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  avalys
  AI is going to be a highly-competitive, extremely capital-intensive commodity market that ends up in a race to the bottom competing on cost and efficiency of delivering models that have all reached the same asymptotic performance in the sense of intelligence, reasoning, etc.The simple evidence for this is that everyone who has invested the same resources in AI has produced roughly the same result. OpenAI, Anthropic, Google, Meta, Deepseek, etc. There's no evidence of a technological moat or a competitive advantage in any of these companies.The conclusion? AI is a world-changing technology, just like the railroads were, and it is going to soon explode in a huge bubble - just like the railroads did. That doesn't mean AI is going to go away, or that it won't change the world - railroads are still here and they did change the world - but from a venture investment perspective, get ready for a massive downturn.
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  cmiles8
  AI is turning into the worst possible business setup for AI startups. A commodity that requires huge capital investment and ongoing innovation to stay relevant. There’s no room for someone to run a small but profitable gold mine or couple of oil wells on the side. The only path to survival is investing crazy sums just to stay relevant and keep up. Meanwhile customers have virtually zero brand loyalty so if you slip behind just a bit folks will swap API endpoints and leave you in the dust. It’s a terrible setup business wise.There’s also no real moat with all the major models converging to be “good enough” for nearly all use cases. Far beyond a typical race to the bottom.Those like Google with other products will just add AI features and everyone else trying to make AI their product will just get completely crushed financially.
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  password54321
  Not sure why they put so much investment into videoSlop and imageSlop. Anthropic seems to be more focused at least.
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  adriand
  This article doesn’t add anything to what we know already. It’s still an open question what happens with the labs this coming year, but I personally think Anthropic’s focus on coding represents the clearest path to subscriber-based success (typical SaaS) whereas OpenAI has a clear opportunity with advertising. Both of these paths could be very lucrative. Meanwhile I expect Google will continue to struggle with making products that people actually want to use, irrespective of the quality of its models.
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  siliconc0w
  The best case I can see is they integrate shopping and steal the best high-intent cash cow commercial queries from G. It's not really about AI, it's about who gets to be the next toll road.
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  mvkel
  The fact is nobody has any idea what OpenAI's cash burn is. Measuring how much they're raising is not an adequate proxy.For all we know, they could be accumulating capital to weather an AI winter.It's also worth noting that OpenAI has not trained a new model since gpt4o (all subsequent models are routing systems and prompt chains built on top of 4), so the idea of OpenAI being stuck in some kind of runaway training expense is not real.
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  moezd
  In other words, OpenAI is a freight train without functioning brakes. There I said it.
• Abh1Works
  I think I super important aspect that people are overlooking, is that every VC wants to invest in the next "big" AI company, and the probability is in your favor to only give funding to AI companies, bc any one of them could be the next big thing. I think, with a downturn of VC investment, we will see some more investment in companies that arent AI native, but use AI as a tool in the toolbox to deliver insights.
• amkharg26
  The comparison to railroad bubble economics is apt. OpenAI's infrastructure costs are astronomical - training runs, inference compute, and scaling to meet demand all burn through capital at an incredible rate.What's interesting is the strategic positioning. They need to maintain leadership while somehow finding a sustainable business model. The API pricing already feels like it's in a race to the bottom as competition intensifies.For startups building on top of LLM APIs, this should be a wake-up call about vendor lock-in risks. If OpenAI has to dramatically change their pricing or pivot their business model to survive, a lot of downstream products could be impacted. Diversifying across multiple model providers isn't just good engineering - it's business risk management.
