9 ms·

OpenAI Needs $400B In The Next 12 Months

alberth 1y ago
Why doesn't Anthropic needs similar levels of capital (or do they)?
- chilipepperhott 1y ago
  I believe they do, but the author seems to focus on OpenAI since they're more of a household name.
- kachapopopow 1y ago
  because this is for building "AGI", this has little to nothing to do with their current offerings. This also assumes that intelligence continues to scale with compute which is not a given.
  - rediguanayum 1y ago
    I don't think it's AGI, but rather video production. OpenAI wants to build the next video social network / ads / tv / movie production system. The moat is the massive compute required.
    - gkoberger 1y ago
      I'm sure they're not against building this, and they definitely have competing priorities. But my personal belief is Sam Altman has a singular goal: AGI. Everything else keeps the lights on.
      - sho_hn 1y ago
        Is there any indication they are actually working on this and Altman is any good at pursuing this goal? I'm seriously asking, please inform the uninformed. My impression is that I hear a lot more about basic research from the competing high-profile labs, while OpenAI feels focused on their established stable of products. They also had high-profile researchers leave. Does OpenAI still have a culture looking for the next breakthroughs? How does their brain trust rank?
      - Analemma_ 1y ago
        Huh, my read is exactly the opposite: Altman wants to be a trillionaire and isn't picky about how he gets there. If AGI accomplishes it, great, but if that's not possible, "just" making a megacorporation which permanently breaks the negotiating power of labor is fine too. Amodei is the one who I think actually wants to build AGI.
        thelastgallon 1y ago
        I think your read is right. There are a few people who want to be trillionaires and aren't too picky about to get there: Elon Musk, Sam Altman, Trump, Larry Ellison, Peter Thiel, Putin. Maybe Bezos and Zuckerberg. Of course, there wouldn't be many people who don't want to be trillionaires. Rare exceptions[1]. But these are the people with means to get there. [1]: No means NO - Do you want a one million dollar answer NO!: https://www.youtube.com/watch?v=GtWC4X628Ek https://www.youtube.com/watch?v=GtWC4X628Ek
        wkat4242 1y ago
        I definitely would not want to be a trillionaire yeah. Having a million or so would be nice but more and you get roped into all kinds of power play and you have to get security goons with you all the time to avoid getting kidnapped. I'd much rather be anonymous.
        cindyllm 1y ago
        [dead]
        kachapopopow 1y ago
        to be fair I couldn't recognize 99% of billionaires and crazy people are easy to deal with if you know what I mean.
        codyb 1y ago
        To be fair, you're probably not an organized crime syndicate looking for targets either.
      - timeon 1y ago
        Isn't that just PR?
  - sillysaurusx 1y ago
    > This also assumes that intelligence continues to scale with compute which is not a given. Isn’t it? Evidence seems to suggest that the more compute you throw at a problem, the smarter the system behaves. Sure, it’s not a given, but it seems plausible.
    - deadbabe 1y ago
      In a brute force poorly architected way, perhaps. But human brains are small and require far less energy to be very generally intelligent. So clearly, there must be a better way to achieve this AGI shit. Preferably something that runs locally in the palm of your hand.
    - kachapopopow 1y ago
      it's not mathematically proven therefore it is not a given.
      - JumpCrisscross 1y ago
        > it's not mathematically proven therefore it is not a given Given doesn't mean proven, it means accepted as true. We can give variables fixed values, for example. Entire classes of proofs, moreover, prove something cannot be true because if you assume it is you get a paradox or nonsense.
        kachapopopow 1y ago
        we had this problem in mathematics that's why all ambiguity was eliminated and why adding two numbers together is like 30 pages of proofs.
    - nutjob2 1y ago
      > a problem That word is carrying a heavy load. There's no evidence that scaling works indefinitely on this particular sort of problem. In fact there is no evidence that scaling solves computing problems generally. In more narrow fields more compute gets better results but that niche is not so large.
    - 1y ago
  - JumpCrisscross 1y ago
    > this is for building "AGI" I’m increasingly convinced this is AI’s public relations strategy. When it comes to talking to customers and investors, AGI doesn’t come up. At fireside chats, AGI doesn’t come up. Then these guys go on CNBC or whatnot and it’s only about AGI.
- evandrofisico 1y ago
  Anthropic is more secretive about their costs, Ed Zitron is right now investigating their costs, specifically on GCP
  - senordevnyc 1y ago
    Sure he is
- cma 1y ago
  Anthropic seems more comfortable using TPUs for overflow capacity. The recent Claude degradation was largely due to a bug from implementation differences with TPUs and from their writeup we got some idea of their mix between Nvidia and TPU for inference. I'm not sure if OpenAI has been willing to deploy weights to Google infrastructure.
- wmf 1y ago
  Anthropic will need it if their growth continues.
pdmccormick 1y ago
That seems like a lot of money. How quickly can sustainable capacity be built up in terms of building power plants, data center construction, silicon design and fabrication, etc.? Are these industries about to experience stratospheric growth, followed by a massive and painful adjustment, or does this represent a printing press or industrial revolution like inflection point? Would anyone like to found a startup doing high-security embedded systems infrastructure? Peter at my username dot com if you’d like to connect.
- bcrl 1y ago
  Almost nothing in tech is sustainable outside of gold recycling.
moralestapia 1y ago
1) What
- ares623 1y ago
  4
sillysaurusx 1y ago
> Even if you think that OpenAI’s growth is impressive — it went from 700 million to 800 million weekly active users in the last two months — that is not the kind of growth that says “build capacity assuming that literally every single human being on Earth uses this all the time.” I’d argue the other way around: 100M growth in two months suggests literally every single human being on Earth would benefit from using this all the time, and it’s just a matter of enabling them to. Beware the sigmoidal curve, though. Growth is exponential till it’s not.
- deleted 1y ago
  [deleted]
- baobabKoodaa 1y ago
  OpenAI's bottleneck first shifted from GPUs to energy. Next it will shift from energy to meatbags. I'm sure they will figure out some way to produce more of us to keep the growthrate going.
  - scarmig 1y ago
    Eventually, we can replace human consumers with LLM agent consumers, and things can scale indefinitely.
    - sellmesoap 1y ago
      You too can qualify as an "ugly bag of mostly water" just give us your CC number!
      - sysguest 1y ago
        hmm I bag to differ
  - stock_toaster 1y ago
    Not just meatbags, but meatbags with _money_.
- 1y ago
overflyer 1y ago
Elon can give them 400B and he would still have a net worth of 100B and from that he can again get back to his former net worth in a few years. The world is not fair.
- misiti3780 1y ago
  what does this mean?
- thevillagechief 1y ago
  That's not how that works. Same reason we don't tax unrealized gains (unless you are Norway).
  - marijnz0r 1y ago
    And The Netherlands
- KeplerBoy 1y ago
  You do realize that a large part of his wealth is tied to the valuation of Tesla (and SpaceX and many other investments). Selling 100B worth of stocks for anything close to 100B is not possible. That volume would mini-crash the entire exchange.
  - JumpCrisscross 1y ago
    > Selling 100B worth of stocks for anything close to 100B is not possible. That volume would mini-crash the entire exchange Nasdaq trades about half a trillion dollars a day [1]. Even if Musk were an idiot and dumped $100bn in one day, it would crash Tesla's stock price, not the Nasdaq. If Musk wanted to give OpenAI $100bn, the best way to do it would be to (a) borrow against his shares or (b) given OpenAI his (non-voting) shares. [1] https://www.nasdaqtrader.com/Trader.aspx?id=DailyMarketSummary https://www.nasdaqtrader.com/Trader.aspx?id=DailyMarketSumma...
ljsprague 1y ago
[flagged]
bytesandbits 1y ago
[flagged]
bdangubic 1y ago
now do TSLA
basisword 1y ago
Vast sums of money that are being invested in it (obviously in the hope of AGI) but I'm not sure the world would notice if OpenAI/current LLM products just disappeared tomorrow.
- sho_hn 1y ago
  Women on dating apps would. Have a search for "chatfishing".
  - basisword 1y ago
    I think the fix for that one is easy enough fortunately. Meet quickly. They can't 'chatfish' you in person.
    - nutjob2 1y ago
      > Meet quickly. Always a good dating strategy.
- VBprogrammer 1y ago
  I don't think that AGI is necessary for LLMs to be revolutionary. I personally use various AI products more than I use Google search these days. Google became the biggest company in the world based on selling advertising on its search engine.
nextworddev 1y ago
