6 ms·
I think they have realized that even if OpenAI is first, it won't last long so really its just compute at scale, which is something they already do themselves.
by strangescript 2y ago
I think they have realized that even if OpenAI is first, it won't last long so really its just compute at scale, which is something they already do themselves.
- echelon 2y agoThere is no moat in models (OpenAI). There is a moat in infra (hyperscalers, Azure, CoreWeave). There is a moat in compute platform (Nvidia, Cuda). Maybe there's a moat with good execution and product, but it isn't showing yet. We haven't seen real break out successes. (I don't think you can call ChatGPT a product. It has zero switching cost.)
- drumhead 2y agoIs anyone other than Nvdia making money from this particular gold rush?
- xnx 2y agoData center construction and power companies.
- scarface_74 2y agoConsulting companies
- _giorgio_ 2y agoYou need to offer AI just to stay in the business, whatever is your business. Just look at how much money Google lost in that failed AI demo from 2003. The stock would be worth 50% less if the invested nothing in AI. Even the founders are back because of it.
- barumrho 2y agoGiven xAI built its 100k gpu datacenter in a very short time, is the infra really a moat?
- freedomben 2y agoI'd say it is because the $ it takes to build out even a small gpu data center is still way, way more than most small cos can do. It's not an impenetrable moat, but it is pretty insulating against startups. Still have a threat from big tech, though I think that will always be true for almost everything
- eagerpace 2y agoI don't think the hardware is that easy to source just yet. Musk pulled some strings and redirected existing inventory and orders from his other companies, namely Tesla, to accelerate delivery.
- PKop 2y agoxAI does not have infra to sell the service and integrations of it to enterprises and such. It's an open question if "models" alone and simple consumer products that use them are profitable. So, probably hyperscale cloud platform infra is a moat yes. Microsoft has Semantic Kernel, Microsoft.Extensions.AI, various RAG and search services, and an entire ecosystem and platform around using LLM's to build with that xAI does not have. Just having a chat app as interface to one's model is part of the discussion here about models as commodities. xAI does have X/Twitter data which is a constantly updating source of information so in that aspect they themselves do have something unique.
- riku_iki 2y agothey likely utilized expertise/supply chain from Tesla
- YetAnotherNick 2y agoWhat moat does Nvidia have. AMD could have ROCm perfected if they really want to. Also most of pytorch, specially those relevant to transformers runs perfectly on Apple Silicon and TPUs and probably other hardware as well. If anyone has moat related to Gen AI, I would say it is the data(Google, Meta).
- klelatti 2y ago> AMD could have ROCm perfected if they really want to. It's not an act of will or CEO dictat. It's about hiring and incentivising the right people, putting the right structures in place etc all in the face of competing demands. Nvidia have a huge head start and by the time AMD have 'caught up' Nvidia with it's greater resources will have moved further ahead.
- YetAnotherNick 2y agoIf head start is a moat, why wouldn't you count OpenAI's headstart as moat?
- echelon 2y agoAnyone can make an LLM. There are hundreds of choices in the market today. Many of them are even open source. OpenAI brings absolutely nothing unique to the table.
- klelatti 2y agoBecause we already see firms competing effectively with OpenAI. There is as yet no indication that AMD can match Nvidia's execution for the very good reason that doing so is extremely difficult. The head start is just the icing on the cake.
- YetAnotherNick 2y agoI see pre AGI AI to be superset of search and its hard to argue that google isn't ahead technically for decades and what they are doing is extremely difficult.
- toasterlovin 2y ago> I don't think you can call ChatGPT a product. It has zero switching cost. In consumer markets the moat is habits. The switching cost for Google Search is zero. The switching cost for Coke is zero. The switching cost for Crest toothpaste is zero. Yet nobody switches.
- charlieyu1 2y agoI’m not that old and I remember people switching away from Geocities, ICQ, Yahoo, many social media sites etc
- crazygringo 2y ago(Never mind I was wrong -- deleting my comment to not spread misinformation. The definition of moat is wider than I was familiar with, thanks for the correction!)
- herval 2y agoA strong brand is most definitely a moat. So is habit. Any source you can find that defines economic moats will list those. https://corporatefinanceinstitute.com/resources/management/economic-moat/ https://corporatefinanceinstitute.com/resources/management/e...
- toasterlovin 2y agoMinor nit, but brand and habit are kinda the same thing. The habit is that you buy a particular brand.
- yawnxyz 2y agoI used to work for Coke — they've been making a lot of money for a very long time. The size of a moat befits the size of a castle it protects. Coke absolutely has a moat, but it's not big enough to defend Coke as a trillion dollar company. The question isn't whether OpenAI has a moat or not, it's if its current moat is big enough to protect a trillion-dollar company.
- 0xDEAFBEAD 2y ago>There is a moat in compute platform (Nvidia, Cuda). Ironically if AI companies are actually able to deliver in terms of SWE agents, Nvidia's moat could start to disappear. I believe Nvidia's moat is basically in the form of software which can be automatically verified. I sold my Nvidia stock when I realized this. The bull case for Nvidia is ultimately a bear case.
- satellite2 2y agoThere is a moat in the brand they're building. Look at Coca Cola, Google, both have plausible competitors, zero switching cost but they maintain their moat without effort. Being first is still a massive advantage. At this point they should only strive to avoid big mistake and they're set.
- hnfong 2y agoCoca Cola only has a moat because soft drinks and junk food are mostly a done product without much space for innovation left. AI is still not there yet, and if any model becomes significantly better than ChatGPT people will flock over to use it despite the branding. It's only when nobody can make better models, then people will just stick to the known brands.