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OpenAI needs to raise at least $207B by 2030

559 points by akira_067 11mo ago

rpmisms 11mo ago
https://archive.ph/PyLnT https://archive.ph/PyLnT
fullshark 11mo ago
"If you owe the cloud computing company a hundred dollars, it's your problem, but if you owe the cloud computing company 207 billion dollars..."
- akira_067 11mo ago
  Too big to fail. It's essentially 08 part 2 with the expected irr.
  - ieie3366 11mo ago
    But this is not a bank, or an airline, or a real estate giant. If OpenAI goes bankrupt, what happens? People won’t be able to write their precious slop oh no and serious professionals will just switch to any other LLM provider
    - LunaSea 10mo ago
      Users might simply switch to Gemini or Claude but partnered companies might go bankrupt or see their stock tank.
  - rubyfan 11mo ago
    OpenAI deals will likely end up with government backing in the next 12 months. Then we’ll all be on the hook for it.
user3939382 11mo ago
If they want to come talk to me I can help them out of this. Usually the smart guys are too busy talking to hear an offer though.
- user3939382 10mo ago
  Downvoted by salty juniors with skill issues who wouldn’t know transformer architecture if it sat on their face. It’s cool I get it. I’m still your friend.
voxadam 11mo ago
Previously: https://news.ycombinator.com/item?id=46054092 https://news.ycombinator.com/item?id=46054092 | 11 hours ago | 44 points | 19 comments
Invictus0 11mo ago
People crying about the revenue gap constantly forget that OpenAI still hasn't turned on the ads, porn, and gambling. Trust, they will turn it on eventually.
- 9cb14c1ec0 11mo ago
  I fully expect all three to happen.
- femiagbabiaka 11mo ago
  HSBC, the firm who did the analysis in the article, took into account projected revenues matching user numbers of 44% of the world's non-Chinese population.
  - rvnx 11mo ago
    It would be plausible but very optimistic projection if there was no competition that is currently crushing OpenAI
    - femiagbabiaka 11mo ago
      Oh, I agree it's implausible. But GP said > People crying about the revenue gap constantly forget that OpenAI still hasn't turned on the ads, porn, and gambling But quite the opposite, HSBC assumed that they will have a virtual global monopoly on AI, and even under those projections they will still need to take on hundreds of billions of debt. I'm sure if they get there getting access to that debt will be easier than I'm assuming currently.
      - rvnx 11mo ago
        Do you believe so ? (like real question, not sarcastic here)
        femiagbabiaka 11mo ago
        I think that a company with a global monopoly on a thinking machine that replaces wide swaths of current internet business categories, whose user base makes up most of the world outside of the GFW, would be very valuable on the public market and would probably have access to as much debt as they want, even if it had negative consequences for the world economy. Even the 2nd or 3rd place company in that race will be quite profitable. It's not impossible, just implausible.
dude250711 11mo ago
A bit like a socialist country.
- lawn 11mo ago
  Not at all. This is capitalism.
  - akira_067 11mo ago
    Something something true capitalism has never been tried before
  - dist-epoch 11mo ago
    No, this is Sparta
  - stuffn 11mo ago
    Not when the government steps in because OpenAI, NVIDIA, Microsoft, etc are all going down together. There is so much pseudo-money-laundering going on between those companies. I would be shocked if the government (e.g. 2008 style socialism for the rich) steps in to make them “too big to fail”.
    - stanleykm 11mo ago
      still capitalism
    - OccamsMirror 11mo ago
      Microsoft and Nvidia aren't going down. Their stock prices might go down but they're not going down.
      - rchaud 11mo ago
        Stock prices going down is the reason AIG, GM and Chrysler received bailouts.
        10mo ago
rapsey 11mo ago
The most interesting point about OpenAI I have heard lately is they are literally trying to make themselves too big to fail. If they go down so does everyone else, which explains all those strange deals with everybody and the comment from their (cfo?) about being backstopped by the gov.
- YetAnotherNick 11mo ago
  > If they go down so does everyone else What does that even mean?
  - rapsey 11mo ago
    In terms of the stock market since without AI thw US would be in a recession.
  - rvnx 11mo ago
    Let's say OpenAI signed a commitment contract that they agreed to spend XXX USD in your company over N years. You invest in infrastructure, your contractors sometimes take loans, the construction companies take loans. Countries / Funds lend money to such companies (example: Saudi Arabia fund), these funds themselves raised debt, it can quickly spiral down.
    - bradfa 11mo ago
      If OpenAI fails, wouldn't their customers just move to other AI providers? So the total hardware demand by AI companies wouldn't dramatically change over a reasonable time frame?
      - stuartjohnson12 11mo ago
        If OpenAI fails, the assumed case is overcapitalisation relative to demand. In such a world, if the reason OpenAI has no liquidity is because there's insufficient demand, there's no customers to move across.
      - tushar-r 11mo ago
matthewowen 11mo ago
It's sort of hard to judge this. The article mostly focuses on ChatGPT uses, but hard to say if ChatGPT is going to be the main revenue driver. It could be! Also unclear if the underlying report is underconsidering the other products. It also estimates that LLM companies will capture 2% of the digital advertising market, which seems kind of low to me. There will be challenges in capturing it and challenges with user trust, but it seems super promising because it will likely be harder to block and has a lot of intent context that should make it like search advertising++. And for context, search advertising is 40% of digital ad revenue. Seems like the error bars have to be pretty big on these estimates.
- disgruntledphd2 11mo ago
  > It also estimates that LLM companies will capture 2% of the digital advertising market, which seems kind of low to me. There will be challenges in capturing it and challenges with user trust, but it seems super promising because it will likely be harder to block and has a lot of intent context that should make it like search advertising++. And for context, search advertising is 40% of digital ad revenue. Yeah, I don't like that estimate. It's either way too low, or much too high. Like, I've seen no sign of OpenAI building an ads team or product, which they'd need to do soon if it's going to contribute meaningful revenue by 2030.
  - _aavaa_ 11mo ago
    https://openai.com/careers/growth-paid-marketing-platform-engineer-san-francisco/ https://openai.com/careers/growth-paid-marketing-platform-en... Is that role not exactly what you mention?
    - disgruntledphd2 11mo ago
      Actually yes (I did mean to check again but I hadn't seen evidence of this before). I do think that this seems odd, looks like they're hiring an IC to build some of this stuff, which seems odd as I would have expected them to be hiring multiple teams. That being said, the earliest they could start making decent money from this is 2028, and if we don't see them hire a real sales team by next March then it's more likely to be 2030 or so.
darkwizard42 11mo ago
Is there any link directly to the report? I am unable to find any in this article or a number of others which seem to just copy the same information here. I think beyond the number of crazy assumptions (no Google taking market share in the consumer market?? only 2% of digital advertising expected to be captured by OpenAI?) it is hard to nail down which levers could move which might make this funding hole disappear.
- NewsaHackO 10mo ago
  No, and there never will be. The second you ask anyone for hard numbers about OpenAI’s (or any AI’s) unprofitability, everyone evaporates (which is weird considering how quantitative the HN crowd tries to be, compared to, say, reddit). Everything is just “professional opinions” on economics by tech bro bloggers.
  - darkwizard42 10mo ago
    I'm not looking for OpenAI numbers, I'm looking for the HSBC report which would contain more numbers regarding how they did their estimates.
aurareturn 11mo ago
The team also assumes LLM companies will capture 2 per cent of the digital advertising market in revenue, from slightly more than zero currently. This seems quite low. Meta has 3.5 billion users and projected ~$200b revenue in 2025. ChatGPT is at ~1 billion so far. By 2030, let's just stay ChatGPT reaches 2 billion years or 57% of Meta's current users. I'd like to think that OpenAI's digital ad revenue should reach 10% by 2030 an then accelerate from there. In my opinion, the data that ChatGPT has on a user is better than the inferred user data from Instagram/FB usage. I think ChatGPT can build a better advertisement profile of each user than Meta can which can lead to better ad targeting. Further more, I think ChatGPT can really create a novel advertisement platform such as learning about sponsored products directly via chat. I'm already asking ChatGPT about potential products and services everyday like medicine, travel, gadgets, etc. I think people are severely underestimating ChatGPT as a way to make money other than subscriptions. I also think people are underestimating the branding power ChatGPT has already. All my friends have ChatGPT on their phone. None of them except me has Gemini or Claude app. This doesn't account for OpenAI's other ambitions such as Sora app. Hey Sam Altman or OpenAI employee, if you are reading this, I think you should buy the North American version of TikTok if the opportunity presents itself. The future of short videos will be heavily AI generated/assisted. Combine Tiktok's audience with your Sora tools and ChatGPT data and you got yourself a true Instagram competitor immediately. If the $14b sales price of US Tiktok is real, that's an absolute bargain in the grand scheme of things.
- gtirloni 11mo ago
  > Meta has 3.5 billion users and projected ~$200b revenue in 2025. Meta has WhatsApp, Instagram, and Facebook to account for that. OpenAI has ChatGPT (not a social platform). It seems to me you're comparing apples and oranges here.
  - k_kelly 11mo ago