Why is this guy so angry? That aside, his math is wrong
- dwedge 1y ago
  He's not angry it's an angsty way of writing, a lot of used to write like that as teenagers. There was a time around 5 years ago where ever best selling book raced to have "fuck" or "vagina" in the title.
- shocks 1y ago
  Us British have a unique relationship with profanity as a way to communicate. edit: Aussies and kiwis too!
- iamacyborg 1y ago
  Yeah his writing is emotionally exhausting
- deanputney 1y ago
  If you're emotionally on edge when reading it, it's easier to miss that his math is wrong and he's no expert. Writing that way benefits him.
  - nextworddev 1y ago
    dang.. that's an angle I haven't thought of
- theideaofcoffee 1y ago
  Why are you -not- angry at all of this insanity? I feel the same way as him, hype has blown the bubble bigger and bigger, and it's just a matter of time until it poops out and causes huge amounts of pain.
  - nextworddev 1y ago
    Yes it’s like watching the titanic. But the question is if the Titanic is 30% of way there or just before hitting an iceberg.
mrkeen 1y ago
I'm not sure if I missed this in the article, but what's the cost of failure? Why can't OpenAI keep projecting/promising massive data centre growth year after year, fail to deliver, and keep making Number Go Up?
- IT4MD 1y ago
  >Why can't OpenAI keep projecting/promising massive data centre growth year after year, fail to deliver, and keep making Number Go Up? Because eventually, Nvidia will run out of money, so the incestuous loop between Nvidia funding AI entities, who then use those funds to buy Nvidia chips, artificially propping up Nvidia's stock price, will eventually end and poof. Competing forces are the market's insatiable need for growth every quarter, and other countries also chasing AIs and will not slow down if other countries, like the US, do slow down.
- IsTom 1y ago
  If they keep missing the hype will burn out eventually
rich_sasha 1y ago
It's going to perhaps sound nuts, but I'm beginning to wonder if America is actually a giant Ponzi scheme. I've been thinking about American exceptionalism - they way it is head and shoulders above Europe and the developed world in terms of GDP growth, market returns, start up successes etc. and what might be the root of this success. And I'm starting to think that, apart from various mild genuine effects, it is also a sequence of circular self-fulfilling prophecies. Let's say you're a sophisticated startup and you want some funding. Where do you go? US of course - it has the easiest access to capital. It does so presumably because US venture funds have an easier time raising funds. And that's presumably because of their track record of making money for investors - real, or at least perceived. They invest in these startups and they exit at a profit, because US companies have better valuations than elsewhere, so at IPO investors lap up the shares and the VCs make money. It's easy to find buyers for US stocks because they're always going up. In turn, they're going up because, well, there's lots of investors. It's much easier to raise billions for data centres and fairy dust because investors are in awe of what can be done with the money and anyway line always go up. Stocks like TSLA have valuations you couldn't justify elsewhere. Maybe because they will build robot AI rocket taxis, or maybe because the collective American Allure means valuations are just high. The beauty of this arrangement is that the elements are entangled in a complex web of financial interdependency. If you think about these things in isolation, you wouldn't conclude there's anything unusual. US VC funding is so good because there's a lot of capital - lucky them. This thought of circularity only struck me when trying to think of the root cause - the nuclear set of elements that drive it. And I concluded any reason I can think of is eventually recursive. I'm not saying America is just dumb luck kept together by spittle, of course there are structural advantages the US has. I'm just not sure it really is that much better an economic machine than other similar countries. One difference to a Ponzi scheme is that you might actually hit a stable level and stay there rather than crash and burn. So it's more like a collective investment into a lottery. OpenAI might burn $400bn and achieve singularity, then proceed to own the rest of the world. But I can't shake the feeling that a lot of recent US growth is a bit of smoke and mirrors. After adjusting for tech, US indices didn't outperform European ones post GFC, IIRC. Much of its growth this year is AI, financed presumably by half the world and maintained by sky-high valuations. And no one says "check" because, well, it's the US and the line always go up.
ctoth 1y ago
His "$400B in next 12 months" claim treats OpenAI as paying construction costs upfront. But OpenAI is leasing capacity as operating expense - Oracle finances and builds the data centers [1]. This is like saying a tenant needs $5M cash because that's what the building cost to construct. The Oracle deal structure: OpenAI pays ~$30B/year in rental fees starting fiscal 2027/2028 [2], ramping up over 5 years as capacity comes online. Not "$400B in 12 months." The deals are structured as staged vendor financing: - NVIDIA "invests" $10B per gigawatt milestone, gets paid back through chip purchases [3] - AMD gives OpenAI warrants for 160M shares (~10% equity) that vest as chips deploy [4] - As one analyst noted: "Nvidia invests $100 billion in OpenAI, which then OpenAI turns back and gives it back to Nvidia" [3] This is circular vendor financing where suppliers extend credit betting on OpenAI's growth. It's unusual and potentially fragile, but it's not "OpenAI needs $400B cash they don't have." Zitron asks: "Does OpenAI have $400B in cash?" The actual question: "Can OpenAI grow revenue from $13B to $60B+ to cover lease payments by 2028-2029?" The first question is nonsensical given deal structure. The second is the actual bet everyone's making. His core thesis - "OpenAI literally cannot afford these deals therefore fraud" - fails because he fundamentally misunderstands how the deals work. The real questions are about execution timelines and revenue growth projections, not about OpenAI needing hundreds of billions in cash right now. There's probably a good critical piece to write about whether these vendor financing bets will pay off, but this isn't it. [1] https://www.cnbc.com/2025/09/23/openai-first-data-center-in-500-billion-stargate-project-up-in-texas.html https://www.cnbc.com/2025/09/23/openai-first-data-center-in-... [2] https://w.media/openai-to-rent-4-5-gw-of-data-center-power-from-oracle-in-us-30-billion-deal/ https://w.media/openai-to-rent-4-5-gw-of-data-center-power-f... [3] https://www.cnbc.com/2025/09/22/nvidia-openai-data-center.html https://www.cnbc.com/2025/09/22/nvidia-openai-data-center.ht... [4] https://techcrunch.com/2025/10/06/amd-to-supply-6gw-of-compute-capacity-to-openai-in-chip-deal-worth-tens-of-billions/ https://techcrunch.com/2025/10/06/amd-to-supply-6gw-of-compu...
- thelastgallon 1y ago
  > His "$400B in next 12 months" claim treats OpenAI as paying construction costs upfront. But OpenAI is leasing capacity as operating expense - Oracle finances and builds the data centers [1]. It is bagholders all the way down[1]! The final bagholder will be the taxpayer/pension holder. [1]https://en.wikipedia.org/wiki/Turtles_all_the_way_down https://en.wikipedia.org/wiki/Turtles_all_the_way_down
ibejoeb 1y ago
Let's assume that estimate is good. For some perspective an context, the last finalized DOD budget (2023) was $815B, and, plus supplementals, turned into about $852 billion. AGI is absolutely a national security concern. Despite it being an enormous number, it'll happen. It may not be earmarked for OpenAI, but the US is going to ensure that the energy capability is there.
- rchaud 1y ago
  > AGI is absolutely a national security concern. This may well be the PR pivot that's to come once it becomes clear that taxpayer funding is needed to plug any financing shortfalls for the industry - it's "too big to let fail". It won't all go to OpenAI, but be distributed across a consortium of other politically connected corps: Oracle, Nvidia/Intel, Microsoft, Meta and whoever else.
  - adventured 1y ago
    The top six US tech companies are generating ~$620 billion per year in operating income (likely to be closer to $700 billion in another 12-18 months). They can afford to spend $2 trillion on this over the next decade without missing a beat. Their profit over that timeline will plausibly be $8 to $10 trillion (and of course something dramatic could change that). That's just six companies.
    - rchaud 1y ago
      Fears of an AI bubble originate from the use of external financing needed to pay for infrastructure investments, which may or may not pay off for the lenders. These 6 companies are using only a small portion of their own cash reserves to invest, and using private credit for the rest. Meta is getting a $30 billion loan from PIMCO and Blue Owl for a datacenter [0], which they could easily pay for out of their own pocket. There are also many datacenters that are being funded through asset-backed securities or commercial mortgage-backed securities [0], the market for which can quickly collapse if expected income doesn't materialize, leading to mortgage defaults, as in 2008. [0] https://www.reuters.com/legal/transactional/meta-set-clinch-nearly-30-billion-financing-deal-louisiana-data-center-site-2025-10-16/ https://www.reuters.com/legal/transactional/meta-set-clinch-... [1] https://www.etftrends.com/etf-strategist-channel/securitizing-ai-role-data-center-abs-cmbs/ https://www.etftrends.com/etf-strategist-channel/securitizin...
