7 ms·

I would have thought that the OpenAI bet is way more risky, because if someone comes along with a better model it could really hurt OpenAI. NVIDIA seems harder

I would have thought that the OpenAI bet is way more risky, because if someone comes along with a better model it could really hurt OpenAI. NVIDIA seems harder to dethrone imo.

nolok 11mo ago
It's SoftBank though, weird risk taking investments seems to be their jam.
- OJFord 11mo ago
  That's how you get to have $6B to throw around on just one part of one your strategies though to be fair.
- mettamage 11mo ago
  Yea, I was thinking the same thing.
- rubzah 11mo ago
  It's because they are playing with other (dumb) people's money.
hobofan 11mo ago
In many ways OpenAI is transitioning towards an end-user facing product business. They have by far the strongest brand among consumers and are positioning themselves to take on Google/Meta in the ad business. By proxy, having the strongest frontier model becomes less and less necessary for them and instead building a strong product by properly layering medium-strong models in a cost-efficient way is the priority.
- nly 11mo ago
  It's hard to see how they become profitable enough to justify current valuations. The numbers are just mind boggling even in the optimistic scenario.
  - NitpickLawyer 11mo ago
    I can see a world where if everything they do pans out, on average 1B "entities" end up paying 20$/mo to openAI, via the myriad of integrations they end up supporting. Where entity can be a user, and one human can have many entities (i.e. a work account where the company pays, a personal account, etc). That'd be a quarter of a T$ revenue / year. Dunno, while the number is so large it's hard to compute, it somewhat seems plausible.
    - iso1631 11mo ago
      And then they'll ruin it all by injecting adverts to get an extra $20b a year in revenue
  - hobofan 11mo ago
    If they are able to actually successfully pivot into ads as a business model, it's very easy to justify the valuation: Just look at Google/Meta. I'm personally skeptical that they are able to pull off ads, at least on the short timescale they likely need to. They more or less have to nurture/disrupt a whole SEO industry, and the way big corps allocate advertising budgets are very slow to shift (many are still struggling to find their footing in social media advertising).
    - disgruntledphd2 11mo ago
      > If they are able to actually successfully pivot into ads as a business model, it's very easy to justify the valuation: Just look at Google/Meta. Ads are not just a switch one can turn on. Firstly, you need to build a decent ad serving/targeting/pacing engine. Secondly (and more importantly) you need to hire a shed ton of sales people (in many, many geos) and then ramp them all up (difficult if you're building the product at the same time). And then you need to keep at it for 3-5 years minimum before you'll finally get the bigger/more conservative brands/agencies/etc to buy in properly. At that point, you'll make decent money, after accounting for all of the costs. I'm not sure that you'll make enough money, but it would definitely stanch their bleeding a little. tl;dr if they haven't already built this ad product, it's unlikely to make a material difference before 2030.
- tarsinge 11mo ago
  This argument regarding brand loyalty gets repeated but it’s really weak to me. The immense majority of people don’t tie their identity to the software services they are using. Without network effects or an ecosystem locking customers will switch as soon as there is a less expensive and/or better alternative, as the history of software has shown countless of times.
  - stingraycharles 11mo ago
    no but there’s the network effect that Google has / once had with search that OpenAI has with ChatGPT: user interactions. all that data and classification will help tremendously getting better datasets, which is equally important (or more important) than better algorithms.
    - JustExAWS 11mo ago
      And defaults matter - every browser that matters except for Edge defaults to Google as well as every mobile phone outside of China. Both Google and Apple (ie any searches in Safari make money for Apple based on the Google deal) said there was no slowdown on Google searches and the “AI overview” by Google is “good enough”.
  - Topfi 11mo ago
    Keep in mind how severely the quality of Google search results or e.g. any consumer facing piece of Microsoft software (Windows, Office, OneDrive, etc.) have deteriorated to the point it has far transcended the more nerdy corners of the web, yet both continue to retain a strict grip, thanks to buy in/brand strength.
    - ForHackernews 11mo ago
      There's no viable alternative for either of those yet. Massive network effects around Microsoft office, and Google's only real competition is the equally-bad Bing.
      - 11mo ago
- chemmail 11mo ago
  It’s going be pretty hard to dethrone Google when even Apple is going to Google for AI with another huge billion $ contract.
  - Topfi 11mo ago
    In fairness, that is for their model, not their brand. In this industry, the mind share and buy in OpenAI has is still second to none, even when Gemini 2.5 Pro served the vast majority of users far better than the OpenAI models, the latter MAU trounced all competitors. We do not know for certain as of yet, but I’d be very surprised if Apple felt the need to loudly communicate to their user base that the upcoming Siri improvements aren’t Apple Intelligence. They won’t lie of course, but Googles brand in the space isn’t nearly as strong with the layperson, whereas they more than happily shouted their use of GPT from the rooftops initially.
  - DANmode 11mo ago
    This year. Apple is in the business of contracting out new-hotness until their polish is done. Then they put their name on the thing, pretend it’s new technology – and depending on the named feature, sometimes it is!
- xnx 11mo ago
  > They have by far the strongest brand Just like Blackberry, but instead of having to buy an new device to switch to the competition, the customer just needs to click on a different website.