    Google makes over a billion of its ad Revenue from search. Intent works. But I think Open AI is not a slam dunk for Ads. Gemini and AI mode will compete for the same budget, and Google's Ad machine is polished. I think eventually you will buy Ads for Open AI in Google's marketing platforms, just like most people buy bing ads in Google.
ZiiS 11mo ago
Raising $207B is plausible vs the dozens of Nuclear Power plants they also need.
- Lalabadie 11mo ago
  Yeah, that's the "so it can continue to lose money" part.
- yehat 11mo ago
  No, they can use the ideas from The Matrix for power delivery.
  - ZiiS 10mo ago
    Whilst the rest of that documentary is spot on; the human battery ideas were overly optimistic.
deleted 11mo ago
[deleted]
ripped_britches 11mo ago
I heard this about Amazon for 20 years
- nasmorn 11mo ago
  Amazon raised like 10million. People complained about lack of dividends but that was at least money earned
- zerosizedweasle 11mo ago
  Amazon wasn't committing to larger spending in one year than the US defense budget.
  - silveraxe93 11mo ago
    2025 US defense budget is $849.8 billion[1]. Had a look and: >In total, OpenAI aims to invest approximately $1.4 trillion in computing infrastructure – encompassing Google Cloud, Nvidia chips, and data center expansions. Huh yeah fair. That's more than the yearly defense budget. Absurd. Though I'm sure it's not _yearly_ - [1] https://en.wikipedia.org/wiki/Military_budget_of_the_United_States https://en.wikipedia.org/wiki/Military_budget_of_the_United_...
    - phatfish 10mo ago
      The sovereign wealth funds and billionaires need something to do with all their available cash. It's no fun just watching the number increase anymore, that got boring quite a while ago.
      - coffeebeqn 10mo ago
        That is such an insane bet though! How many trillions can they have itching in their pockets
- deleted 11mo ago
  [deleted]
- 11mo ago
aika_london 11mo ago
How to read FT for free
- mikestew 11mo ago
  https://news.ycombinator.com/item?id=46058125 https://news.ycombinator.com/item?id=46058125
- almostkindatech 10mo ago
  If you sign-up for a free account you can read FT Alphaville, which is the blog-style section of the FT containing articles like this one
- fragmede 10mo ago
  I'll tell you for $45/month.
bill3389 11mo ago
It is not losing money, the whole industry haven't figured out how to generate revenue yet. it is the starting phase of LLM like we experienced in .com bubble. Is it a bubble at this point? Yes. Can it generate revenue in the future? Yes. Will openAI survive in this bubble? Maybe.
- trollski 11mo ago
  [dead]
- VerminOctopus1 11mo ago
  It is quite literally losing money at an unsustainable rate. They need a path to profitability otherwise this is a massive boondoggle for all of the investors
  - Mistletoe 11mo ago
    Unfortunately “all of the investors” is in reality the whole world’s markets due to the disgusting top heavy nature of the SP500 currently. I have been talking to AI a lot about what portfolios will survive that crash. :)
    - integricho 10mo ago
      And what is the conclusion, what will survive?
      - christophilus 10mo ago
        Berkshire.
      - Mistletoe 10mo ago
        Stuff like this is what survived the lost decade after the tech bubble crash in 2000- Gold, treasuries, small cap value. https://portfoliocharts.com/2021/12/16/three-secret-ingredients-of-the-most-efficient-portfolios/ https://portfoliocharts.com/2021/12/16/three-secret-ingredie... I think I'll add in some Bitcoin to round it out. Bitcoin and gold seem to take turns going now and be inversely correlated often. https://www.theblock.co/data/crypto-markets/prices/btc-pearson-correlation-30d https://www.theblock.co/data/crypto-markets/prices/btc-pears...
tantalor 11mo ago
> as ubiquitous and useful as Microsoft 365 What is this saying? Is this sarcastic? I don't know anybody with a Microsoft 365 subscription. I suppose the cloud storage is nice, but you can do much better; Google gives you double that for the same price ($99/yr).
- zerosizedweasle 11mo ago
  Businesses, a lot of people have it through work.
- hdjrudni 10mo ago
  > I suppose the cloud storage is nice, but you can do much better; Google gives you double that for the same price ($99/yr). Nuh uh. I get 6TB of OneDrive for $100/yr*. Granted, it's across 6 accounts. For $100, I get 2TB of Google One. Edit: OK, so they upped it to $130/yr.
- fragmede 10mo ago
  > I don't know anybody with a Microsoft 365 subscription I don’t either, but the lesson to be learned is that you live in a bubble. Microsoft makes many millions of dollars a year off of those subscriptions. Just because the bubble of people you interact with doesn’t mean that those people don’t exist. OK no that was a lie. I know one person that has a Microsoft 365 subscription. I hate it when he sends me word or outlook document links or whatever the hell. Just use Google docs, dude.
- fodkodrasz 10mo ago
  Hi. Now you know one person. Also: Google One gives you 2 TB, MS 365 Family gives 6x1TB for roughly the same price (for a total of 6 seats). The packages differ in multiple ways, being different fit for different use cases. Also note: I'm using Google docs at work, and while Word for one example has too many features, Google docs is lacking even on the basics like document styling (think custom paragraph styles), it is painfully inadequate for business use, lot of work is wasted on working its limitations around.
ChicagoDave 11mo ago
TechCrunch: Anthropic is projecting positive cash flow by 2028, while OpenAI is expecting sizable losses, with cash burn reaching $14 billion in 2026
- deleted 10mo ago
  [deleted]
pjmlp 11mo ago
What about the usual capitalism point of view? If their business isn't sustainable they should go bankrupt, and close shop.
- Joel_Mckay 11mo ago
  Except the 7 firms make up >30% of all market growth, and move more capital than entire countries. Yes, they are hemorrhaging cash with every new customer, and burdening taxpayers by eating community electrical and water infrastructure. In terms of business, it is not sustainable: https://www.youtube.com/watch?v=t-8TDOFqkQA https://www.youtube.com/watch?v=t-8TDOFqkQA The hype-cycle is nothing new =3 "Memoirs of extraordinary popular delusions and the madness of crowds" (Charles Mackay, 1852) https://www.gutenberg.org/files/24518/24518-h/24518-h.htm https://www.gutenberg.org/files/24518/24518-h/24518-h.htm
- rchaud 10mo ago
  Capitalism makes more sense if it's thought about purely in terms of individual self interest as supposed to something that leads to an efficient market on aggregate. The CEOs making big calls across the economy have already negotiated golden parachutes in the event of their failure. The financiers and lawyers getting a chunk of each bond deal they close have every incentive to raise more than what's actually needed. Investment funds flush with ZIRP dollars have every incentive to plow it back into investments to show that "the money is at work".
  - pjmlp 10mo ago
    Yeah self interest is how we end with world we have today at the edge of destruction through various mechanisms.
- dgb23 10mo ago
  Boom and bust hype cycles have always been a feature of capitalism, especially for advanced technology. Perhaps the only way to know the limit is to overshoot.
  - 10mo ago
paxys 11mo ago
TL;DR - financial analysts look at current charts and project them foward by 5 years and go "wow the numbers look bad". Sure OpenAI may well be bleeding money into the 2030s, or may even go bust completely depending on how pessimistic you are, but the analysis completely skips: - They are building their own data centers, and will be less reliant on renting compute from Microsoft and Amazon over time. - Once the AI bubble has subsided costs for GPU purchases and rentals will decrease significantly. Plus there will be more advancements and competition in the space (e.g. Google TPUs) and Nvidia will no longer be able to name their own price. - We will write more efficient software for training and inference. - Once user growth is tapped out OpenAI will no longer need to have the overly generous free tier that they do today. And if they decide to turn up the advertising faucet these users could bring in a ton more revenue than in the projection. Thinking that every AI company combined will capture only 2% of the total digital advertising market is ridiculous. AI apps are already challenging social media for scrolling time. Basically, the entire space is evolving so rapidly that it's pointless to make a projection with the assumption that the landscape isn't going to change from here on.
- logsr 10mo ago
  I think you are right that the entire analysis is flawed. The Amazon and Microsoft "rental" deals have inflated price tags because of the circular financial arrangements between them and OpenAI, and because those future revenue streams can be used notionally to finance CapEx. All of the Stargate DC build is being done through for-profit SPVs, so the financials are murky, but building the infra gives them collateral for debt, and they are going to lease the compute to the highest bidder, so there is a whole scheme for getting out of the non-profit box, creating a self-perpetuating loop of borrowing to build, using what they build as collateral for more borrowing, raising additional revenue and hedging by leasing compute to 3rd parties, and then using the for-profit SPVs to cross-subsidize OpenAI proper. That plan has enormous risks of its own (can the leadership team of OpenAI effectively build a competitor in the hyperscale compute space?) but whatever happens, it won't just be straight line scaling their current deals with existing hyperscalers.
- rhetocj23 10mo ago
  [dead]
raincole 11mo ago
ChatGPT just launched "shopping research."[0] Hideous idea as it is, I fully expect they break even in 2026. [0]: https://openai.com/index/chatgpt-shopping-research/ https://openai.com/index/chatgpt-shopping-research/
- 542458 10mo ago
  Honestly, this is huge for people like me who tend to over-research and over-think the hell out of product choices. "Find me a top-fill warm-mist humidifier that looks nice, is competitively priced against similar products, and is available from a retailer in $city_name. Now watch for it to go on sale and lmk." If they can figure out how to get the right kickbacks/referrals without compromising user trust and really nail the search and aggregation of data this could be a real money-maker.