ChrisArchitect 1y ago
Related: They Don't Have the Money: OpenAI Edition https://news.ycombinator.com/item?id=45545236 https://news.ycombinator.com/item?id=45545236
Havoc 1y ago
They sure are writing cheques fast. Presumable Sam has a plan
r33b33 1y ago
Sorry, best I can do is $20
Group_B 1y ago
At this point we all know this is just a massive bubble. I'm done paying attention to it really. I'm prepared for all my investments to go down in the next 1-5 years. If you're nearing retirement now is the time to cash out. Yes, investments could go up in a value a lot until the correction, but I don't really think that is worth the risk.
- saulpw 1y ago
  So cash out, and then what? Buy gold? Hang onto your cash while inflation takes off and dilutes it to nothing?
  - deleted 1y ago
    [deleted]
quux 1y ago
Can someone explain why we measure these datacenters in Gigawatts rather than something that actually measures compute like flops or whatever the AI equivalent of flops is? To put it another way, I don't know anything but I could probably make a '1 GW' datacenter with a single 6502 and a giant bank of resistors.
- refulgentis 1y ago
  Because, to us tech nerds, GPUs are the core thing. With a PM hat on, it's the datacenter in toto. Put another way: how can we measure in flops? By the time all this is built out we're on the next gen of cards.
- szundi 1y ago
  [dead]
- omgJustTest 1y ago
  Measurement in unit of power because this is the ultimate use-cost, assuming scaling in compute efficiencies, capex costs, etc.
- dcre 1y ago
  My understanding is that there is no universal measure of compute power that applies across different hardware and workloads. You can interpret the power number to mean something close to the maximum amount of compute you can get for that power at a given time (or at least at time of install). It also works across geographies, cooling methods, etc. It covers all that.
- morkalork 1y ago
  Assuming a datacenter is more or less filled with $current_year chips, the number of of flops is kind of a meaninglessly large number. It's big. How big? Big enough it needs a nuclear power plant to run.
  - sedawkgrep 1y ago
    Not to mention it would assume that number wouldn't change...but of course it depends entirely on what type of compute is there as well as the fact that every few years truckloads of hardware gets replaced and the compute goes up.
locallost 1y ago
My search habits have evolved quite fast - when I search for something now I first ask for quick results from Chatgpt, which gives me pointers I then drill down on. Google's revenue for 2024 was 350 billion. I know it's not all Google ads, but s lot of it is. When you follow a link from Chatgpt, it always has a utm_source=Chatgpt in it, so companies are quickly learning how important getting linked there is. I'm not saying there's no bubble, and I personally anticipate a lot of turmoil in the next year, but monetisation of that would be the most primitive way of earning a lot of money. If anyone is dead man walking it's Google. For better or worse, Chatgpt has become to AI what Google was to search, even though I think Gemini is also good or even better. I also have my own doubts about the value of LLMs because I've already experienced a lot of caveats with the stuff it gives you. But at the same time, as long as you don't believe it blindly, getting started with something new has never been easier. If you don't see value in that, I don't know what to tell you.
- thewebguyd 1y ago
  > For better or worse, Chatgpt has become to AI what Google was to search, even though I think Gemini is also good or even better. Google definitely has the better model right now, but I think ChatGPT is already well on its way to becoming to AI what Google was to search. ChatGPT is a household name at this point. Any non tech person I ask or talk about AI with it's default to be assumed it's ChatGPT. "ChatGPT" has become synonymous with "AI" for the average population, much in the same way "Google it" meant to perform an internet search. So ChatGPT already has the popular brand. I think people are sleeping on Google though. They have a hardware advantage and aren't reliant on Nvidia, and have way more experience than OpenAI in building out compute and with ML, Google has been an "AI Company" since forever. Google's problem if they lose won't be because of tech or an inferior model, it will be because they absolutely suck at making products. What Google puts out always feels like a research project made public because someone inside thought it was cool enough to share. There's not a whole lot of product strategy or cohesion across the Google ecosystem.
haunter 1y ago
I'd be happy with $4000
refulgentis 1y ago
If you're reading this article and wondering "When is this house of cards going to collapse!?", a little advice, gained at a high price to myself: you can waste years waiting for it to collapse, 95% of the time, it never will. I never thought Uber or Tesla would survive COVID. I'd have $450K in bitcoin if I held onto the "joke" amount I bought for $200 in 2013. Thing that make me skip this specific narrative: - There's some heavy-handed reaching to get to $400B next 12 months: guesstimate $50B = 1 GW of capacity, then list out 3.3 gigawatts across Broadcom chip purchases, Nvidia, and AMD - OpenAI is far better positioned than any of the obvious failures I foresaw in my 37 years on this rock. It's very, very, hard to fuck up to the point you go out of business. - Ed is repeating narratives instead of facts ("what did they spend that money on!? GPT-5 was a big let down!" -- i.e. he remembers the chatgpt.com router discourse, and missed that it was the first OpenAI release that could get the $30-50/day/engineer in spend we've been sending to Anthropic)
- Yizahi 1y ago
  Yeah, I've re-evaluated my misconceptions around the same time. As another datapoint - infamous Tether/Bitfinex corporation which was blatantly cheating and insolvent (per normal definition) for years and every time reasonable people were giving them less than a year to bankruptcy and jail. But here were are, Tether is still printing tokens like madman, no one is in jail and every analyst was proven both wrong and right at the same time. Apparently company can be insolvent and cheating and breaking law for a looong time, with zero repercussions. And no one bats an eye. I suspect OpenAI is deeply in red today and any normal small company would went out of business years ago. But they are too big to fail and will continue working this way. They may even transition to being profitable later on, and people will retcon that they always have been so. At this point I just wonder, what would be exact mechanism with which Sam will redirect his negatives to a regular public like us here. Bailouts? Irresponsible government investments? Banks overreaching and them getting bailouts? Something new?...
  - refulgentis 1y ago
    Couple points where our principled bear-ishness diverges and I'm bullish: - I think it overstates the case to even get to the $150B #. - $50B/GW sounds very wrong to me. - They don't need anything, 2 of the 3 are GPUs-for-equity, and Broadcom isn't going to insist OpenAI make a $100B 100% full purchase commitment up front, I'd be surprised at $1B. - All I see is undercapacity in the sector after 2-3 years of feverish buildouts, it's hard for me to foresee, in the short term, a place where market signals can't override deals in principle. (random ramble: this reminds me somewhat of when Waymo "committed" to...80K Jaguar & Pacifica purchases? In 2016? I thought that meant they were definitely going to scale in the short term, hell or high water. In retrospect, I bet they're at a 1/4 of the 9 years later, and are yet entirely real.)
uchibeke 1y ago
What if they can't get it? What happens to companies that are built on their models like this Meeting Prep AI I just launched today https://news.ycombinator.com/item?id=45617686 https://news.ycombinator.com/item?id=45617686
retrocog 1y ago
It like dumping all your cash into mainframes right before the PC revolution.
- dcre 1y ago
  The PC revolution in this analogy is local models? However good and fast they get locally, the same model will run 10-1000x faster on a dedicated device. I think cloud models will be in demand for a long time even before you factor in efficiencies of scale.
  - brainwad 1y ago
    Also there will be tons of loads that are natively server side and don't make sense to use a local model for (or where using server side models retains more control).
lumost 1y ago