  - keiferski 11mo ago
    Not a great analogy. Blackberry was never really for mass consumers and was always business-first. They lost to Apple because Apple won the mass market, and the mass market overwhelmed the specific niche business use-case that was BB. OpenAI is already the consumer-first AI platform. And, in my opinion, in the minds of the average consumer, the biggest one that is "an app" with memory and folders, vs. something like Gemini which is perceived as an extension of Google Search and thus doesn't have the same "knowledge database" UI.
    - diamond559 11mo ago
      Yeah but consumers don't want to pay for these 7 second memes or "erotica", blackberries had actual value that companies paid for.
- jorvi 11mo ago
  > They have by far the strongest brand They don't really, because of Gemini and Grok. If it was OpenAI vs Claude then yeah, ChatGPT is known whereas Claude you have to be an enthusiast to know. But everyone using Google runs into Gemini and everyone using X runs into Grok, and people talk. Now even the laypeople know there is more than one AI, and they're from big brands that they trust. Which means that people will window shop for the AI with the best performance per cost. Bye bye brand power.
  - ForHackernews 11mo ago
    Does anyone trust Xitter? If so, they shouldn't.
    - jpadkins 11mo ago
      why?
      - baal80spam 11mo ago
        Probably because something something Nazi.
        diamond559 11mo ago
        Well the guy that owns it sieg heiled on stage twice so... Do you not have working eyes, or does something prevent you from acknowledging reality?
      - array_key_first 11mo ago
        It's run by an insane person and insane people are generally very volatile and difficult to rely on. I mean, even just the name - 'X'. You can tell that's some Elon Musk bullshit because it's the stupidest fucking name I've ever heard in my life and nobody with even a quarter of a brain would ever suggest that as a brand name. When that's literally the brand of your company, naturally I question if everyone has the screws tightened up there, you know?
  - 11mo ago
- yesco 11mo ago
  I'd argue their brand might be too strong, ChatGPT has already begun to enter the same semantic space as "Velcro". Everyone I know seems to have tried it yet quickly you begin to realize that for most people ChatGPT == LLM, it seems everyone is using "ChatGPT" on completely different platforms. In the end, regardless of technical understanding, people will always shop around on price if the feature set is similar enough I suppose.
  - JustExAWS 11mo ago
    ChatGPT though isn’t where the profit id going to come from. Businesses using LLMs are and Amazon (AWS) is not selling access to Bedrock and neither is Google (GCP). Models are becoming a commodity. *Every* implementation I’ve done one of the requirements is to easily be able to switch between multiple models
  - roncesvalles 11mo ago
    The thing is, laypeople aren't using anything other than Google Search even for LLM answers. If I want an LLM answer to "is erythritol bad for you", I'm not firing up ChatGPT. I'm just typing it into Google, and the LLM answer it spits out is pretty good. ChatGPT needs to be significantly more compelling for most people to use it for one-shot LLM answers over Google Search. And the minute Google removes the one-shottedness of its search answers, it's over for ChatGPT. Imo ChatGPT is just "a feature not a product", in the search engine space, as the adage goes.
    - marcus_holmes 11mo ago
      I have no idea on the data, but anecdotally I'd dispute this. Regular folks in my life (i.e. non-techies) routinely talk to an LLM and use it to answer questions that 5 years ago they'd have searched for. The techies are the ones who are steering clear and sticking with search engines in my experience.
    - butlike 11mo ago
      It's a Google without ads right now. Worth using until that day comes
weego 11mo ago
Probably so, but that doesn't mean their value can keep scaling without heavy diminishing returns. Softbank must assume they've taken 80%+ of the gains from this phase of NVIDIA's growth, and want to capture the next wave of growth. I agree with you that OpenAI seems much more risky in terms of it's actual true viability as a business, but the risk:reward must be there for Softbank.
lvl155 11mo ago
They probably know more than us. Such as alternative chips or that the Chinese will go in-house sooner than we think. Nvidia’s moat is not as permanent as people think.
- ForHackernews 11mo ago
  Given how poorly Intel and AMD have fared, it suggests the hardware moat is much deeper than the software one.
  - ethbr1 11mo ago
    Nvidia's moat is their pace of performance growth, which is hardware + software + cultural. If they skip a beat, or it becomes impossible to increase performance (TSMC node stumble or P4-style dead-end), then it won't take long for someone to catch up. If they keep executing on better hardware performance + software to support it? They keep the money spigot on.
    - bmacho 11mo ago
      People are saying that nvidia doesn't have any moat for 20 years. And nvidia hasn't been dethroned, but grown into the largest company in the world in the meantime.
      - ethbr1 11mo ago
        Both realities are true. They don't have a moat... because their moat is their performance growth rate. If they stopped today, competition would flood in. But by the time competition catches up to Nvidia today, Nvidia has moved several steps ahead.
  - raw_anon_1111 11mo ago
    Nvidia doesn’t make hardware. It designs hardware. TSMC makes hardware.
    - 11mo ago
mark_l_watson 11mo ago
Without a doubt, in my opinion, OpenAI is a risky bet, but perhaps Softbank can make some money on OpenAI and then get out.
Jyaif 11mo ago
They want to profit from the IPO of OpenAI. Private investors get a free 20% - 30% gain not available to the retail investors.
deleted 11mo ago
[deleted]
ZiiS 11mo ago
SoftBank is the world leader in turning safe bets into risky ones.