  - chneu 10mo ago
    Trusting AI with your shopping is very short sighted. Lol what a terrible idea. Why not just hand every decision you'll ever make to AI? Nobody needs critical thinking or anything. Just have AI do it so you save $3 and 4 minutes.
    - crims0n 10mo ago
      Fundamentally, is it really that different from being persuaded by an advertisement or trusting what the marketing says on the box?
    - wnolens 10mo ago
      Why would I want to spend 1-2h researching humidifiers if I can spend that time in any other way, and still end up with a humidifier that fits my needs first try? This kind of task is perfect for AI in a way that doesn't take away too much from the human experience. I'll keep my art, but shopping can die off.
      - superxpro12 10mo ago
adidoit 11mo ago
LLMs have high utility for coding. The PMF is so strong that even with just coding i feel they will see an ARPU expansion beyond conservative assumptions. There are adjacancies in white collar work like financial analysis that they will go after. All these will capture high ARPU usage. Consumer is not their only path to revenue but it is probably the easiest to model. The enterprise play to automate and accelerate some white collar workers is a clear target not reflected here.
- zerosizedweasle 11mo ago
  They've committed to spend an amount equal to the entire US defense budget just in October.
  - skizm 10mo ago
    I think you mean the US WAR budget! /s
  - Culonavirus 10mo ago
    I swear on the crap I just pulled out of my ass that I'll spend 100 quadrillion dollars. Imaginary ones of course. Now pump my stock. Seriously though, massive recession is on the horizon, no one is going to be spending squat.
- serendipityAI 10mo ago
  but with coding, the users are mercenary and will instantly switch to a model that is better. Less sticky compared to the consumer product
  - deleted 10mo ago
    [deleted]
- guizadillas 10mo ago
  They can get all the enterprise contracts they want but I don't think it will be enough
tehjoker 11mo ago
You already can't trust llm output. How will you trust it when its actively steering you based on profit motive?
- ragazzina 10mo ago
  Do you trust the result of your Google searches?
  - guizadillas 10mo ago
    Who does?
  - tehjoker 10mo ago
    Not really but it would be nice if we could have high quality non manipulative information :/
  - chimineycricket 10mo ago
    Yes, in the sense that Google is not hallucinating search results or making up products when searching for it.
mise_en_place 10mo ago
The reason for this is that leverage is extremely expensive and punished in the current macro regime. OpenAI will lose money faster if they scale up. That's because the Fed can capitulate all it wants, but real interest rates and real yields won't move. The market is saying "pay me".
Aeroi 10mo ago
Google earned $264.59 billion in ad revenue in 2024 alone. OpenAI can figure it out.
- rchaud 10mo ago
  And all Google did was develop the world's most popular search engine, email host, web browser, ad network, video streaming site, mobile operating system and cloud office suite and deliver profits for 20 straight years.
  - osn9363739 10mo ago
    OpenAI will just get their AI to make it happen.
austin-cheney 10mo ago
The top two comments mention that capturing, at minimum, 2% of the digital advertising market seems low. I disagree. I see that as an enormous hill to climb. The LLMs will create new content, but they aren't creating new business channels in the advertising industry. As an example even once Google achieved search domination they still didn't have this. They had purchase a lot of things to make that happen like Urchin, Adscape, DoubleClick, YouTube, and a lot more.
anshumankmr 10mo ago
I have two words: 1) government contracts 2) ad dollars
- setnone 10mo ago
  The third might be 'AI Device'
  - anshumankmr 10mo ago
    What I am reading makes it sound similar to the Humane Pin but with Jony Ive's design
- Aldipower 10mo ago
  That are 4 words. ;-) Other then that yes, goverment contracts, meaning offloading the costs to the regular people. I think the US goes all in with AI, trying to get world dominant and controlling the market. But I think this is a mistake and the US will get into trouble with this.
captainkrtek 10mo ago
It's so sad how much money leaders will effortlessly pump into something like this, when we still have existential threats of climate change, incurable diseases, poverty, housing, and so on. Meanwhile ungodly amounts of money are being used so some boomer can generate a AI video of a baby riding a puppy.
jillesvangurp 10mo ago
I think they are missing a few very significant revenue sources that likely going to grow beyond just simple enterprise user accounts for Chat GPT. I'll call out two of them. Image, video, and other content generation is going to become more important and companies will be spending on that. We've seen some impressive improvements there. IMHO near term a lot of that stuff might start showing up in advertising and news content, the whole media industry is going to be a massive consumer of this stuff. And there's going to be a lot of competition for the really high quality models that can be run at scale. Five years until 2030 is a lot of time for some pretty serious improvements to land. Another area that the article skips over is agentic tools. Those are showing a lot of promise right now. Agentic coding tools are just the tip of the iceberg here. A lot of these tools are going to be using APIs. So API revenue is a source of revenue. There are applications across the entire IT industry. SAAS, legacy software, productivity tools, etc. Yes 207B is a lot of money. And there's no guarantee that OpenAI comes out on top "winning" all these markets of course and we can argue about how big these markets will be. But OpenAI does have a good starting position and some street credibility here. It's a big bet on revenue and potential here. But so is betting against all that and dismissing things. And there's a lot of middle ground here.
- olelele 10mo ago
  This sounds very similar to the Tesla stock value hype train. It’s all a gamble on the promise of tech that isn’t quite there yet.
  - qwertox 10mo ago
    What I don't understand is how Elon will ever compete with Chinese humanoid robot pricing and output. He's known for not caring about privacy, so there's no real difference between buying a Tesla one or a Chinese one. Both will look and listen into your home and transfer as much data as possible to their true owners. He congratulates Jeff Bezos for New Glenn, and rightly so, but he's absolutely silent about the Chinese robots. One has to admit that they're already ahead of the US. This comes from a German who well recognizes how far behind Germany is in comparison to the US, in regards to any digital technology.
paulddraper 10mo ago
This is why consensus will never produce innovation. OpenAI has many plausible monetization avenues. (Whether it will execute on them -- a fair question. But acting like they just don't exist is low IQ.) Take ONE example: online shopping. Online shopping is $6-7 trillion per year, growing 7% annually. Suppose ChatGPT captures 10% of that with a 5% fee. (Marketplaces like Amazon and Walmart charge 15%. Ebay is 5%.) That's $200B over five years.
bofadeez 10mo ago
Meanwhile Google does not have to raise money and they're profitable whether AI works or not.
fpauser 10mo ago
AI is/will be the mother of all bubbles.
yk 10mo ago
It's really hard for start ups to compete for VC money: "Hello Mr. VC I'm going to burn your money for buzzword" just no longer works, first openAi has an industrial buzz word generator, second their money burning plan scales much better than my money burning plan.
- smallmancontrov 10mo ago
  Yeah but they aren't a diversified portfolio of money burning plans and that's the real secret to responsible investing. I think Warren Buffet said that.
0xbadcafebee 10mo ago
I just realized that other industries are way larger than AI. Assuming they capture the entire advertising market, only $390 Billion was spent in the US last year. Compare that to health care, where 4.3 Trillion was spent in the US last year, or commercial banking's revenue of 1.5 Trillion, commercial real estate's 1.5 Trillion, gasoline stations' 1.10 Trillion, etc. What's amazing is, despite the fact that AI isn't making much money, is taking on considerable debt, and isn't even assured to be all that useful, one third of the stock market is now just AI crap. The economy is going to collapse because of a small, brand-new industry. This... shouldn't be possible.
- nprateem 10mo ago
  I know right it's like people are buying future value rather than based on current revenues or something. How long did Apple keep going up following the smartphone revolution?
- Glemkloksdjf 10mo ago
  Build a system which can read MRI images, now AI took over the whole MRI Analysis sector. Let AI diagnose the avg cold, now AI took over the household / local doctor for 90% of cases. Use AI for support, now AI took over the call-center business. AI can already code. It might not be perfect, it might not be always good but NO ONE assumed that 2025 some matrix multiplication can mimick another human being so well that you can write with it and it will produce working code at all. thats the hype, thats the market of ai. And in parallel we get robotic too. Only possible because of this AI thing. Because robotic with ML is so much better than whatever we had before. Now you can talk to a robot, the robot can move, the robot can plan actions. All of these robots use some type of ML in the background. Segment Anything is possible because of AI. Thats the reason why this 'AI crap' is so hyped.
  - freejazz 10mo ago
    I don't understand why people think that AI "being able to code" has any bearing on anything else that humans do
fpauser 10mo ago
Can we just stop putting the "I" behind the "A"? Thanks.
AndrewKemendo 10mo ago
They aren’t going to get new equity funding they are going to go public so they can start issuing bonds.
luxuryballs 10mo ago
“We’re gonna need more fuel for this fire!”
lvl155 10mo ago