How much does the capex model of a datacenter change when the goal is 100% utilization, with no care for node uptime beyond capex efficiency/hardware value mainenance? I wouldn't be surprised if the cost came down by at least one order of magnitude, two if NVidia and others adjust their margin expectations. If the bet is that OpenAI can ship crappy datacenters with crappy connectivity/latency characteristics in places with cheap/existing power - then that seems at least somewhat plausible. OpenAI burning 40 billion dollars on datacenters in the next 1 year is almost guaranteed. Modern datacenter facilities are carefully engineered for uptime, I don't think OpenAI cares about rack uptime or even facility uptime at this scale.
- wmf 1y ago
  People who have run these numbers still want tier IVish. I haven't seen evidence of crypto mining "tier zero" datacenters being converted to AI despite the obvious advantages.
  - lumost 1y ago
    Aye- given the margins involved, is imagine you could get quite favorable insurance policies from NVDA on tier 0 facilities.
999900000999 1y ago
This was an interesting article, but he completely misses the only real threat to either Open AI or Anthro. Open source models like deepseek and llama 3 are rapidly catching up, if I can get 90% of the functionality for significantly less ( or free if I want to use my own GPU), what value does open AI really have . I'm a paid subscriber of open AI, but it's really just a matter of convenience. The app is really good, and I find it's really great for double checking some of my math. However I don't know how they're going to ever truly become a corporate necessity at the prices they're going to need to bill at to become profitable. Then again, open AI is obviously ran by some of the smartest people on planet Earth, with other extremely smart people giving them tons of money, so I can be completely wrong here
- TechDebtDevin 1y ago
  There is no threat, both are private public partnerships that greatly benefit the military/empire. Read Pynchon.
- moomoo11 1y ago
  For actual work and not toying around the 10% gap is absolutely worth the cost.
  - 999900000999 1y ago
    You may be correct, but for my hobbyist projects I tend to use the cheaper models to get started, and then I'll switch to a more expensive one if the cheaper model gets stuck. Unless the actual race is to create an AI Employee that operates and can deliver work without constant supervision. At that level, of course it would be cheaper to pay $2,000 a month straight to Open AI vs hiring a junior SWE
  - georgemcbay 1y ago
    > For actual work and not toying around the 10% gap is absolutely worth the cost. I agree with this... for now. But the hosted commercial models aren't widening the gap as far as I can tell, if anything it appears to be narrowing. And if the relative delta doesn't increase somehow I don't see any way in which the "AI race" doesn't end in a situation where locally run LLMs on relatively cheap hardware end up being good enough for virtually everyone. Which in many ways is the best possible outcome, except for the likely severe economic effects when the bubble bursts on the commercial AI side.
TechDebtDevin 1y ago
BECAUSE OpenAI is apart of the military. This doesnt matter. Americans really should be reading Pynchon.
devy 1y ago
Ed Zitron the author of the article talked about this in an earlier podcast: https://youtu.be/_wStScmT748 https://youtu.be/_wStScmT748
ashanoko 1y ago
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torginus 1y ago
This might be slightly off topic, but after the Sora 2/anime controversy I just looked up how much does it cost to make your average anime - it turns out that top tier 26 ep anime shows like Chainsaw Man, Delicious In Dungeon or box office movies like Demon Slayer cost between $10-$20m to make. Now I don't know how much they spend on Sora 2, but I'd imagine tens of billions. For that money, you could make a thousand such shows. While this post is full of conjecture, and somewhat unrelated to LLMs, but not their economics - I wonder how the insane capex is going to be justified even if AI becomes fully capable of replacing salaried professionals, they'll still end up paying much much more than what it'd have cost to just hire that armies of professionals for decades.
- Tiberium 1y ago
  > Now I don't know how much they spend on Sora 2, but I'd imagine tens of billions I think it's magnitudes less, actually.
- deleted 1y ago
  [deleted]
- udkl 1y ago
  A consequence of tools like Sora and Google Flow is that there will be an increase in amateurs creating professional quality content for comparatively cheap. So a thousand such shows (probably many more) isn't in the realm of the impossible!
- nithril 1y ago
  Not off topics at all. That massive investment must be baked by something with a bigger ROI than just a chatbot.
- ksynwa 1y ago
  Can you even make "shows" with sora 2? I haven't used it but everytime I hear about it it's in the context of making "shorts". Making shows would require a technological leap from that point.
- tim333 1y ago
  I think that kind of thing is one of the main problems with the 'AI bubble'. It's probably a misallocation of capital, spending billions on energy sucking data centers people don't especially want which leaves less money for things like paying creatives to make anime shows people do want. In properly functioning capitalism entrepreneurs would look at what they can make a profit at due to people paying for it because they want it and invest in that but the hype wave seems to be causing an over allocation to heavily loss making activities. And I say that as a believer that AGI is on the way but that it will come from smart computer folk designing better systems, not from more gigawatts of data centers.
nevir 1y ago
The capital cost is even less insane than the fact that power utility companies are the real constraint on this industry. North American grids are starving for electricity right now. Someone ought to do a deep dive into how much actual total excess power capacity we have today (that could feasibly be used by data center megacampuses), and how much capacity is coming online and when. Power plants are massively slow undertakings. All these datacenters deals seem to be making an assumption that capacity will magically appear in time, and/or that competition for it doesn't exist.
- Mentlo 1y ago
  How this is not more examined is beyond me….
- komali2 1y ago
  We have a nuclear power plant in Taiwan that was built and never switched on, seems it'd be the perfect way for Taiwan to claw its way into not just providing chips but also just popping them straight into a data center in Fulong.
mark_l_watson 1y ago
I was explaining the problem of lagging benefits for the huge expenditures for AI research and infrastructure this morning to my wife (my RC airplane flying club is an hour round trip drive so we really had time to get into it). She is not much interested in tech but she found the story of over investment and what it might do to our economy very interesting indeed. There are many people in the USA who don’t overly care about technology but might care a lot about the economic risks of overly aggressively chasing strong AI capabilities. I am forwarding this article to a few friends and family members.
- downrightmike 1y ago
  The emperor wears no clothes
deleted 1y ago
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unit149 1y ago
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BobbyTables2 1y ago
How the hell does one spend $2 Billion on sales and marketing!!! I really don’t get it. If AI is hot and profitable, can’t they fund their own expansion? Either the $400B will be a piece of cake or they are wildly overestimating the demand and have an impractical business model. Sure, there are those would like to have a car wash where the walls are made of crystal, organic artisan soaps, and only ultra pure water is used to wash the car. But such wouldn’t be a profitable business, no matter how much money is invested. No amount of marketing will change that.
Yizahi 1y ago
"a man best known for needing, at any given moment, another billion dollars" (c) I'm writing it down, this is peak AI :)
Nevermark 1y ago
Everybody calm down. Altman has this. In the not too distant future, like in 47 days, ChatGPT 6 Recurd is going to knock everyone's socks off. Instead of a better model, it's a recycled model (there's some recursion for you!) but it auto purchases 10 more ChatGPT 6 plans to help it perform much much better. Then another 38 days later each of those plans upgrades, and scores improve one percent again. And then 24 days later, those plans purchase a cluster of upgrades. It is very easy to underestimate super-exponentials. But by early 2026, OpenAI is likely to be selling trillions of licenses to these models. At the dawn of agentic computing, the number of human customers is not the limit anymore. And if you are thinking that the global money supply is going to economically choke off his plan, well, Altman has a coin for that. And an automated loan system extending credit to every human and all those models. And, of course, compute futures (until the real world can catch up) for everybody. But there won't be too much coin for its price to rocket with demand, so get in early. It's a whole new world. Alt/World! Back to your local station.
tsoukase 1y ago
It is mathematicaly sure that OpenAI is burning investor money. Even if the whole world paid a 20$ monthly subscription, it would need 3 years to collect 400 billions. In reality it needs decades.
paulpauper 1y ago
These figures are off. The whole piece is clickbait.

