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> OpenAI has $1.15T in spend commitments over the next 10 years Yes, but those aren't contracted commitments, and we know some of them are equity swaps. For ex

by nl 10mo ago

> OpenAI has $1.15T in spend commitments over the next 10 years Yes, but those aren't contracted commitments, and we know some of them are equity swaps. For example "Microsoft ($250B Azure commitment)" from the footnote is an unknown amount of actual cash. And I think it's fair to point out the other information in your link "OpenAI projects a 48% gross profit margin in 2025, improving to 70% by 2029."

roughly 10mo ago
> "OpenAI projects a 48% gross profit margin in 2025, improving to 70% by 2029." OpenAI can project whatever they want, they're not public.
- brookst 10mo ago
  They still have shareholders who can sue for misinformation. Private companies do have a license to lie to their shareholders.
re-thc 10mo ago
> Yes, but those aren't contracted commitments, and we know some of them are equity swaps. It's worse than not contracted. Nvidia said in their earnings call that their OpenAI commitment was "maybe".
ironbound 10mo ago
Sounds like the railway boom.. I mean bond scam's
short_sells_poo 10mo ago
The fact that there's an incestual circle between OpenAI, Microsoft, NVidia, AMD, etc.. where they provide massive promises to each other for future business is nothing short of hilarious. The economics of the entire setup are laughable and it's obvious that it's a massive bubble. The profit that'd need to be delivered to justify the current valuations is far beyond what is actually realistic. What moat does OpenAI have? I'd argue basically none. They make extremely lofty forecasts and project an image of crazy growth opportunities, but is that going to ever survive the bubble popping?
- philipallstar 10mo ago
  I still don't really understand this "circle" issue. If I fix your bathroom and in return you make me a new table, is that an incestuous circle? Haven't we both just exchanged value?
  - CodesInChaos 10mo ago
    The circle allows you to put an arbitrary "price" on those services. You could say that the bathroom and table are $100 each, so your combined work was $200. Or you could claim that each of you did $1M work. Without actual money flowing in/out of your circle, your claims aren't tethered to reality.
    - brookst 10mo ago
      You don’t think real money is changing hands when Microsoft buys Nvidia GPUs?
      - short_sells_poo 10mo ago
        It's a soft version of money printing basically. These firms are clearly inflating each other's valuations by making huge promises of future business to each other. Naively, one would look at the headlines and draw the conclusion that much more money is going to flow into AI in the near future. Of course, a rational investor looks at this and discounts the fact that most of those promises are predicated on insane growth that has no grounding in reality. However, there are plenty of greedy or irrational investors, whose recklessness will affect everyone, not just them.
        philipallstar 10mo ago
        For Nvidia shares: converting cash into shares in a speculative business while guaranteeing increasing demand for your product is a pretty good idea, and probably doesn't have any downsides. For the AI company being bought: I wouldn't trust these shares or valuations, because the money invested is going on GPUs and back to Nvidia.

by nl 10mo ago

roughly 10mo ago

> "OpenAI projects a 48% gross profit margin in 2025, improving to 70% by 2029." OpenAI can project whatever they want, they're not public.

brookst 10mo ago
They still have shareholders who can sue for misinformation. Private companies do have a license to lie to their shareholders.

re-thc 10mo ago

> Yes, but those aren't contracted commitments, and we know some of them are equity swaps. It's worse than not contracted. Nvidia said in their earnings call that their OpenAI commitment was "maybe".

ironbound 10mo ago

Sounds like the railway boom.. I mean bond scam's

short_sells_poo 10mo ago

The fact that there's an incestual circle between OpenAI, Microsoft, NVidia, AMD, etc.. where they provide massive promises to each other for future business is nothing short of hilarious. The economics of the entire setup are laughable and it's obvious that it's a massive bubble. The profit that'd need to be delivered to justify the current valuations is far beyond what is actually realistic. What moat does OpenAI have? I'd argue basically none. They make extremely lofty forecasts and project an image of crazy growth opportunities, but is that going to ever survive the bubble popping?

philipallstar 10mo ago
I still don't really understand this "circle" issue. If I fix your bathroom and in return you make me a new table, is that an incestuous circle? Haven't we both just exchanged value?
- CodesInChaos 10mo ago
  The circle allows you to put an arbitrary "price" on those services. You could say that the bathroom and table are $100 each, so your combined work was $200. Or you could claim that each of you did $1M work. Without actual money flowing in/out of your circle, your claims aren't tethered to reality.
  - brookst 10mo ago
    You don’t think real money is changing hands when Microsoft buys Nvidia GPUs?
    - short_sells_poo 10mo ago
      It's a soft version of money printing basically. These firms are clearly inflating each other's valuations by making huge promises of future business to each other. Naively, one would look at the headlines and draw the conclusion that much more money is going to flow into AI in the near future. Of course, a rational investor looks at this and discounts the fact that most of those promises are predicated on insane growth that has no grounding in reality. However, there are plenty of greedy or irrational investors, whose recklessness will affect everyone, not just them.
      - philipallstar 10mo ago
        For Nvidia shares: converting cash into shares in a speculative business while guaranteeing increasing demand for your product is a pretty good idea, and probably doesn't have any downsides. For the AI company being bought: I wouldn't trust these shares or valuations, because the money invested is going on GPUs and back to Nvidia.