I don’t think LLM leader is going to come out of this AI race on top. OpenAI is like Yahoo! in my view. They were there in the beginning and led by default. Someone somewhere will be the Google of this era. It won’t be LLM but the next step. Leaps and bounds better than LLM. I also think we won’t use even 1/100th of the energy needs projected right now.
- kilroy123 10mo ago
  I agree. Or someone who combines a lot of tough to build tech right at the perfect time.
- logsr 10mo ago
  Google may very well be the Google of this era. They have demonstrated the ability to maintain parity on the engineering side, they have a long running advantage on OpEx with TPU, they have the most data, and the most trusted brand. AI collapses the value of IP across the board, because AI trends towards being the only IP, which means that the marketplace will be defined by operational efficiency, ability to build and run systems at massive global scale, access to capital, and government connections, so Microsoft, Amazon, and Google probably stay on top.
  - lvl155 10mo ago
    They barely caught up after leaking talent for the past 4-5 years. I am not drinking the koolaid. A lot of talented people are going back home to China. I am 99% the next Google will come out of Asia.
- jasondigitized 10mo ago
  Google will be the Google of this era. They just got a slow start but the flywheel they already have in place is now spinning in their advantage.
ec109685 10mo ago
That’s 207b / 8b people / 4 years / 365 days or 1.17 cents a person. If ChatGPT is delivering that, they should have no problem raising money.
- PunchyHamster 10mo ago
  That if competition doesn't under-cut you and you convert at least part of the free users in the process. And with near every level of hardware getting some kind of AI acceleration a lof of the uses might even be local
- deleted 10mo ago
  [deleted]
mr_00ff00 10mo ago
I don’t know if this is ridiculous, but I’m curious if access to LLMs will one day be priced like the Bloomberg Terminal or something. Where access for one user is like 20,000 dollars. Maybe less than that, but like 5k per person. Seems crazy by most software standards, but when Bloomberg became a software only program (they stopped selling physical terminals) and people were shocked when they paid almost nothing for excel but then so much for the second tool they needed as traders. Yet it still is priced so high and people pay.
- ronsor 10mo ago
  The difference is that Bloomberg Terminals were always expensive, and so people expected to pay. LLMs are basically free (subsidized) at this point, and people are very sensitive to large price increases.
  - mr_00ff00 10mo ago
    Sure and I’m sure there would be a huge shock, but simple economics would dictate that if that’s the true equilibrium of price for LLMs to be economical, then it would have to get to the price eventually
- WhyOhWhyQ 10mo ago
  I think there could be a few directions. Consumer level LLM usage will become free. Corporate-grade LLM use will cost a lot of money. Maybe the highest grade LLM use will be regulated and only done through government labs.
  - techblueberry 10mo ago
    What’s a high grade LLM though in such a competitive environment? And if China releases more high grade open source models, that pricing model is f8cked. One interesting thing I heard someone say about LLM’s is this could be a people’s innovation, basically something so low margin it actually provides more value to “the people” than billionaires.
ayaros 10mo ago
I'm sure they'll have no issues raising the funds. If they run into trouble, they can always ask ChatGPT for advice.
smileson2 10mo ago
This should be a easy barrier for OpenAI, cgpt has only been public for 3 or so years and they are already close to mediating most of the global economy and human decision making AI credits will likely replace current money anyway
- sethops1 10mo ago
  I hope this is sarcasm
saguntum 10mo ago
For context, this is close to all venture capital spending in the US in 2024 ($215B): https://nvca.org/press_releases/nvca-releases-2025-yearbook-showcasing-2024-vc-trends https://nvca.org/press_releases/nvca-releases-2025-yearbook-...
andy_ppp 10mo ago
Chill out everyone, all we will need to do is ask the AGI how to make money on the investment! 1. Make AGI 2. ??? 3. Infinite profit!
- venturecruelty 10mo ago
  You need to ask it to invent a time machine first so you can go back in time to build the AGI first, naturally.
venturecruelty 10mo ago
How many $20 per month subscriptions will that take?
- tim333 10mo ago
  172 million. Or so.
  - fragmede 10mo ago
    if you make them $200/month subscriptions, that's only 17 million subscriptions. Or so.
    - tim333 10mo ago
      I was thinking the 172 figure was $20/mo times five years but in reality if OpenAI had a bunch of such users they'd value them at about 20x annual revenue and raise on the stock market so they'd only need like 40 or 50 million subscribers.
mbrumlow 10mo ago
Please let me invest…
mvkel 10mo ago
This seems... completely reasonable?
liamconnell 10mo ago
Unfortunately for OpenAI, they are not positioned to capture value from any of the "big margin" use cases that they highlight as key to their future. I think all of these are pretty unrealistic for them: - Revenue sharing from drug discovery (called out by OpenAI CFO): Why would a pharma company give away the upside to a commoditized intelligence layer? Why would OpenAI have a more compelling story than Google Deep Mind, which has serious accolades in this space? - Media generation for ads and other content: For ads, OpenAI is facing off against Google, Meta and Amazon, all of which have existing relationships with advertisers. For the foreseeable future, AI content will be a major discount product compared to humans. OpenAI will not get to charge $1M for an ad like a production company does. So the TAM of ad production (~$50B) shrinks below $1B because AI deflates prices so much. - Other agent use cases: OpenAI doesnt have a surface to build these on. Google has chrome, Microsoft has office, Apple has OS's. The other use cases like coding will be a low-margin competition between model providers until some of them throw in the towel. The players with the best cash position win - and thats not OAI. I think the place that they could win is retail (also called out by OAI CFO). They made deals with Etsy and other small retailers. I was fixing my guitar the other day and would have instantly bought the tools it had suggested that I would need. The problem is that they have to win against Amazon here, and there is zero chance of a partnership for obvious reasons.
- ivan_gammel 10mo ago
  >Other agent use cases: OpenAI doesnt have a surface to build these on. Google has chrome ChatGPT app is their Chrome. Large consumer base using chat on daily basis can expand to prosumer and to enterprise. They build an emotional connection to their customers that has the vibe of iPhone.
  - liamconnell 10mo ago
    Yes but its not relevant to the agent use cases (which are mostly about interacting with external systems). So agents built by Microsoft (Copilot) can natively interact with Office files in Sharepoint, and the Sharepoint product team can build to enable this in special ways. OpenAI has to use the APIs and deal with rate limits, speed issues and other limitations.
skeuomorphism 10mo ago
207 billion to fund sam altmans greatest con on the world. Will it also be treated as "too big to fail", and be bailed out in the future, when it inevitably fails to deliver?
jason-richar15 10mo ago
[dead]
atleastoptimal 10mo ago
What is inevitably going to happen 1. AI becomes better, causes more fear, public uproar, arms race between China/US 2. AI becomes a government project, big labs merge, major push into AI for manipulation, logistics, weapons development/control 3. ???? 4. Utopia or destruction
- cindyllm 10mo ago
  [dead]
mvdtnz 10mo ago
Why was the original title changed? It had the correct title on HN a couple of hours ago.
temptemptemp111 10mo ago
[dead]
wg0 10mo ago
It is very simple. Let's forget other domains and talk about software industry alone. If they capture it fully that would only mean that OpenAI gets a portion of the engineering spend (because it is supposed to save on engineering salaries) which is a portion of the total spend which is almost always less than the total revenue. Now estimate the total revenue of all software companies combined in the world and look at their engineering spend and a faction of that is what OpenAI can have in best case scenario. So... Bubble.
whoamii 10mo ago
So, tree fiddy before inflation
burnerRhodov2 10mo ago
I feel like OpenAI could flip on the ad switch and make $20B a quarter like google... so this number isn't too crazy to me?
scoofy 10mo ago
Oh, I like the part where they're supposed to be a not-for-profit... I guess I'm honestly a bit happy they aren't profiting.
chasing0entropy 10mo ago
Human thought is more than just general intelligence (AGI), but the ability to conceptualize data beyond linear symbolic representations and to combine the schema / metadata from multiple contextual inputs with memory, to output unique concepts in both alphanumeric and other conceptualized manners. An LLM, in addition to being unable to ever obtain true AGI because of the linear and singular representation of concepts and data, cannot combine multiple schemas or metadata from multiple contexts with its own training and reinforcement data. That means it cannot truly remember and correct its mistakes. A mistake is more than the observation and correction, it is applying global changes to both your metadata and schema of the event and surrounding data. LLMs as an AI solution is a dead end.
nr378 10mo ago
I suspect that the asymptotic price of consumer facing LLMs will be 0, much like Search - although just like Search, monetisation potential from ads will be high (perhaps even higher given the ability to truly integrate ads into the result itself using LLMs). It potentially looks like Google and OpenAI will take this new market.
1vuio0pswjnm7 10mo ago
Original HN title: (80 chars) "OpenAI needs to raise at least $207bn by 2030 so it can continue to lose money" Full title: (95 chars) "OpenAI needs to raise at least $207bn by 2030 so it can continue to lose money, HSBC estimates"
- lupire 10mo ago
  The false precision of "207" tells me all I need to know.
ImHereToVote 10mo ago
That's nothing. I need to raise at least one trillion.
nooraiadmin 10mo ago
ads on chatgpt