Why doesn't Anthropic needs similar levels of capital (or do they)?

chilipepperhott 1y ago
I believe they do, but the author seems to focus on OpenAI since they're more of a household name.
kachapopopow 1y ago
because this is for building "AGI", this has little to nothing to do with their current offerings. This also assumes that intelligence continues to scale with compute which is not a given.
- rediguanayum 1y ago
  I don't think it's AGI, but rather video production. OpenAI wants to build the next video social network / ads / tv / movie production system. The moat is the massive compute required.
  - gkoberger 1y ago
    I'm sure they're not against building this, and they definitely have competing priorities. But my personal belief is Sam Altman has a singular goal: AGI. Everything else keeps the lights on.
    - sho_hn 1y ago
      Is there any indication they are actually working on this and Altman is any good at pursuing this goal? I'm seriously asking, please inform the uninformed. My impression is that I hear a lot more about basic research from the competing high-profile labs, while OpenAI feels focused on their established stable of products. They also had high-profile researchers leave. Does OpenAI still have a culture looking for the next breakthroughs? How does their brain trust rank?
    - Analemma_ 1y ago
      Huh, my read is exactly the opposite: Altman wants to be a trillionaire and isn't picky about how he gets there. If AGI accomplishes it, great, but if that's not possible, "just" making a megacorporation which permanently breaks the negotiating power of labor is fine too. Amodei is the one who I think actually wants to build AGI.
      - thelastgallon 1y ago
        I think your read is right. There are a few people who want to be trillionaires and aren't too picky about to get there: Elon Musk, Sam Altman, Trump, Larry Ellison, Peter Thiel, Putin. Maybe Bezos and Zuckerberg. Of course, there wouldn't be many people who don't want to be trillionaires. Rare exceptions[1]. But these are the people with means to get there. [1]: No means NO - Do you want a one million dollar answer NO!: https://www.youtube.com/watch?v=GtWC4X628Ek https://www.youtube.com/watch?v=GtWC4X628Ek
        wkat4242 1y ago
        I definitely would not want to be a trillionaire yeah. Having a million or so would be nice but more and you get roped into all kinds of power play and you have to get security goons with you all the time to avoid getting kidnapped. I'd much rather be anonymous.
        cindyllm 1y ago
        [dead]
        kachapopopow 1y ago
        to be fair I couldn't recognize 99% of billionaires and crazy people are easy to deal with if you know what I mean.
        codyb 1y ago
        To be fair, you're probably not an organized crime syndicate looking for targets either.
    - timeon 1y ago
      Isn't that just PR?
- sillysaurusx 1y ago
  > This also assumes that intelligence continues to scale with compute which is not a given. Isn’t it? Evidence seems to suggest that the more compute you throw at a problem, the smarter the system behaves. Sure, it’s not a given, but it seems plausible.
  - deadbabe 1y ago
    In a brute force poorly architected way, perhaps. But human brains are small and require far less energy to be very generally intelligent. So clearly, there must be a better way to achieve this AGI shit. Preferably something that runs locally in the palm of your hand.
  - kachapopopow 1y ago
    it's not mathematically proven therefore it is not a given.
    - JumpCrisscross 1y ago
      > it's not mathematically proven therefore it is not a given Given doesn't mean proven, it means accepted as true. We can give variables fixed values, for example. Entire classes of proofs, moreover, prove something cannot be true because if you assume it is you get a paradox or nonsense.
      - kachapopopow 1y ago
        we had this problem in mathematics that's why all ambiguity was eliminated and why adding two numbers together is like 30 pages of proofs.
  - nutjob2 1y ago
    > a problem That word is carrying a heavy load. There's no evidence that scaling works indefinitely on this particular sort of problem. In fact there is no evidence that scaling solves computing problems generally. In more narrow fields more compute gets better results but that niche is not so large.
  - 1y ago
- JumpCrisscross 1y ago
  > this is for building "AGI" I’m increasingly convinced this is AI’s public relations strategy. When it comes to talking to customers and investors, AGI doesn’t come up. At fireside chats, AGI doesn’t come up. Then these guys go on CNBC or whatnot and it’s only about AGI.
evandrofisico 1y ago
Anthropic is more secretive about their costs, Ed Zitron is right now investigating their costs, specifically on GCP
- senordevnyc 1y ago
  Sure he is
cma 1y ago
Anthropic seems more comfortable using TPUs for overflow capacity. The recent Claude degradation was largely due to a bug from implementation differences with TPUs and from their writeup we got some idea of their mix between Nvidia and TPU for inference. I'm not sure if OpenAI has been willing to deploy weights to Google infrastructure.
wmf 1y ago
Anthropic will need it if their growth continues.

That seems like a lot of money. How quickly can sustainable capacity be built up in terms of building power plants, data center construction, silicon design and fabrication, etc.? Are these industries about to experience stratospheric growth, followed by a massive and painful adjustment, or does this represent a printing press or industrial revolution like inflection point? Would anyone like to found a startup doing high-security embedded systems infrastructure? Peter at my username dot com if you’d like to connect.

bcrl 1y ago
Almost nothing in tech is sustainable outside of gold recycling.

moralestapia 1y ago

1) What

ares623 1y ago
4

sillysaurusx 1y ago

> Even if you think that OpenAI’s growth is impressive — it went from 700 million to 800 million weekly active users in the last two months — that is not the kind of growth that says “build capacity assuming that literally every single human being on Earth uses this all the time.” I’d argue the other way around: 100M growth in two months suggests literally every single human being on Earth would benefit from using this all the time, and it’s just a matter of enabling them to. Beware the sigmoidal curve, though. Growth is exponential till it’s not.

deleted 1y ago
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baobabKoodaa 1y ago
OpenAI's bottleneck first shifted from GPUs to energy. Next it will shift from energy to meatbags. I'm sure they will figure out some way to produce more of us to keep the growthrate going.
- scarmig 1y ago
  Eventually, we can replace human consumers with LLM agent consumers, and things can scale indefinitely.
  - sellmesoap 1y ago
    You too can qualify as an "ugly bag of mostly water" just give us your CC number!
    - sysguest 1y ago
      hmm I bag to differ
- stock_toaster 1y ago
  Not just meatbags, but meatbags with _money_.
1y ago

overflyer 1y ago

Elon can give them 400B and he would still have a net worth of 100B and from that he can again get back to his former net worth in a few years. The world is not fair.

misiti3780 1y ago
what does this mean?
thevillagechief 1y ago
That's not how that works. Same reason we don't tax unrealized gains (unless you are Norway).
- marijnz0r 1y ago
  And The Netherlands
KeplerBoy 1y ago
You do realize that a large part of his wealth is tied to the valuation of Tesla (and SpaceX and many other investments). Selling 100B worth of stocks for anything close to 100B is not possible. That volume would mini-crash the entire exchange.
- JumpCrisscross 1y ago
  > Selling 100B worth of stocks for anything close to 100B is not possible. That volume would mini-crash the entire exchange Nasdaq trades about half a trillion dollars a day [1]. Even if Musk were an idiot and dumped $100bn in one day, it would crash Tesla's stock price, not the Nasdaq. If Musk wanted to give OpenAI $100bn, the best way to do it would be to (a) borrow against his shares or (b) given OpenAI his (non-voting) shares. [1] https://www.nasdaqtrader.com/Trader.aspx?id=DailyMarketSummary https://www.nasdaqtrader.com/Trader.aspx?id=DailyMarketSumma...

ljsprague 1y ago

[flagged]

bytesandbits 1y ago

[flagged]

bdangubic 1y ago

now do TSLA

basisword 1y ago

Vast sums of money that are being invested in it (obviously in the hope of AGI) but I'm not sure the world would notice if OpenAI/current LLM products just disappeared tomorrow.