I would have thought that the OpenAI bet is way more risky, because if someone comes along with a better model it could really hurt OpenAI. NVIDIA seems harder to dethrone imo.

nolok 11mo ago

It's SoftBank though, weird risk taking investments seems to be their jam.

OJFord 11mo ago
That's how you get to have $6B to throw around on just one part of one your strategies though to be fair.
mettamage 11mo ago
Yea, I was thinking the same thing.
rubzah 11mo ago
It's because they are playing with other (dumb) people's money.

hobofan 11mo ago

In many ways OpenAI is transitioning towards an end-user facing product business. They have by far the strongest brand among consumers and are positioning themselves to take on Google/Meta in the ad business. By proxy, having the strongest frontier model becomes less and less necessary for them and instead building a strong product by properly layering medium-strong models in a cost-efficient way is the priority.

nly 11mo ago
It's hard to see how they become profitable enough to justify current valuations. The numbers are just mind boggling even in the optimistic scenario.
- NitpickLawyer 11mo ago
  I can see a world where if everything they do pans out, on average 1B "entities" end up paying 20$/mo to openAI, via the myriad of integrations they end up supporting. Where entity can be a user, and one human can have many entities (i.e. a work account where the company pays, a personal account, etc). That'd be a quarter of a T$ revenue / year. Dunno, while the number is so large it's hard to compute, it somewhat seems plausible.
  - iso1631 11mo ago
    And then they'll ruin it all by injecting adverts to get an extra $20b a year in revenue
- hobofan 11mo ago
  If they are able to actually successfully pivot into ads as a business model, it's very easy to justify the valuation: Just look at Google/Meta. I'm personally skeptical that they are able to pull off ads, at least on the short timescale they likely need to. They more or less have to nurture/disrupt a whole SEO industry, and the way big corps allocate advertising budgets are very slow to shift (many are still struggling to find their footing in social media advertising).
  - disgruntledphd2 11mo ago
    > If they are able to actually successfully pivot into ads as a business model, it's very easy to justify the valuation: Just look at Google/Meta. Ads are not just a switch one can turn on. Firstly, you need to build a decent ad serving/targeting/pacing engine. Secondly (and more importantly) you need to hire a shed ton of sales people (in many, many geos) and then ramp them all up (difficult if you're building the product at the same time). And then you need to keep at it for 3-5 years minimum before you'll finally get the bigger/more conservative brands/agencies/etc to buy in properly. At that point, you'll make decent money, after accounting for all of the costs. I'm not sure that you'll make enough money, but it would definitely stanch their bleeding a little. tl;dr if they haven't already built this ad product, it's unlikely to make a material difference before 2030.
tarsinge 11mo ago
This argument regarding brand loyalty gets repeated but it’s really weak to me. The immense majority of people don’t tie their identity to the software services they are using. Without network effects or an ecosystem locking customers will switch as soon as there is a less expensive and/or better alternative, as the history of software has shown countless of times.
- stingraycharles 11mo ago
  no but there’s the network effect that Google has / once had with search that OpenAI has with ChatGPT: user interactions. all that data and classification will help tremendously getting better datasets, which is equally important (or more important) than better algorithms.
  - JustExAWS 11mo ago
    And defaults matter - every browser that matters except for Edge defaults to Google as well as every mobile phone outside of China. Both Google and Apple (ie any searches in Safari make money for Apple based on the Google deal) said there was no slowdown on Google searches and the “AI overview” by Google is “good enough”.
- Topfi 11mo ago
  Keep in mind how severely the quality of Google search results or e.g. any consumer facing piece of Microsoft software (Windows, Office, OneDrive, etc.) have deteriorated to the point it has far transcended the more nerdy corners of the web, yet both continue to retain a strict grip, thanks to buy in/brand strength.
  - ForHackernews 11mo ago
    There's no viable alternative for either of those yet. Massive network effects around Microsoft office, and Google's only real competition is the equally-bad Bing.
    - 11mo ago
chemmail 11mo ago
It’s going be pretty hard to dethrone Google when even Apple is going to Google for AI with another huge billion $ contract.
- Topfi 11mo ago