559 points by akira_067 11mo ago

https://archive.ph/PyLnT https://archive.ph/PyLnT

"If you owe the cloud computing company a hundred dollars, it's your problem, but if you owe the cloud computing company 207 billion dollars..."

akira_067 11mo ago
Too big to fail. It's essentially 08 part 2 with the expected irr.
- ieie3366 11mo ago
  But this is not a bank, or an airline, or a real estate giant. If OpenAI goes bankrupt, what happens? People won’t be able to write their precious slop oh no and serious professionals will just switch to any other LLM provider
  - LunaSea 10mo ago
    Users might simply switch to Gemini or Claude but partnered companies might go bankrupt or see their stock tank.
- rubyfan 11mo ago
  OpenAI deals will likely end up with government backing in the next 12 months. Then we’ll all be on the hook for it.

user3939382 11mo ago

If they want to come talk to me I can help them out of this. Usually the smart guys are too busy talking to hear an offer though.

user3939382 10mo ago
Downvoted by salty juniors with skill issues who wouldn’t know transformer architecture if it sat on their face. It’s cool I get it. I’m still your friend.

voxadam 11mo ago

Previously: https://news.ycombinator.com/item?id=46054092 https://news.ycombinator.com/item?id=46054092 | 11 hours ago | 44 points | 19 comments

Invictus0 11mo ago

People crying about the revenue gap constantly forget that OpenAI still hasn't turned on the ads, porn, and gambling. Trust, they will turn it on eventually.

9cb14c1ec0 11mo ago
I fully expect all three to happen.
femiagbabiaka 11mo ago
HSBC, the firm who did the analysis in the article, took into account projected revenues matching user numbers of 44% of the world's non-Chinese population.
- rvnx 11mo ago
  It would be plausible but very optimistic projection if there was no competition that is currently crushing OpenAI
  - femiagbabiaka 11mo ago
    Oh, I agree it's implausible. But GP said > People crying about the revenue gap constantly forget that OpenAI still hasn't turned on the ads, porn, and gambling But quite the opposite, HSBC assumed that they will have a virtual global monopoly on AI, and even under those projections they will still need to take on hundreds of billions of debt. I'm sure if they get there getting access to that debt will be easier than I'm assuming currently.
    - rvnx 11mo ago
      Do you believe so ? (like real question, not sarcastic here)
      - femiagbabiaka 11mo ago
        I think that a company with a global monopoly on a thinking machine that replaces wide swaths of current internet business categories, whose user base makes up most of the world outside of the GFW, would be very valuable on the public market and would probably have access to as much debt as they want, even if it had negative consequences for the world economy. Even the 2nd or 3rd place company in that race will be quite profitable. It's not impossible, just implausible.

dude250711 11mo ago

A bit like a socialist country.

lawn 11mo ago
Not at all. This is capitalism.
- akira_067 11mo ago
  Something something true capitalism has never been tried before
- dist-epoch 11mo ago
  No, this is Sparta
- stuffn 11mo ago
  Not when the government steps in because OpenAI, NVIDIA, Microsoft, etc are all going down together. There is so much pseudo-money-laundering going on between those companies. I would be shocked if the government (e.g. 2008 style socialism for the rich) steps in to make them “too big to fail”.
  - stanleykm 11mo ago
    still capitalism
  - OccamsMirror 11mo ago
    Microsoft and Nvidia aren't going down. Their stock prices might go down but they're not going down.
    - rchaud 11mo ago
      Stock prices going down is the reason AIG, GM and Chrysler received bailouts.
      - 10mo ago

rapsey 11mo ago

The most interesting point about OpenAI I have heard lately is they are literally trying to make themselves too big to fail. If they go down so does everyone else, which explains all those strange deals with everybody and the comment from their (cfo?) about being backstopped by the gov.

YetAnotherNick 11mo ago
> If they go down so does everyone else What does that even mean?
- rapsey 11mo ago
  In terms of the stock market since without AI thw US would be in a recession.
- rvnx 11mo ago
  Let's say OpenAI signed a commitment contract that they agreed to spend XXX USD in your company over N years. You invest in infrastructure, your contractors sometimes take loans, the construction companies take loans. Countries / Funds lend money to such companies (example: Saudi Arabia fund), these funds themselves raised debt, it can quickly spiral down.
  - bradfa 11mo ago
    If OpenAI fails, wouldn't their customers just move to other AI providers? So the total hardware demand by AI companies wouldn't dramatically change over a reasonable time frame?
    - stuartjohnson12 11mo ago
      If OpenAI fails, the assumed case is overcapitalisation relative to demand. In such a world, if the reason OpenAI has no liquidity is because there's insufficient demand, there's no customers to move across.
    - tushar-r 11mo ago

matthewowen 11mo ago

It's sort of hard to judge this. The article mostly focuses on ChatGPT uses, but hard to say if ChatGPT is going to be the main revenue driver. It could be! Also unclear if the underlying report is underconsidering the other products. It also estimates that LLM companies will capture 2% of the digital advertising market, which seems kind of low to me. There will be challenges in capturing it and challenges with user trust, but it seems super promising because it will likely be harder to block and has a lot of intent context that should make it like search advertising++. And for context, search advertising is 40% of digital ad revenue. Seems like the error bars have to be pretty big on these estimates.

disgruntledphd2 11mo ago
> It also estimates that LLM companies will capture 2% of the digital advertising market, which seems kind of low to me. There will be challenges in capturing it and challenges with user trust, but it seems super promising because it will likely be harder to block and has a lot of intent context that should make it like search advertising++. And for context, search advertising is 40% of digital ad revenue. Yeah, I don't like that estimate. It's either way too low, or much too high. Like, I've seen no sign of OpenAI building an ads team or product, which they'd need to do soon if it's going to contribute meaningful revenue by 2030.
- _aavaa_ 11mo ago
  https://openai.com/careers/growth-paid-marketing-platform-engineer-san-francisco/ https://openai.com/careers/growth-paid-marketing-platform-en... Is that role not exactly what you mention?
  - disgruntledphd2 11mo ago
    Actually yes (I did mean to check again but I hadn't seen evidence of this before). I do think that this seems odd, looks like they're hiring an IC to build some of this stuff, which seems odd as I would have expected them to be hiring multiple teams. That being said, the earliest they could start making decent money from this is 2028, and if we don't see them hire a real sales team by next March then it's more likely to be 2030 or so.

darkwizard42 11mo ago

Is there any link directly to the report? I am unable to find any in this article or a number of others which seem to just copy the same information here. I think beyond the number of crazy assumptions (no Google taking market share in the consumer market?? only 2% of digital advertising expected to be captured by OpenAI?) it is hard to nail down which levers could move which might make this funding hole disappear.

NewsaHackO 10mo ago
No, and there never will be. The second you ask anyone for hard numbers about OpenAI’s (or any AI’s) unprofitability, everyone evaporates (which is weird considering how quantitative the HN crowd tries to be, compared to, say, reddit). Everything is just “professional opinions” on economics by tech bro bloggers.
- darkwizard42 10mo ago
  I'm not looking for OpenAI numbers, I'm looking for the HSBC report which would contain more numbers regarding how they did their estimates.

aurareturn 11mo ago

The team also assumes LLM companies will capture 2 per cent of the digital advertising market in revenue, from slightly more than zero currently. This seems quite low. Meta has 3.5 billion users and projected ~$200b revenue in 2025. ChatGPT is at ~1 billion so far. By 2030, let's just stay ChatGPT reaches 2 billion years or 57% of Meta's current users. I'd like to think that OpenAI's digital ad revenue should reach 10% by 2030 an then accelerate from there. In my opinion, the data that ChatGPT has on a user is better than the inferred user data from Instagram/FB usage. I think ChatGPT can build a better advertisement profile of each user than Meta can which can lead to better ad targeting. Further more, I think ChatGPT can really create a novel advertisement platform such as learning about sponsored products directly via chat. I'm already asking ChatGPT about potential products and services everyday like medicine, travel, gadgets, etc. I think people are severely underestimating ChatGPT as a way to make money other than subscriptions. I also think people are underestimating the branding power ChatGPT has already. All my friends have ChatGPT on their phone. None of them except me has Gemini or Claude app. This doesn't account for OpenAI's other ambitions such as Sora app. Hey Sam Altman or OpenAI employee, if you are reading this, I think you should buy the North American version of TikTok if the opportunity presents itself. The future of short videos will be heavily AI generated/assisted. Combine Tiktok's audience with your Sora tools and ChatGPT data and you got yourself a true Instagram competitor immediately. If the $14b sales price of US Tiktok is real, that's an absolute bargain in the grand scheme of things.

gtirloni 11mo ago
> Meta has 3.5 billion users and projected ~$200b revenue in 2025. Meta has WhatsApp, Instagram, and Facebook to account for that. OpenAI has ChatGPT (not a social platform). It seems to me you're comparing apples and oranges here.
- k_kelly 11mo ago
  Google makes over a billion of its ad Revenue from search. Intent works. But I think Open AI is not a slam dunk for Ads. Gemini and AI mode will compete for the same budget, and Google's Ad machine is polished. I think eventually you will buy Ads for Open AI in Google's marketing platforms, just like most people buy bing ads in Google.