sho_hn 1y ago
Women on dating apps would. Have a search for "chatfishing".
- basisword 1y ago
  I think the fix for that one is easy enough fortunately. Meet quickly. They can't 'chatfish' you in person.
  - nutjob2 1y ago
    > Meet quickly. Always a good dating strategy.
VBprogrammer 1y ago
I don't think that AGI is necessary for LLMs to be revolutionary. I personally use various AI products more than I use Google search these days. Google became the biggest company in the world based on selling advertising on its search engine.

nextworddev 1y ago

Why is this guy so angry? That aside, his math is wrong

dwedge 1y ago
He's not angry it's an angsty way of writing, a lot of used to write like that as teenagers. There was a time around 5 years ago where ever best selling book raced to have "fuck" or "vagina" in the title.
shocks 1y ago
Us British have a unique relationship with profanity as a way to communicate. edit: Aussies and kiwis too!
iamacyborg 1y ago
Yeah his writing is emotionally exhausting
deanputney 1y ago
If you're emotionally on edge when reading it, it's easier to miss that his math is wrong and he's no expert. Writing that way benefits him.
- nextworddev 1y ago
  dang.. that's an angle I haven't thought of
theideaofcoffee 1y ago
Why are you -not- angry at all of this insanity? I feel the same way as him, hype has blown the bubble bigger and bigger, and it's just a matter of time until it poops out and causes huge amounts of pain.
- nextworddev 1y ago
  Yes it’s like watching the titanic. But the question is if the Titanic is 30% of way there or just before hitting an iceberg.

mrkeen 1y ago

I'm not sure if I missed this in the article, but what's the cost of failure? Why can't OpenAI keep projecting/promising massive data centre growth year after year, fail to deliver, and keep making Number Go Up?

IT4MD 1y ago
>Why can't OpenAI keep projecting/promising massive data centre growth year after year, fail to deliver, and keep making Number Go Up? Because eventually, Nvidia will run out of money, so the incestuous loop between Nvidia funding AI entities, who then use those funds to buy Nvidia chips, artificially propping up Nvidia's stock price, will eventually end and poof. Competing forces are the market's insatiable need for growth every quarter, and other countries also chasing AIs and will not slow down if other countries, like the US, do slow down.
IsTom 1y ago
If they keep missing the hype will burn out eventually

rich_sasha 1y ago

It's going to perhaps sound nuts, but I'm beginning to wonder if America is actually a giant Ponzi scheme. I've been thinking about American exceptionalism - they way it is head and shoulders above Europe and the developed world in terms of GDP growth, market returns, start up successes etc. and what might be the root of this success. And I'm starting to think that, apart from various mild genuine effects, it is also a sequence of circular self-fulfilling prophecies. Let's say you're a sophisticated startup and you want some funding. Where do you go? US of course - it has the easiest access to capital. It does so presumably because US venture funds have an easier time raising funds. And that's presumably because of their track record of making money for investors - real, or at least perceived. They invest in these startups and they exit at a profit, because US companies have better valuations than elsewhere, so at IPO investors lap up the shares and the VCs make money. It's easy to find buyers for US stocks because they're always going up. In turn, they're going up because, well, there's lots of investors. It's much easier to raise billions for data centres and fairy dust because investors are in awe of what can be done with the money and anyway line always go up. Stocks like TSLA have valuations you couldn't justify elsewhere. Maybe because they will build robot AI rocket taxis, or maybe because the collective American Allure means valuations are just high. The beauty of this arrangement is that the elements are entangled in a complex web of financial interdependency. If you think about these things in isolation, you wouldn't conclude there's anything unusual. US VC funding is so good because there's a lot of capital - lucky them. This thought of circularity only struck me when trying to think of the root cause - the nuclear set of elements that drive it. And I concluded any reason I can think of is eventually recursive. I'm not saying America is just dumb luck kept together by spittle, of course there are structural advantages the US has. I'm just not sure it really is that much better an economic machine than other similar countries. One difference to a Ponzi scheme is that you might actually hit a stable level and stay there rather than crash and burn. So it's more like a collective investment into a lottery. OpenAI might burn $400bn and achieve singularity, then proceed to own the rest of the world. But I can't shake the feeling that a lot of recent US growth is a bit of smoke and mirrors. After adjusting for tech, US indices didn't outperform European ones post GFC, IIRC. Much of its growth this year is AI, financed presumably by half the world and maintained by sky-high valuations. And no one says "check" because, well, it's the US and the line always go up.

ctoth 1y ago

His "$400B in next 12 months" claim treats OpenAI as paying construction costs upfront. But OpenAI is leasing capacity as operating expense - Oracle finances and builds the data centers [1]. This is like saying a tenant needs $5M cash because that's what the building cost to construct. The Oracle deal structure: OpenAI pays ~$30B/year in rental fees starting fiscal 2027/2028 [2], ramping up over 5 years as capacity comes online. Not "$400B in 12 months." The deals are structured as staged vendor financing: - NVIDIA "invests" $10B per gigawatt milestone, gets paid back through chip purchases [3] - AMD gives OpenAI warrants for 160M shares (~10% equity) that vest as chips deploy [4] - As one analyst noted: "Nvidia invests $100 billion in OpenAI, which then OpenAI turns back and gives it back to Nvidia" [3] This is circular vendor financing where suppliers extend credit betting on OpenAI's growth. It's unusual and potentially fragile, but it's not "OpenAI needs $400B cash they don't have." Zitron asks: "Does OpenAI have $400B in cash?" The actual question: "Can OpenAI grow revenue from $13B to $60B+ to cover lease payments by 2028-2029?" The first question is nonsensical given deal structure. The second is the actual bet everyone's making. His core thesis - "OpenAI literally cannot afford these deals therefore fraud" - fails because he fundamentally misunderstands how the deals work. The real questions are about execution timelines and revenue growth projections, not about OpenAI needing hundreds of billions in cash right now. There's probably a good critical piece to write about whether these vendor financing bets will pay off, but this isn't it. [1] https://www.cnbc.com/2025/09/23/openai-first-data-center-in-500-billion-stargate-project-up-in-texas.html https://www.cnbc.com/2025/09/23/openai-first-data-center-in-... [2] https://w.media/openai-to-rent-4-5-gw-of-data-center-power-from-oracle-in-us-30-billion-deal/ https://w.media/openai-to-rent-4-5-gw-of-data-center-power-f... [3] https://www.cnbc.com/2025/09/22/nvidia-openai-data-center.html https://www.cnbc.com/2025/09/22/nvidia-openai-data-center.ht... [4] https://techcrunch.com/2025/10/06/amd-to-supply-6gw-of-compute-capacity-to-openai-in-chip-deal-worth-tens-of-billions/ https://techcrunch.com/2025/10/06/amd-to-supply-6gw-of-compu...

thelastgallon 1y ago
> His "$400B in next 12 months" claim treats OpenAI as paying construction costs upfront. But OpenAI is leasing capacity as operating expense - Oracle finances and builds the data centers [1]. It is bagholders all the way down[1]! The final bagholder will be the taxpayer/pension holder. [1]https://en.wikipedia.org/wiki/Turtles_all_the_way_down https://en.wikipedia.org/wiki/Turtles_all_the_way_down

ibejoeb 1y ago

Let's assume that estimate is good. For some perspective an context, the last finalized DOD budget (2023) was $815B, and, plus supplementals, turned into about $852 billion. AGI is absolutely a national security concern. Despite it being an enormous number, it'll happen. It may not be earmarked for OpenAI, but the US is going to ensure that the energy capability is there.

rchaud 1y ago
> AGI is absolutely a national security concern. This may well be the PR pivot that's to come once it becomes clear that taxpayer funding is needed to plug any financing shortfalls for the industry - it's "too big to let fail". It won't all go to OpenAI, but be distributed across a consortium of other politically connected corps: Oracle, Nvidia/Intel, Microsoft, Meta and whoever else.
- adventured 1y ago
  The top six US tech companies are generating ~$620 billion per year in operating income (likely to be closer to $700 billion in another 12-18 months). They can afford to spend $2 trillion on this over the next decade without missing a beat. Their profit over that timeline will plausibly be $8 to $10 trillion (and of course something dramatic could change that). That's just six companies.
  - rchaud 1y ago
    Fears of an AI bubble originate from the use of external financing needed to pay for infrastructure investments, which may or may not pay off for the lenders. These 6 companies are using only a small portion of their own cash reserves to invest, and using private credit for the rest. Meta is getting a $30 billion loan from PIMCO and Blue Owl for a datacenter [0], which they could easily pay for out of their own pocket. There are also many datacenters that are being funded through asset-backed securities or commercial mortgage-backed securities [0], the market for which can quickly collapse if expected income doesn't materialize, leading to mortgage defaults, as in 2008. [0] https://www.reuters.com/legal/transactional/meta-set-clinch-nearly-30-billion-financing-deal-louisiana-data-center-site-2025-10-16/ https://www.reuters.com/legal/transactional/meta-set-clinch-... [1] https://www.etftrends.com/etf-strategist-channel/securitizing-ai-role-data-center-abs-cmbs/ https://www.etftrends.com/etf-strategist-channel/securitizin...