• jillesvangurp
  I don't see a bubble, I see a rapidly growing business case.MS Office has about 345 million active users. Those are paying subscriptions. IMHO that's roughly the totally addressable market for OpenAI for non coding users. Coding users is another few 20-30 million.If OpenAI can convert double digit percentages of those onto 20$ and 50$ per month subscriptions by delivering good enough AI that works well, they should be raking in cash by the billions per month adding up to close to the projected 2030 cash burn per year. That would be just subscription revenue. There is also going to be API revenue. And those expensive models used for video and other media creation are going to be indispensable for media and advertising companies which is yet more revenue.The office market at 20$/month is worth about 82 billion per year in subscription revenue. Add maybe a few premium tiers to that at 50$/month and 100$/month and that 2030 130 billion per year in cash burn suddenly seems quite reasonable.I've been quite impressed with Codex in the last few months. I only pay 20$/month for that currently. If that goes up, I won't loose sleep over it as it is valuable enough to me. Most programmers I know are on some paid subscription to that, Anthropic's Claude, or similar. Quite a few spend quite a bit more than that. My Chat GPT Plus subscription feels like really good value to me currently.Agentic tooling for business users is currently severely lacking in capability. Most of the tools are crap. You can get models to generate text. But forget about getting them to format that text correctly in a word processor. I'm constantly fixing bullets, headings and what not in Google docs for my AI assisted writings. Gemini is close to ff-ing useless both with the text and the formatting.But I've seen enough technology demos of what is possible to know that this is mostly a UX and software development problem, not a model quality problem. It seems companies are holding back from fully integrating things mainly for liability reasons (I suspect). But unlocking AI value like that is where the money is. Something similarly useful as codex for business usage with full access to your mail, drive, spread sheets, slides, word processors, CRMs, and whatever other tools you use running in YOLO mode (which is how I use codex in a virtual machine currently, --yolo). That would replace a shit ton of manual drudgery for me. It would be valuable to me and lots of other users. Valuable as in "please take my money".Currently doing stuff like this is a very scary thing to do because it might make expensive/embarrassing mistakes. I do it for code because I can contain the risk to the vm. It actually seems to be pretty well behaved. The vm is just there to make me feel good. It could do all sorts of crazy shit. It mostly just does what I ask it to. Clearly the security model around this needs work and instrumentation. That's not a model training problem though.Something like this for business usage is going to be the next step in agent powered utility that people will pay for at MS office levels of numbers of users and revenue. Google and MS could do it technically but they have huge legal exposure via their existing SAAS contracts and they seem scared shitless of their own lawyers. OpenAI doing something aggressive in this space in the next year or so is what I'm expecting to happen.Anyway, the bubble predictors seem to be ignoring the revenue potential here. Could it go wrong for OpenAI? Sure. If somebody else shows up and takes most of the revenue. But I think we're past the point where that revenue is not looking very realistic. Five years is a long time for them to get to 130 billion per year in revenue. Chat GPT did not exist five years ago. OpenAI can mess this up by letting somebody else take most of that revenue. The question is who? Google, maybe but I'm underwhelmed so far. MS, seems to want to but unable to. Apple is flailing. Anthropic seems increasingly like an also ran.There is a hardware cost bubble though. I'm betting OpenAI will get a lot more bang for its buck in terms of hardware by 2030. It won't be NVidia taking most of that revenue. They'll have competition and enter a race to the bottom in terms of hardware cost. If OpenAI burning 130 billion per year, it will probably be getting a lot more compute for it than currently projected. IMHO that's a reasonable cost level given the total addressable market for them. They should be raking in hundreds of billions by then.
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  gip
  There is no doubt that OpenAI is taking a lot of risks by betting that AI adoption will translate into revenues in the very short term. And that could really happen imo (with a low probability sure, but worth the risk for VCs? Probably).
• zackify
  Surprised they burn cash advertising on Reddit to “make a mini me” version of yourself where you hold your body in your hand. What a waste of AI lol
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  dredmorbius
  Archive/Paywall: <https://archive.is/rHPk3>
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  jeffbee
  For what I use them for, the LLM market has become a two player game, and the players are Anthropic and Google. So I find it quite interesting that OpenAI is still the default assumption of the leader.
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  andsoitis
  In a parallel universe, governments invest in the compute/datacenters (read: infra), and let model makers compete on the same playing field.
• GannaIlinykh
  Burn rate often gets treated as a hard signal, but it is mostly about expectations. Once people get used to the idea of cheap intelligence, any slowdown feels like failure, even if the technology is still moving forward. That gap is usually where bubbles begin.
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  HardCodedBias
  OpenAI has #5 traffic levels globally. Their product-market fit is undeniable. The question is monetization.Their cost to serve each request is roughly 3 orders of magnitude higher than conventional web sites.While it is clear people see value in the product, we only know they see value at today’s subsidized prices. It is possible that inference prices will continue their rapid decline. Or it is possible that OAI will need to raise prices and consumers will be willing to pay more for the value.
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  laweijfmvo
  why does the article used words like burn and incinerate, implying that OpenAI is somehow making money disappear or something? They’re spending it; someone is profiting here, even if it’s not OpenAI. Is it all Nvidia?
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  Avicebron
  On the radio they mentioned that the total global chocolate market is ~100B, I googled it when I was home and it seems to be about ~135B. Apparently that is ... all chocolate, everywhere.. OpenAI's valuation is about 500B. Maybe going up to like 835B.I'd love to see the rationale that OpenAI (not "AI" everywhere) is more valuable than chocolate globally.... so crash early 2026?
• WhereIsTheTruth
  The Microsoft effect, everything they touch turns to shit
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  agentifysh
  2008: US Banks pump stocks -> market correction -> taxpayer bailout2026: US AI companies pump stocks -> market correction -> taxpayer bailoutMark my words. OpenAI will be bailed out by US taxpayers.
• g-unit33
  Well they got $40B more to burn lol
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  deadbabe
  What does it mean for the AI bubble to pop? Everyone stops using AI en masse and we go back to the old ways? Cloud based AI no longer becomes an available product?
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  geldedus
  paywall, no upvote
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  camillomiller
  It’s like watching a train wreck waiting to happen, while everyone praise the madman conduct or who’s operating the locomotor at full steam.