  In fairness, that is for their model, not their brand. In this industry, the mind share and buy in OpenAI has is still second to none, even when Gemini 2.5 Pro served the vast majority of users far better than the OpenAI models, the latter MAU trounced all competitors. We do not know for certain as of yet, but I’d be very surprised if Apple felt the need to loudly communicate to their user base that the upcoming Siri improvements aren’t Apple Intelligence. They won’t lie of course, but Googles brand in the space isn’t nearly as strong with the layperson, whereas they more than happily shouted their use of GPT from the rooftops initially.
- DANmode 11mo ago
  This year. Apple is in the business of contracting out new-hotness until their polish is done. Then they put their name on the thing, pretend it’s new technology – and depending on the named feature, sometimes it is!
xnx 11mo ago
> They have by far the strongest brand Just like Blackberry, but instead of having to buy an new device to switch to the competition, the customer just needs to click on a different website.
- keiferski 11mo ago
  Not a great analogy. Blackberry was never really for mass consumers and was always business-first. They lost to Apple because Apple won the mass market, and the mass market overwhelmed the specific niche business use-case that was BB. OpenAI is already the consumer-first AI platform. And, in my opinion, in the minds of the average consumer, the biggest one that is "an app" with memory and folders, vs. something like Gemini which is perceived as an extension of Google Search and thus doesn't have the same "knowledge database" UI.
  - diamond559 11mo ago
    Yeah but consumers don't want to pay for these 7 second memes or "erotica", blackberries had actual value that companies paid for.
jorvi 11mo ago
> They have by far the strongest brand They don't really, because of Gemini and Grok. If it was OpenAI vs Claude then yeah, ChatGPT is known whereas Claude you have to be an enthusiast to know. But everyone using Google runs into Gemini and everyone using X runs into Grok, and people talk. Now even the laypeople know there is more than one AI, and they're from big brands that they trust. Which means that people will window shop for the AI with the best performance per cost. Bye bye brand power.
- ForHackernews 11mo ago
  Does anyone trust Xitter? If so, they shouldn't.
  - jpadkins 11mo ago
    why?
    - baal80spam 11mo ago
      Probably because something something Nazi.
      - diamond559 11mo ago
        Well the guy that owns it sieg heiled on stage twice so... Do you not have working eyes, or does something prevent you from acknowledging reality?
    - array_key_first 11mo ago
      It's run by an insane person and insane people are generally very volatile and difficult to rely on. I mean, even just the name - 'X'. You can tell that's some Elon Musk bullshit because it's the stupidest fucking name I've ever heard in my life and nobody with even a quarter of a brain would ever suggest that as a brand name. When that's literally the brand of your company, naturally I question if everyone has the screws tightened up there, you know?
- 11mo ago
yesco 11mo ago
I'd argue their brand might be too strong, ChatGPT has already begun to enter the same semantic space as "Velcro". Everyone I know seems to have tried it yet quickly you begin to realize that for most people ChatGPT == LLM, it seems everyone is using "ChatGPT" on completely different platforms. In the end, regardless of technical understanding, people will always shop around on price if the feature set is similar enough I suppose.
- JustExAWS 11mo ago
  ChatGPT though isn’t where the profit id going to come from. Businesses using LLMs are and Amazon (AWS) is not selling access to Bedrock and neither is Google (GCP). Models are becoming a commodity. *Every* implementation I’ve done one of the requirements is to easily be able to switch between multiple models
- roncesvalles 11mo ago
  The thing is, laypeople aren't using anything other than Google Search even for LLM answers. If I want an LLM answer to "is erythritol bad for you", I'm not firing up ChatGPT. I'm just typing it into Google, and the LLM answer it spits out is pretty good. ChatGPT needs to be significantly more compelling for most people to use it for one-shot LLM answers over Google Search. And the minute Google removes the one-shottedness of its search answers, it's over for ChatGPT. Imo ChatGPT is just "a feature not a product", in the search engine space, as the adage goes.
  - marcus_holmes 11mo ago
    I have no idea on the data, but anecdotally I'd dispute this. Regular folks in my life (i.e. non-techies) routinely talk to an LLM and use it to answer questions that 5 years ago they'd have searched for. The techies are the ones who are steering clear and sticking with search engines in my experience.
  - butlike 11mo ago
    It's a Google without ads right now. Worth using until that day comes