ChrisArchitect 1y ago

Related: They Don't Have the Money: OpenAI Edition https://news.ycombinator.com/item?id=45545236 https://news.ycombinator.com/item?id=45545236

Havoc 1y ago

They sure are writing cheques fast. Presumable Sam has a plan

r33b33 1y ago

Sorry, best I can do is $20

Group_B 1y ago

At this point we all know this is just a massive bubble. I'm done paying attention to it really. I'm prepared for all my investments to go down in the next 1-5 years. If you're nearing retirement now is the time to cash out. Yes, investments could go up in a value a lot until the correction, but I don't really think that is worth the risk.

saulpw 1y ago
So cash out, and then what? Buy gold? Hang onto your cash while inflation takes off and dilutes it to nothing?
- deleted 1y ago
  [deleted]

quux 1y ago

Can someone explain why we measure these datacenters in Gigawatts rather than something that actually measures compute like flops or whatever the AI equivalent of flops is? To put it another way, I don't know anything but I could probably make a '1 GW' datacenter with a single 6502 and a giant bank of resistors.

refulgentis 1y ago
Because, to us tech nerds, GPUs are the core thing. With a PM hat on, it's the datacenter in toto. Put another way: how can we measure in flops? By the time all this is built out we're on the next gen of cards.
szundi 1y ago
[dead]
omgJustTest 1y ago
Measurement in unit of power because this is the ultimate use-cost, assuming scaling in compute efficiencies, capex costs, etc.
dcre 1y ago
My understanding is that there is no universal measure of compute power that applies across different hardware and workloads. You can interpret the power number to mean something close to the maximum amount of compute you can get for that power at a given time (or at least at time of install). It also works across geographies, cooling methods, etc. It covers all that.
morkalork 1y ago
Assuming a datacenter is more or less filled with $current_year chips, the number of of flops is kind of a meaninglessly large number. It's big. How big? Big enough it needs a nuclear power plant to run.
- sedawkgrep 1y ago
  Not to mention it would assume that number wouldn't change...but of course it depends entirely on what type of compute is there as well as the fact that every few years truckloads of hardware gets replaced and the compute goes up.

locallost 1y ago

My search habits have evolved quite fast - when I search for something now I first ask for quick results from Chatgpt, which gives me pointers I then drill down on. Google's revenue for 2024 was 350 billion. I know it's not all Google ads, but s lot of it is. When you follow a link from Chatgpt, it always has a utm_source=Chatgpt in it, so companies are quickly learning how important getting linked there is. I'm not saying there's no bubble, and I personally anticipate a lot of turmoil in the next year, but monetisation of that would be the most primitive way of earning a lot of money. If anyone is dead man walking it's Google. For better or worse, Chatgpt has become to AI what Google was to search, even though I think Gemini is also good or even better. I also have my own doubts about the value of LLMs because I've already experienced a lot of caveats with the stuff it gives you. But at the same time, as long as you don't believe it blindly, getting started with something new has never been easier. If you don't see value in that, I don't know what to tell you.

thewebguyd 1y ago
> For better or worse, Chatgpt has become to AI what Google was to search, even though I think Gemini is also good or even better. Google definitely has the better model right now, but I think ChatGPT is already well on its way to becoming to AI what Google was to search. ChatGPT is a household name at this point. Any non tech person I ask or talk about AI with it's default to be assumed it's ChatGPT. "ChatGPT" has become synonymous with "AI" for the average population, much in the same way "Google it" meant to perform an internet search. So ChatGPT already has the popular brand. I think people are sleeping on Google though. They have a hardware advantage and aren't reliant on Nvidia, and have way more experience than OpenAI in building out compute and with ML, Google has been an "AI Company" since forever. Google's problem if they lose won't be because of tech or an inferior model, it will be because they absolutely suck at making products. What Google puts out always feels like a research project made public because someone inside thought it was cool enough to share. There's not a whole lot of product strategy or cohesion across the Google ecosystem.

haunter 1y ago

I'd be happy with $4000

refulgentis 1y ago

If you're reading this article and wondering "When is this house of cards going to collapse!?", a little advice, gained at a high price to myself: you can waste years waiting for it to collapse, 95% of the time, it never will. I never thought Uber or Tesla would survive COVID. I'd have $450K in bitcoin if I held onto the "joke" amount I bought for $200 in 2013. Thing that make me skip this specific narrative: - There's some heavy-handed reaching to get to $400B next 12 months: guesstimate $50B = 1 GW of capacity, then list out 3.3 gigawatts across Broadcom chip purchases, Nvidia, and AMD - OpenAI is far better positioned than any of the obvious failures I foresaw in my 37 years on this rock. It's very, very, hard to fuck up to the point you go out of business. - Ed is repeating narratives instead of facts ("what did they spend that money on!? GPT-5 was a big let down!" -- i.e. he remembers the chatgpt.com router discourse, and missed that it was the first OpenAI release that could get the $30-50/day/engineer in spend we've been sending to Anthropic)

Yizahi 1y ago
Yeah, I've re-evaluated my misconceptions around the same time. As another datapoint - infamous Tether/Bitfinex corporation which was blatantly cheating and insolvent (per normal definition) for years and every time reasonable people were giving them less than a year to bankruptcy and jail. But here were are, Tether is still printing tokens like madman, no one is in jail and every analyst was proven both wrong and right at the same time. Apparently company can be insolvent and cheating and breaking law for a looong time, with zero repercussions. And no one bats an eye. I suspect OpenAI is deeply in red today and any normal small company would went out of business years ago. But they are too big to fail and will continue working this way. They may even transition to being profitable later on, and people will retcon that they always have been so. At this point I just wonder, what would be exact mechanism with which Sam will redirect his negatives to a regular public like us here. Bailouts? Irresponsible government investments? Banks overreaching and them getting bailouts? Something new?...
- refulgentis 1y ago
  Couple points where our principled bear-ishness diverges and I'm bullish: - I think it overstates the case to even get to the $150B #. - $50B/GW sounds very wrong to me. - They don't need anything, 2 of the 3 are GPUs-for-equity, and Broadcom isn't going to insist OpenAI make a $100B 100% full purchase commitment up front, I'd be surprised at $1B. - All I see is undercapacity in the sector after 2-3 years of feverish buildouts, it's hard for me to foresee, in the short term, a place where market signals can't override deals in principle. (random ramble: this reminds me somewhat of when Waymo "committed" to...80K Jaguar & Pacifica purchases? In 2016? I thought that meant they were definitely going to scale in the short term, hell or high water. In retrospect, I bet they're at a 1/4 of the 9 years later, and are yet entirely real.)

uchibeke 1y ago

What if they can't get it? What happens to companies that are built on their models like this Meeting Prep AI I just launched today https://news.ycombinator.com/item?id=45617686 https://news.ycombinator.com/item?id=45617686

retrocog 1y ago

It like dumping all your cash into mainframes right before the PC revolution.

dcre 1y ago
The PC revolution in this analogy is local models? However good and fast they get locally, the same model will run 10-1000x faster on a dedicated device. I think cloud models will be in demand for a long time even before you factor in efficiencies of scale.
- brainwad 1y ago
  Also there will be tons of loads that are natively server side and don't make sense to use a local model for (or where using server side models retains more control).

lumost 1y ago

How much does the capex model of a datacenter change when the goal is 100% utilization, with no care for node uptime beyond capex efficiency/hardware value mainenance? I wouldn't be surprised if the cost came down by at least one order of magnitude, two if NVidia and others adjust their margin expectations. If the bet is that OpenAI can ship crappy datacenters with crappy connectivity/latency characteristics in places with cheap/existing power - then that seems at least somewhat plausible. OpenAI burning 40 billion dollars on datacenters in the next 1 year is almost guaranteed. Modern datacenter facilities are carefully engineered for uptime, I don't think OpenAI cares about rack uptime or even facility uptime at this scale.

wmf 1y ago
People who have run these numbers still want tier IVish. I haven't seen evidence of crypto mining "tier zero" datacenters being converted to AI despite the obvious advantages.
- lumost 1y ago
  Aye- given the margins involved, is imagine you could get quite favorable insurance policies from NVDA on tier 0 facilities.

