99.9% of them are not. The nay sayers are right most of the time.

Recent high-profile examples include Segway, NFT, Crypto as a whole, pre-tranformers voice assistants and various "Design Thinking" projects like those Amazon prime buttons.

131hn 3 hours ago||
My grandma (and my parents, by the way) have never heard of Segway, NFTs, or crypto, but they use ChatGPT all the time.
hogwasher 2 hours ago|||
And your grandma and parents pay for it, do they?

Free ChatGPT chat has made the company a household name, and helped it to persuade investors, but every single one of those free users costs the company money. Most of those free users have proved unwilling to convert to paid users, and adding ads to the free service promises to send it into the same enshittification death spiral so many other companies have fallen into.

Also, how on Earth would your grandma and parents not have heard of crypto? Crypto is frequently front page news, even in print newspapers. There have been crypto superbowl ads. Are they living under a rock?

rvnx 2 hours ago|||
They would use Claude or Grok for day-to-day if they had heard of it.
109847 7 hours ago|||
Thiel said around last autumn that AI is a bubble and exited Nvidia. Nvidia is now falling despite good earnings.

If OpenAI keeps getting circular financing, of course they will not collapse yet.

hzwanip 3 hours ago||
> Nvidia is now falling despite good earnings.

I think it's still too early to tell. By what measure did you even determine that Nvidia is falling?

outside1234 9 hours ago|||
Well, $110B a year doesn't last long if you are losing $40B a quarter.

Also Softbank invested, which is never a great signal.

muddi900 7 hours ago||
That's mean.

They also invested in Uber

emptyfile 8 hours ago||
[dead]
randusername 8 hours ago||
There's this saying that if you owe the bank a million dollars, you have a big problem, but if you owe the bank 100 million dollars, the bank has a big problem.

Is the same thing true for corporations? At some point the numbers are so wild the entire economy must help you succeed? I don't mean "too big to fail" exactly, more like "so big eventual success is guaranteed at all costs"

advael 8 hours ago||
Those are the same thing. The whole point of saying "too big to fail" is to evoke the moment in the housing crash where governments largely threw most of their citizens under the bus by bailing out banks rather than homeowners for the banks' wildly irresponsible decisions. "Too big to fail" means the government steps in and bails you out, and that phrase became popular because for many it was the final nail in the coffin for their trust in government
Dumblydorr 3 hours ago||
Would the current administration bail out OpenAI?
hn_acc1 3 hours ago||
They would give OpenAI anything they want if they proclaim the current guy the bestest and biggliest president of all time, ever. (edit: I meant, if chatgpt were to consistently claim that the current guy is the greatest president ever)
zvqcMMV6Zcr 8 hours ago|||
I wonder if there is "too big for IPO". Saudi Aramco in 2019 sold shares worth $25.6 billion in IPO. Even offering just 5% of OpenAI to public would shatter that record. Well, unless public isn't actually interested in investing such huge amounts.
paxys 7 hours ago||
And if you owe the bank a hundred billon dollars the entire economy has a big problem.
newyankee 9 hours ago||
What would really help is knowing the details of such funding. The hierarchy of who gets paid first in event of going under is very illuminating and while I am not a banker I always wonder if there are caveats too complicated even for the large investors to understand
holografix 3 hours ago||
Is OpenAI giving employees RSUs? What good are those under these astronomical valuations?
azinman2 2 hours ago||
Presumably it’s all relative. Apple gives me RSUs with a much higher valuation (although at least it’s on the public market already).
whimsicalism 2 hours ago||
they have PPUs
xvector 2 hours ago||
No it's RSU now. But idk if anyone would want to join OpenAI at these levels. Are they really a $1T business?

At least Anthropic has some runway in terms of valuation and isn't bleeding all over some free tier.

mikkupikku 9 hours ago||
SoftBank? The music must be stopping soon, hold onto your butts.
clouedoc 9 hours ago||
What's the meme with SoftBank? Just that they're super bad at investments?
reducesuffering 2 hours ago||
Ya. The WeWork debacle and investing $300 million into Wag, an imploded Uber for dog walking, surely wasn't helping.
whynotminot 9 hours ago||
What? SoftBank has been investing in them repeatedly for years now.
himata4113 3 hours ago||
Less than a decade ago companies reaching 1 trillion was still every much "out there". Now we have an IPO at almost 1 trillion.

It's clear that the stock market cannot be considered normal anymore, held up on hopes at prayers at best.

aurareturn 3 hours ago||
Sure it can. The value of the dollar coincides with stock market valuations.
himata4113 35 minutes ago|||
"UBS downgraded the US stock market" happened today for a reason and you're implying that the US dollar lost 1000% of it's value since less than a decade ago? 1/10th of what it is worth today?
danny_codes 2 hours ago|||
Exactly. A devalued dollar means higher number without adjustment
epolanski 3 hours ago||
Well, it's still VC market right now, and all the investors have vetted interest into the music not stopping.
CrzyLngPwd 2 hours ago||
Puff puff until it pops!
tosh 9 hours ago|
> We continue to have a great relationship with Microsoft. Our stateless API will remain exclusive to Azure, and we will build out much more capacity with them.

This sounds a bit like going forward (some) OpenAI APIs will also run on platforms other than Azure (AWS)?

Anyone knows more?

rob74 9 hours ago||
I guess Amazon would have a hard time justifying their investment if OpenAI remained Azure-exclusive...

https://openai.com/index/amazon-partnership/

zmmmmm 2 hours ago|||
Curious what is meant by "stateless".

OpenAI desperately needs to be available outside Azure. We are exclusively using Anthropic atm because it is what is available in AWS Bedrock and it works. These things are solidifying fast.

sidewndr46 9 hours ago||
Unless I'm mistaken wasn't someone at Microsoft suggesting they would just develop their own models soon?
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