ZiiS 11mo ago

Raising $207B is plausible vs the dozens of Nuclear Power plants they also need.

Lalabadie 11mo ago
Yeah, that's the "so it can continue to lose money" part.
yehat 11mo ago
No, they can use the ideas from The Matrix for power delivery.
- ZiiS 10mo ago
  Whilst the rest of that documentary is spot on; the human battery ideas were overly optimistic.

deleted 11mo ago

[deleted]

ripped_britches 11mo ago

I heard this about Amazon for 20 years

nasmorn 11mo ago
Amazon raised like 10million. People complained about lack of dividends but that was at least money earned
zerosizedweasle 11mo ago
Amazon wasn't committing to larger spending in one year than the US defense budget.
- silveraxe93 11mo ago
  2025 US defense budget is $849.8 billion[1]. Had a look and: >In total, OpenAI aims to invest approximately $1.4 trillion in computing infrastructure – encompassing Google Cloud, Nvidia chips, and data center expansions. Huh yeah fair. That's more than the yearly defense budget. Absurd. Though I'm sure it's not _yearly_ - [1] https://en.wikipedia.org/wiki/Military_budget_of_the_United_States https://en.wikipedia.org/wiki/Military_budget_of_the_United_...
  - phatfish 10mo ago
    The sovereign wealth funds and billionaires need something to do with all their available cash. It's no fun just watching the number increase anymore, that got boring quite a while ago.
    - coffeebeqn 10mo ago
      That is such an insane bet though! How many trillions can they have itching in their pockets
deleted 11mo ago
[deleted]
11mo ago

aika_london 11mo ago

How to read FT for free

mikestew 11mo ago
https://news.ycombinator.com/item?id=46058125 https://news.ycombinator.com/item?id=46058125
almostkindatech 10mo ago
If you sign-up for a free account you can read FT Alphaville, which is the blog-style section of the FT containing articles like this one
fragmede 10mo ago
I'll tell you for $45/month.

bill3389 11mo ago

It is not losing money, the whole industry haven't figured out how to generate revenue yet. it is the starting phase of LLM like we experienced in .com bubble. Is it a bubble at this point? Yes. Can it generate revenue in the future? Yes. Will openAI survive in this bubble? Maybe.

trollski 11mo ago
[dead]
VerminOctopus1 11mo ago
It is quite literally losing money at an unsustainable rate. They need a path to profitability otherwise this is a massive boondoggle for all of the investors
- Mistletoe 11mo ago
  Unfortunately “all of the investors” is in reality the whole world’s markets due to the disgusting top heavy nature of the SP500 currently. I have been talking to AI a lot about what portfolios will survive that crash. :)
  - integricho 10mo ago
    And what is the conclusion, what will survive?
    - christophilus 10mo ago
      Berkshire.
    - Mistletoe 10mo ago
      Stuff like this is what survived the lost decade after the tech bubble crash in 2000- Gold, treasuries, small cap value. https://portfoliocharts.com/2021/12/16/three-secret-ingredients-of-the-most-efficient-portfolios/ https://portfoliocharts.com/2021/12/16/three-secret-ingredie... I think I'll add in some Bitcoin to round it out. Bitcoin and gold seem to take turns going now and be inversely correlated often. https://www.theblock.co/data/crypto-markets/prices/btc-pearson-correlation-30d https://www.theblock.co/data/crypto-markets/prices/btc-pears...

tantalor 11mo ago

> as ubiquitous and useful as Microsoft 365 What is this saying? Is this sarcastic? I don't know anybody with a Microsoft 365 subscription. I suppose the cloud storage is nice, but you can do much better; Google gives you double that for the same price ($99/yr).

zerosizedweasle 11mo ago
Businesses, a lot of people have it through work.
hdjrudni 10mo ago
> I suppose the cloud storage is nice, but you can do much better; Google gives you double that for the same price ($99/yr). Nuh uh. I get 6TB of OneDrive for $100/yr*. Granted, it's across 6 accounts. For $100, I get 2TB of Google One. Edit: OK, so they upped it to $130/yr.
fragmede 10mo ago
> I don't know anybody with a Microsoft 365 subscription I don’t either, but the lesson to be learned is that you live in a bubble. Microsoft makes many millions of dollars a year off of those subscriptions. Just because the bubble of people you interact with doesn’t mean that those people don’t exist. OK no that was a lie. I know one person that has a Microsoft 365 subscription. I hate it when he sends me word or outlook document links or whatever the hell. Just use Google docs, dude.
fodkodrasz 10mo ago
Hi. Now you know one person. Also: Google One gives you 2 TB, MS 365 Family gives 6x1TB for roughly the same price (for a total of 6 seats). The packages differ in multiple ways, being different fit for different use cases. Also note: I'm using Google docs at work, and while Word for one example has too many features, Google docs is lacking even on the basics like document styling (think custom paragraph styles), it is painfully inadequate for business use, lot of work is wasted on working its limitations around.

ChicagoDave 11mo ago

TechCrunch: Anthropic is projecting positive cash flow by 2028, while OpenAI is expecting sizable losses, with cash burn reaching $14 billion in 2026

deleted 10mo ago
[deleted]

pjmlp 11mo ago

What about the usual capitalism point of view? If their business isn't sustainable they should go bankrupt, and close shop.

Joel_Mckay 11mo ago
Except the 7 firms make up >30% of all market growth, and move more capital than entire countries. Yes, they are hemorrhaging cash with every new customer, and burdening taxpayers by eating community electrical and water infrastructure. In terms of business, it is not sustainable: https://www.youtube.com/watch?v=t-8TDOFqkQA https://www.youtube.com/watch?v=t-8TDOFqkQA The hype-cycle is nothing new =3 "Memoirs of extraordinary popular delusions and the madness of crowds" (Charles Mackay, 1852) https://www.gutenberg.org/files/24518/24518-h/24518-h.htm https://www.gutenberg.org/files/24518/24518-h/24518-h.htm
rchaud 10mo ago
Capitalism makes more sense if it's thought about purely in terms of individual self interest as supposed to something that leads to an efficient market on aggregate. The CEOs making big calls across the economy have already negotiated golden parachutes in the event of their failure. The financiers and lawyers getting a chunk of each bond deal they close have every incentive to raise more than what's actually needed. Investment funds flush with ZIRP dollars have every incentive to plow it back into investments to show that "the money is at work".
- pjmlp 10mo ago
  Yeah self interest is how we end with world we have today at the edge of destruction through various mechanisms.
dgb23 10mo ago
Boom and bust hype cycles have always been a feature of capitalism, especially for advanced technology. Perhaps the only way to know the limit is to overshoot.
- 10mo ago

paxys 11mo ago

TL;DR - financial analysts look at current charts and project them foward by 5 years and go "wow the numbers look bad". Sure OpenAI may well be bleeding money into the 2030s, or may even go bust completely depending on how pessimistic you are, but the analysis completely skips: - They are building their own data centers, and will be less reliant on renting compute from Microsoft and Amazon over time. - Once the AI bubble has subsided costs for GPU purchases and rentals will decrease significantly. Plus there will be more advancements and competition in the space (e.g. Google TPUs) and Nvidia will no longer be able to name their own price. - We will write more efficient software for training and inference. - Once user growth is tapped out OpenAI will no longer need to have the overly generous free tier that they do today. And if they decide to turn up the advertising faucet these users could bring in a ton more revenue than in the projection. Thinking that every AI company combined will capture only 2% of the total digital advertising market is ridiculous. AI apps are already challenging social media for scrolling time. Basically, the entire space is evolving so rapidly that it's pointless to make a projection with the assumption that the landscape isn't going to change from here on.

logsr 10mo ago
I think you are right that the entire analysis is flawed. The Amazon and Microsoft "rental" deals have inflated price tags because of the circular financial arrangements between them and OpenAI, and because those future revenue streams can be used notionally to finance CapEx. All of the Stargate DC build is being done through for-profit SPVs, so the financials are murky, but building the infra gives them collateral for debt, and they are going to lease the compute to the highest bidder, so there is a whole scheme for getting out of the non-profit box, creating a self-perpetuating loop of borrowing to build, using what they build as collateral for more borrowing, raising additional revenue and hedging by leasing compute to 3rd parties, and then using the for-profit SPVs to cross-subsidize OpenAI proper. That plan has enormous risks of its own (can the leadership team of OpenAI effectively build a competitor in the hyperscale compute space?) but whatever happens, it won't just be straight line scaling their current deals with existing hyperscalers.
rhetocj23 10mo ago
[dead]

raincole 11mo ago

ChatGPT just launched "shopping research."[0] Hideous idea as it is, I fully expect they break even in 2026. [0]: https://openai.com/index/chatgpt-shopping-research/ https://openai.com/index/chatgpt-shopping-research/