999900000999 1y ago

This was an interesting article, but he completely misses the only real threat to either Open AI or Anthro. Open source models like deepseek and llama 3 are rapidly catching up, if I can get 90% of the functionality for significantly less ( or free if I want to use my own GPU), what value does open AI really have . I'm a paid subscriber of open AI, but it's really just a matter of convenience. The app is really good, and I find it's really great for double checking some of my math. However I don't know how they're going to ever truly become a corporate necessity at the prices they're going to need to bill at to become profitable. Then again, open AI is obviously ran by some of the smartest people on planet Earth, with other extremely smart people giving them tons of money, so I can be completely wrong here

TechDebtDevin 1y ago
There is no threat, both are private public partnerships that greatly benefit the military/empire. Read Pynchon.
moomoo11 1y ago
For actual work and not toying around the 10% gap is absolutely worth the cost.
- 999900000999 1y ago
  You may be correct, but for my hobbyist projects I tend to use the cheaper models to get started, and then I'll switch to a more expensive one if the cheaper model gets stuck. Unless the actual race is to create an AI Employee that operates and can deliver work without constant supervision. At that level, of course it would be cheaper to pay $2,000 a month straight to Open AI vs hiring a junior SWE
- georgemcbay 1y ago
  > For actual work and not toying around the 10% gap is absolutely worth the cost. I agree with this... for now. But the hosted commercial models aren't widening the gap as far as I can tell, if anything it appears to be narrowing. And if the relative delta doesn't increase somehow I don't see any way in which the "AI race" doesn't end in a situation where locally run LLMs on relatively cheap hardware end up being good enough for virtually everyone. Which in many ways is the best possible outcome, except for the likely severe economic effects when the bubble bursts on the commercial AI side.

TechDebtDevin 1y ago

BECAUSE OpenAI is apart of the military. This doesnt matter. Americans really should be reading Pynchon.

devy 1y ago

Ed Zitron the author of the article talked about this in an earlier podcast: https://youtu.be/_wStScmT748 https://youtu.be/_wStScmT748

ashanoko 1y ago

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torginus 1y ago

This might be slightly off topic, but after the Sora 2/anime controversy I just looked up how much does it cost to make your average anime - it turns out that top tier 26 ep anime shows like Chainsaw Man, Delicious In Dungeon or box office movies like Demon Slayer cost between $10-$20m to make. Now I don't know how much they spend on Sora 2, but I'd imagine tens of billions. For that money, you could make a thousand such shows. While this post is full of conjecture, and somewhat unrelated to LLMs, but not their economics - I wonder how the insane capex is going to be justified even if AI becomes fully capable of replacing salaried professionals, they'll still end up paying much much more than what it'd have cost to just hire that armies of professionals for decades.

Tiberium 1y ago
> Now I don't know how much they spend on Sora 2, but I'd imagine tens of billions I think it's magnitudes less, actually.
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udkl 1y ago
A consequence of tools like Sora and Google Flow is that there will be an increase in amateurs creating professional quality content for comparatively cheap. So a thousand such shows (probably many more) isn't in the realm of the impossible!
nithril 1y ago
Not off topics at all. That massive investment must be baked by something with a bigger ROI than just a chatbot.
ksynwa 1y ago
Can you even make "shows" with sora 2? I haven't used it but everytime I hear about it it's in the context of making "shorts". Making shows would require a technological leap from that point.
tim333 1y ago
I think that kind of thing is one of the main problems with the 'AI bubble'. It's probably a misallocation of capital, spending billions on energy sucking data centers people don't especially want which leaves less money for things like paying creatives to make anime shows people do want. In properly functioning capitalism entrepreneurs would look at what they can make a profit at due to people paying for it because they want it and invest in that but the hype wave seems to be causing an over allocation to heavily loss making activities. And I say that as a believer that AGI is on the way but that it will come from smart computer folk designing better systems, not from more gigawatts of data centers.

nevir 1y ago

The capital cost is even less insane than the fact that power utility companies are the real constraint on this industry. North American grids are starving for electricity right now. Someone ought to do a deep dive into how much actual total excess power capacity we have today (that could feasibly be used by data center megacampuses), and how much capacity is coming online and when. Power plants are massively slow undertakings. All these datacenters deals seem to be making an assumption that capacity will magically appear in time, and/or that competition for it doesn't exist.

Mentlo 1y ago
How this is not more examined is beyond me….
komali2 1y ago
We have a nuclear power plant in Taiwan that was built and never switched on, seems it'd be the perfect way for Taiwan to claw its way into not just providing chips but also just popping them straight into a data center in Fulong.

mark_l_watson 1y ago

I was explaining the problem of lagging benefits for the huge expenditures for AI research and infrastructure this morning to my wife (my RC airplane flying club is an hour round trip drive so we really had time to get into it). She is not much interested in tech but she found the story of over investment and what it might do to our economy very interesting indeed. There are many people in the USA who don’t overly care about technology but might care a lot about the economic risks of overly aggressively chasing strong AI capabilities. I am forwarding this article to a few friends and family members.

downrightmike 1y ago
The emperor wears no clothes

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unit149 1y ago

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BobbyTables2 1y ago

How the hell does one spend $2 Billion on sales and marketing!!! I really don’t get it. If AI is hot and profitable, can’t they fund their own expansion? Either the $400B will be a piece of cake or they are wildly overestimating the demand and have an impractical business model. Sure, there are those would like to have a car wash where the walls are made of crystal, organic artisan soaps, and only ultra pure water is used to wash the car. But such wouldn’t be a profitable business, no matter how much money is invested. No amount of marketing will change that.

Yizahi 1y ago

"a man best known for needing, at any given moment, another billion dollars" (c) I'm writing it down, this is peak AI :)

Nevermark 1y ago

Everybody calm down. Altman has this. In the not too distant future, like in 47 days, ChatGPT 6 Recurd is going to knock everyone's socks off. Instead of a better model, it's a recycled model (there's some recursion for you!) but it auto purchases 10 more ChatGPT 6 plans to help it perform much much better. Then another 38 days later each of those plans upgrades, and scores improve one percent again. And then 24 days later, those plans purchase a cluster of upgrades. It is very easy to underestimate super-exponentials. But by early 2026, OpenAI is likely to be selling trillions of licenses to these models. At the dawn of agentic computing, the number of human customers is not the limit anymore. And if you are thinking that the global money supply is going to economically choke off his plan, well, Altman has a coin for that. And an automated loan system extending credit to every human and all those models. And, of course, compute futures (until the real world can catch up) for everybody. But there won't be too much coin for its price to rocket with demand, so get in early. It's a whole new world. Alt/World! Back to your local station.

tsoukase 1y ago

It is mathematicaly sure that OpenAI is burning investor money. Even if the whole world paid a 20$ monthly subscription, it would need 3 years to collect 400 billions. In reality it needs decades.

paulpauper 1y ago

These figures are off. The whole piece is clickbait.