weego 11mo ago

Probably so, but that doesn't mean their value can keep scaling without heavy diminishing returns. Softbank must assume they've taken 80%+ of the gains from this phase of NVIDIA's growth, and want to capture the next wave of growth. I agree with you that OpenAI seems much more risky in terms of it's actual true viability as a business, but the risk:reward must be there for Softbank.

lvl155 11mo ago

They probably know more than us. Such as alternative chips or that the Chinese will go in-house sooner than we think. Nvidia’s moat is not as permanent as people think.

ForHackernews 11mo ago
Given how poorly Intel and AMD have fared, it suggests the hardware moat is much deeper than the software one.
- ethbr1 11mo ago
  Nvidia's moat is their pace of performance growth, which is hardware + software + cultural. If they skip a beat, or it becomes impossible to increase performance (TSMC node stumble or P4-style dead-end), then it won't take long for someone to catch up. If they keep executing on better hardware performance + software to support it? They keep the money spigot on.
  - bmacho 11mo ago
    People are saying that nvidia doesn't have any moat for 20 years. And nvidia hasn't been dethroned, but grown into the largest company in the world in the meantime.
    - ethbr1 11mo ago
      Both realities are true. They don't have a moat... because their moat is their performance growth rate. If they stopped today, competition would flood in. But by the time competition catches up to Nvidia today, Nvidia has moved several steps ahead.
- raw_anon_1111 11mo ago
  Nvidia doesn’t make hardware. It designs hardware. TSMC makes hardware.
  - 11mo ago

mark_l_watson 11mo ago

Without a doubt, in my opinion, OpenAI is a risky bet, but perhaps Softbank can make some money on OpenAI and then get out.

Jyaif 11mo ago

They want to profit from the IPO of OpenAI. Private investors get a free 20% - 30% gain not available to the retail investors.

deleted 11mo ago

[deleted]

ZiiS 11mo ago

SoftBank is the world leader in turning safe bets into risky ones.