542458 10mo ago
Honestly, this is huge for people like me who tend to over-research and over-think the hell out of product choices. "Find me a top-fill warm-mist humidifier that looks nice, is competitively priced against similar products, and is available from a retailer in $city_name. Now watch for it to go on sale and lmk." If they can figure out how to get the right kickbacks/referrals without compromising user trust and really nail the search and aggregation of data this could be a real money-maker.
- chneu 10mo ago
  Trusting AI with your shopping is very short sighted. Lol what a terrible idea. Why not just hand every decision you'll ever make to AI? Nobody needs critical thinking or anything. Just have AI do it so you save $3 and 4 minutes.
  - crims0n 10mo ago
    Fundamentally, is it really that different from being persuaded by an advertisement or trusting what the marketing says on the box?
  - wnolens 10mo ago
    Why would I want to spend 1-2h researching humidifiers if I can spend that time in any other way, and still end up with a humidifier that fits my needs first try? This kind of task is perfect for AI in a way that doesn't take away too much from the human experience. I'll keep my art, but shopping can die off.
    - superxpro12 10mo ago

adidoit 11mo ago

LLMs have high utility for coding. The PMF is so strong that even with just coding i feel they will see an ARPU expansion beyond conservative assumptions. There are adjacancies in white collar work like financial analysis that they will go after. All these will capture high ARPU usage. Consumer is not their only path to revenue but it is probably the easiest to model. The enterprise play to automate and accelerate some white collar workers is a clear target not reflected here.

zerosizedweasle 11mo ago
They've committed to spend an amount equal to the entire US defense budget just in October.
- skizm 10mo ago
  I think you mean the US WAR budget! /s
- Culonavirus 10mo ago
  I swear on the crap I just pulled out of my ass that I'll spend 100 quadrillion dollars. Imaginary ones of course. Now pump my stock. Seriously though, massive recession is on the horizon, no one is going to be spending squat.
serendipityAI 10mo ago
but with coding, the users are mercenary and will instantly switch to a model that is better. Less sticky compared to the consumer product
- deleted 10mo ago
  [deleted]
guizadillas 10mo ago
They can get all the enterprise contracts they want but I don't think it will be enough

tehjoker 11mo ago

You already can't trust llm output. How will you trust it when its actively steering you based on profit motive?

ragazzina 10mo ago
Do you trust the result of your Google searches?
- guizadillas 10mo ago
  Who does?
- tehjoker 10mo ago
  Not really but it would be nice if we could have high quality non manipulative information :/
- chimineycricket 10mo ago
  Yes, in the sense that Google is not hallucinating search results or making up products when searching for it.

mise_en_place 10mo ago

The reason for this is that leverage is extremely expensive and punished in the current macro regime. OpenAI will lose money faster if they scale up. That's because the Fed can capitulate all it wants, but real interest rates and real yields won't move. The market is saying "pay me".

Aeroi 10mo ago

Google earned $264.59 billion in ad revenue in 2024 alone. OpenAI can figure it out.

rchaud 10mo ago
And all Google did was develop the world's most popular search engine, email host, web browser, ad network, video streaming site, mobile operating system and cloud office suite and deliver profits for 20 straight years.
- osn9363739 10mo ago
  OpenAI will just get their AI to make it happen.

austin-cheney 10mo ago

The top two comments mention that capturing, at minimum, 2% of the digital advertising market seems low. I disagree. I see that as an enormous hill to climb. The LLMs will create new content, but they aren't creating new business channels in the advertising industry. As an example even once Google achieved search domination they still didn't have this. They had purchase a lot of things to make that happen like Urchin, Adscape, DoubleClick, YouTube, and a lot more.

anshumankmr 10mo ago

I have two words: 1) government contracts 2) ad dollars

setnone 10mo ago
The third might be 'AI Device'
- anshumankmr 10mo ago
  What I am reading makes it sound similar to the Humane Pin but with Jony Ive's design
Aldipower 10mo ago
That are 4 words. ;-) Other then that yes, goverment contracts, meaning offloading the costs to the regular people. I think the US goes all in with AI, trying to get world dominant and controlling the market. But I think this is a mistake and the US will get into trouble with this.

captainkrtek 10mo ago

It's so sad how much money leaders will effortlessly pump into something like this, when we still have existential threats of climate change, incurable diseases, poverty, housing, and so on. Meanwhile ungodly amounts of money are being used so some boomer can generate a AI video of a baby riding a puppy.

jillesvangurp 10mo ago

I think they are missing a few very significant revenue sources that likely going to grow beyond just simple enterprise user accounts for Chat GPT. I'll call out two of them. Image, video, and other content generation is going to become more important and companies will be spending on that. We've seen some impressive improvements there. IMHO near term a lot of that stuff might start showing up in advertising and news content, the whole media industry is going to be a massive consumer of this stuff. And there's going to be a lot of competition for the really high quality models that can be run at scale. Five years until 2030 is a lot of time for some pretty serious improvements to land. Another area that the article skips over is agentic tools. Those are showing a lot of promise right now. Agentic coding tools are just the tip of the iceberg here. A lot of these tools are going to be using APIs. So API revenue is a source of revenue. There are applications across the entire IT industry. SAAS, legacy software, productivity tools, etc. Yes 207B is a lot of money. And there's no guarantee that OpenAI comes out on top "winning" all these markets of course and we can argue about how big these markets will be. But OpenAI does have a good starting position and some street credibility here. It's a big bet on revenue and potential here. But so is betting against all that and dismissing things. And there's a lot of middle ground here.

olelele 10mo ago
This sounds very similar to the Tesla stock value hype train. It’s all a gamble on the promise of tech that isn’t quite there yet.
- qwertox 10mo ago
  What I don't understand is how Elon will ever compete with Chinese humanoid robot pricing and output. He's known for not caring about privacy, so there's no real difference between buying a Tesla one or a Chinese one. Both will look and listen into your home and transfer as much data as possible to their true owners. He congratulates Jeff Bezos for New Glenn, and rightly so, but he's absolutely silent about the Chinese robots. One has to admit that they're already ahead of the US. This comes from a German who well recognizes how far behind Germany is in comparison to the US, in regards to any digital technology.

paulddraper 10mo ago

This is why consensus will never produce innovation. OpenAI has many plausible monetization avenues. (Whether it will execute on them -- a fair question. But acting like they just don't exist is low IQ.) Take ONE example: online shopping. Online shopping is $6-7 trillion per year, growing 7% annually. Suppose ChatGPT captures 10% of that with a 5% fee. (Marketplaces like Amazon and Walmart charge 15%. Ebay is 5%.) That's $200B over five years.

bofadeez 10mo ago

Meanwhile Google does not have to raise money and they're profitable whether AI works or not.

fpauser 10mo ago

AI is/will be the mother of all bubbles.

yk 10mo ago

It's really hard for start ups to compete for VC money: "Hello Mr. VC I'm going to burn your money for buzzword" just no longer works, first openAi has an industrial buzz word generator, second their money burning plan scales much better than my money burning plan.

smallmancontrov 10mo ago
Yeah but they aren't a diversified portfolio of money burning plans and that's the real secret to responsible investing. I think Warren Buffet said that.

0xbadcafebee 10mo ago

I just realized that other industries are way larger than AI. Assuming they capture the entire advertising market, only $390 Billion was spent in the US last year. Compare that to health care, where 4.3 Trillion was spent in the US last year, or commercial banking's revenue of 1.5 Trillion, commercial real estate's 1.5 Trillion, gasoline stations' 1.10 Trillion, etc. What's amazing is, despite the fact that AI isn't making much money, is taking on considerable debt, and isn't even assured to be all that useful, one third of the stock market is now just AI crap. The economy is going to collapse because of a small, brand-new industry. This... shouldn't be possible.

nprateem 10mo ago
I know right it's like people are buying future value rather than based on current revenues or something. How long did Apple keep going up following the smartphone revolution?
Glemkloksdjf 10mo ago
Build a system which can read MRI images, now AI took over the whole MRI Analysis sector. Let AI diagnose the avg cold, now AI took over the household / local doctor for 90% of cases. Use AI for support, now AI took over the call-center business. AI can already code. It might not be perfect, it might not be always good but NO ONE assumed that 2025 some matrix multiplication can mimick another human being so well that you can write with it and it will produce working code at all. thats the hype, thats the market of ai. And in parallel we get robotic too. Only possible because of this AI thing. Because robotic with ML is so much better than whatever we had before. Now you can talk to a robot, the robot can move, the robot can plan actions. All of these robots use some type of ML in the background. Segment Anything is possible because of AI. Thats the reason why this 'AI crap' is so hyped.
- freejazz 10mo ago
  I don't understand why people think that AI "being able to code" has any bearing on anything else that humans do

fpauser 10mo ago

Can we just stop putting the "I" behind the "A"? Thanks.

AndrewKemendo 10mo ago

They aren’t going to get new equity funding they are going to go public so they can start issuing bonds.

luxuryballs 10mo ago

“We’re gonna need more fuel for this fire!”

lvl155 10mo ago

I don’t think LLM leader is going to come out of this AI race on top. OpenAI is like Yahoo! in my view. They were there in the beginning and led by default. Someone somewhere will be the Google of this era. It won’t be LLM but the next step. Leaps and bounds better than LLM. I also think we won’t use even 1/100th of the energy needs projected right now.

kilroy123 10mo ago
I agree. Or someone who combines a lot of tough to build tech right at the perfect time.
logsr 10mo ago
Google may very well be the Google of this era. They have demonstrated the ability to maintain parity on the engineering side, they have a long running advantage on OpEx with TPU, they have the most data, and the most trusted brand. AI collapses the value of IP across the board, because AI trends towards being the only IP, which means that the marketplace will be defined by operational efficiency, ability to build and run systems at massive global scale, access to capital, and government connections, so Microsoft, Amazon, and Google probably stay on top.
- lvl155 10mo ago
  They barely caught up after leaking talent for the past 4-5 years. I am not drinking the koolaid. A lot of talented people are going back home to China. I am 99% the next Google will come out of Asia.
jasondigitized 10mo ago
Google will be the Google of this era. They just got a slow start but the flywheel they already have in place is now spinning in their advantage.

ec109685 10mo ago

That’s 207b / 8b people / 4 years / 365 days or 1.17 cents a person. If ChatGPT is delivering that, they should have no problem raising money.

PunchyHamster 10mo ago
That if competition doesn't under-cut you and you convert at least part of the free users in the process. And with near every level of hardware getting some kind of AI acceleration a lof of the uses might even be local
deleted 10mo ago
[deleted]

mr_00ff00 10mo ago

I don’t know if this is ridiculous, but I’m curious if access to LLMs will one day be priced like the Bloomberg Terminal or something. Where access for one user is like 20,000 dollars. Maybe less than that, but like 5k per person. Seems crazy by most software standards, but when Bloomberg became a software only program (they stopped selling physical terminals) and people were shocked when they paid almost nothing for excel but then so much for the second tool they needed as traders. Yet it still is priced so high and people pay.

ronsor 10mo ago
The difference is that Bloomberg Terminals were always expensive, and so people expected to pay. LLMs are basically free (subsidized) at this point, and people are very sensitive to large price increases.
- mr_00ff00 10mo ago
  Sure and I’m sure there would be a huge shock, but simple economics would dictate that if that’s the true equilibrium of price for LLMs to be economical, then it would have to get to the price eventually
WhyOhWhyQ 10mo ago
I think there could be a few directions. Consumer level LLM usage will become free. Corporate-grade LLM use will cost a lot of money. Maybe the highest grade LLM use will be regulated and only done through government labs.
- techblueberry 10mo ago
  What’s a high grade LLM though in such a competitive environment? And if China releases more high grade open source models, that pricing model is f8cked. One interesting thing I heard someone say about LLM’s is this could be a people’s innovation, basically something so low margin it actually provides more value to “the people” than billionaires.

ayaros 10mo ago

I'm sure they'll have no issues raising the funds. If they run into trouble, they can always ask ChatGPT for advice.

smileson2 10mo ago

This should be a easy barrier for OpenAI, cgpt has only been public for 3 or so years and they are already close to mediating most of the global economy and human decision making AI credits will likely replace current money anyway

sethops1 10mo ago
I hope this is sarcasm

saguntum 10mo ago

For context, this is close to all venture capital spending in the US in 2024 ($215B): https://nvca.org/press_releases/nvca-releases-2025-yearbook-showcasing-2024-vc-trends https://nvca.org/press_releases/nvca-releases-2025-yearbook-...

andy_ppp 10mo ago

Chill out everyone, all we will need to do is ask the AGI how to make money on the investment! 1. Make AGI 2. ??? 3. Infinite profit!

venturecruelty 10mo ago
You need to ask it to invent a time machine first so you can go back in time to build the AGI first, naturally.

venturecruelty 10mo ago

How many $20 per month subscriptions will that take?

tim333 10mo ago
172 million. Or so.
- fragmede 10mo ago
  if you make them $200/month subscriptions, that's only 17 million subscriptions. Or so.
  - tim333 10mo ago
    I was thinking the 172 figure was $20/mo times five years but in reality if OpenAI had a bunch of such users they'd value them at about 20x annual revenue and raise on the stock market so they'd only need like 40 or 50 million subscribers.

mbrumlow 10mo ago

Please let me invest…

mvkel 10mo ago

This seems... completely reasonable?

liamconnell 10mo ago

Unfortunately for OpenAI, they are not positioned to capture value from any of the "big margin" use cases that they highlight as key to their future. I think all of these are pretty unrealistic for them: - Revenue sharing from drug discovery (called out by OpenAI CFO): Why would a pharma company give away the upside to a commoditized intelligence layer? Why would OpenAI have a more compelling story than Google Deep Mind, which has serious accolades in this space? - Media generation for ads and other content: For ads, OpenAI is facing off against Google, Meta and Amazon, all of which have existing relationships with advertisers. For the foreseeable future, AI content will be a major discount product compared to humans. OpenAI will not get to charge $1M for an ad like a production company does. So the TAM of ad production (~$50B) shrinks below $1B because AI deflates prices so much. - Other agent use cases: OpenAI doesnt have a surface to build these on. Google has chrome, Microsoft has office, Apple has OS's. The other use cases like coding will be a low-margin competition between model providers until some of them throw in the towel. The players with the best cash position win - and thats not OAI. I think the place that they could win is retail (also called out by OAI CFO). They made deals with Etsy and other small retailers. I was fixing my guitar the other day and would have instantly bought the tools it had suggested that I would need. The problem is that they have to win against Amazon here, and there is zero chance of a partnership for obvious reasons.

ivan_gammel 10mo ago
>Other agent use cases: OpenAI doesnt have a surface to build these on. Google has chrome ChatGPT app is their Chrome. Large consumer base using chat on daily basis can expand to prosumer and to enterprise. They build an emotional connection to their customers that has the vibe of iPhone.
- liamconnell 10mo ago
  Yes but its not relevant to the agent use cases (which are mostly about interacting with external systems). So agents built by Microsoft (Copilot) can natively interact with Office files in Sharepoint, and the Sharepoint product team can build to enable this in special ways. OpenAI has to use the APIs and deal with rate limits, speed issues and other limitations.

skeuomorphism 10mo ago

207 billion to fund sam altmans greatest con on the world. Will it also be treated as "too big to fail", and be bailed out in the future, when it inevitably fails to deliver?

jason-richar15 10mo ago

[dead]

atleastoptimal 10mo ago

What is inevitably going to happen 1. AI becomes better, causes more fear, public uproar, arms race between China/US 2. AI becomes a government project, big labs merge, major push into AI for manipulation, logistics, weapons development/control 3. ???? 4. Utopia or destruction

cindyllm 10mo ago
[dead]

mvdtnz 10mo ago

Why was the original title changed? It had the correct title on HN a couple of hours ago.

temptemptemp111 10mo ago

[dead]

wg0 10mo ago

It is very simple. Let's forget other domains and talk about software industry alone. If they capture it fully that would only mean that OpenAI gets a portion of the engineering spend (because it is supposed to save on engineering salaries) which is a portion of the total spend which is almost always less than the total revenue. Now estimate the total revenue of all software companies combined in the world and look at their engineering spend and a faction of that is what OpenAI can have in best case scenario. So... Bubble.

whoamii 10mo ago

So, tree fiddy before inflation

burnerRhodov2 10mo ago

I feel like OpenAI could flip on the ad switch and make $20B a quarter like google... so this number isn't too crazy to me?

scoofy 10mo ago

Oh, I like the part where they're supposed to be a not-for-profit... I guess I'm honestly a bit happy they aren't profiting.

chasing0entropy 10mo ago

Human thought is more than just general intelligence (AGI), but the ability to conceptualize data beyond linear symbolic representations and to combine the schema / metadata from multiple contextual inputs with memory, to output unique concepts in both alphanumeric and other conceptualized manners. An LLM, in addition to being unable to ever obtain true AGI because of the linear and singular representation of concepts and data, cannot combine multiple schemas or metadata from multiple contexts with its own training and reinforcement data. That means it cannot truly remember and correct its mistakes. A mistake is more than the observation and correction, it is applying global changes to both your metadata and schema of the event and surrounding data. LLMs as an AI solution is a dead end.

nr378 10mo ago

I suspect that the asymptotic price of consumer facing LLMs will be 0, much like Search - although just like Search, monetisation potential from ads will be high (perhaps even higher given the ability to truly integrate ads into the result itself using LLMs). It potentially looks like Google and OpenAI will take this new market.

1vuio0pswjnm7 10mo ago

Original HN title: (80 chars) "OpenAI needs to raise at least $207bn by 2030 so it can continue to lose money" Full title: (95 chars) "OpenAI needs to raise at least $207bn by 2030 so it can continue to lose money, HSBC estimates"

lupire 10mo ago
The false precision of "207" tells me all I need to know.

ImHereToVote 10mo ago

That's nothing. I need to raise at least one trillion.

nooraiadmin 10mo ago

ads on chatgpt