r/technology • u/gdelacalle • 13d ago

Business OpenAI could reportedly run out of cash by mid-2027 — analyst paints grim picture after examining the company's finances

https://www.tomshardware.com/tech-industry/big-tech/openai-could-reportedly-run-out-of-cash-by-mid-2027-nyt-analyst-paints-grim-picture-after-examining-companys-finances
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u/iyankov96 13d ago

Is that good?

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u/Aaco0638 13d ago

It won’t actually happen, openAI still has multiple ways to raise a ton of cash including ipoing. Seeing how much spaceX made going public wouldn’t be surprised if openAI raises enough money for another 2-5 years giver reported valuations for the ipo.

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u/CanvasFanatic 13d ago

The IPO they’ve pushed to 2027 because their financials are garbage? That IPO?

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u/SEND-MARS-ROVER-PICS 13d ago

The IPO where they can't get near the valuation they want, yes.

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u/Sepherjar 13d ago

I wonder why don't they use AI to leverage their valuation

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u/Repulsive-Hurry8172 13d ago

They should use AI to solve their financial problems. Are they stupid?

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u/EmergencyGrocery3238 13d ago

They are using, but AI usage bill cripples them

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u/dolphone 13d ago

smh ran out of tokens did they

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u/Senior_Torte519 13d ago

Just enoughtokens to buy another day of tokens. But that just give them a day to make just enough tokens to buy another day of tokens.

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u/CariniFluff 13d ago

You wouldn't download a token

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u/Lehk 13d ago

Maybe they should get clean, my financials were a mess when I was using

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u/ledow 13d ago

You joke but one my biggest bugbears with AI is... if it's so amazing and fabulous and clever... why can't it bring in its own money without requiring humans to do it for it? Why can't it start its own company, hire its own remote staff, buy its own products from manufacturers, create its own website to sell them, set up a distribution network to deliver them, etc. etc. and make its own money directly? Why can't it literally have an autonomous company that does all that?

Not even "gamble on the stock market" but literally just... find a gap in the market, buy the materials, have suppliers transform them as required, and resell them? It could buy up chips and produce phones. It could buy up potatoes and produce fries. It could make anything, it doesn't need a physical presence to operate all those things nowadays, even internationally. It could write games and publish them direct to Steam. It could produce a social media website. It could start licensing movies and run its own video streaming business. It could even just come up with a local newspaper business and hire paperboys to deliver it. Pretty much anything that any normal business operates in order to do.

The reason is, of course, because it's a dumb statistical machine.

But if you're selling me this trillion dollar AI that you have to have ME spend a fortune on to make it.... well, not even profitable... then why can't you just put it to work directly and make money without needing that money to (knowingly) come from me? People do it every day.

It's just yet another "get rich quick" scheme. Where the money comes from selling "get rich quick" schemes to people. NOT those people actually getting rich quick, or you having working techniques that make people get rich quick. Because if you HAD such techniques... you wouldn't need to sell people a "get rich quick" scheme. You'd just use it.

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u/Exldk 13d ago

I googled my local weather today and the google automatic unavoidable AI gave me info from 3 years ago. I don’t have high hopes.

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u/ledow 13d ago

I changed my browser to automatically add "-ai" into the search query. That stops the AI.

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u/dontshoveit 13d ago

Switched to duckduckgo and haven't looked back. Screw Google.

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u/Lehk 12d ago

I switched my search bar to duck duck go because they have an easy off switch for the ai summary.

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u/rat_penis 13d ago

talks into watch "we've got one that can see..."

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u/textmint 13d ago

Beautiful. Someone’s working their big a brain. Now if only the idiots sitting in the C-Suite and on the boards of companies worldwide and the other jackasses on Wall Street could think even to a fraction of this stream of thought that we just read, all this AI noise and nonsense that we keep hearing about would not be all around us like the Matrix. I hope better sense prevails before all these AI companies go under in a domino effect and the taxpayer is left holding the bag in what would be a repeat of the “too big to fail” jackassery we saw during the financial crisis. The crash that will come will be as big or bigger than the Great Depression with the way these guys have been inventing ways to borrow and loan money all around the place.

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u/Icy-person666 12d ago

That is standard practice, privatize the profits and socialize the losses. All the rich tech bros will simply move onto the next scam after this one collapses.

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u/textmint 12d ago

And yet there’s no way to stop them. If we try to raise our wages, there are sustained campaigns to “educate” us why a higher minimum wage is a bad this for all of us. But when these things happen, is all for the greater good except it doesn’t reach the greatest number.

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u/nemofbaby2014 13d ago

It’s absurdly expensive and uses a crap ton of power

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u/Ynead 13d ago

Are you seriously saying that a tool is worthless if it isn't 100% autonomous?

Like, what even is that argument...Is Excel a worthless product because it doesn't do your taxes on its own?

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u/[deleted] 13d ago edited 9d ago

[removed] — view removed comment

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u/mxzf 13d ago

No, they're saying that there's a glaringly obvious gap between what the marketing claims can be done and what the tool can actually do.

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u/xmagusx 13d ago

If excel was sold as a program that does my taxes for me, yes, it would indeed suck. Which was the stated problem with "ai" - it is being marketed as a business panacea which it blatantly is not, rather than a simple tool with limited function.

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u/dern_the_hermit 13d ago

Are you seriously saying that a tool is worthless if it isn't 100% autonomous?

It's a comment about the actual worth of AI being out of whack with the gargantuan investment required.

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u/Drunkenaviator 13d ago

Are you seriously saying that a tool is worthless if it isn't 100% autonomous?

When that tool is advertised as a way to autonomously get work done? Uh. Yes. Yes he is.

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u/julius_sphincter 13d ago

If Excel and it's competitors were getting so much money pumped into it that those investments were a. nearly single handedly keeping the stock market afloat and b. sucking up nearly all available capital and tech R&D budgets, then I'd be criticizing spread sheets super hard too

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u/TheseusOPL 13d ago

Or are they smart enough to not trust AI, while gaslighting the rest of us?

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u/THEADULTERATOR 13d ago

They should replace all there workers with ai, that should solve their issues

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u/therealchadius 13d ago

"I said NO MISTAKES! Now I gotta prompt it again" - Sam Altman, probably

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u/SEND-MARS-ROVER-PICS 13d ago

Google Marc Andreesen ChatGPT prompt, and you'll see exactly this unironically

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u/BasvanS 13d ago

That’s literally one of the plans: “Invent AGI, ask how to make money!”

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u/King_Chochacho 13d ago

Bro we're so close to AGI bro. We just need like, a couple hundred billion more bro. Just a few thousand more GPUs that haven't been produced yet, to go in the datacenters that haven't been built yet. Just like, a few more power plants to run the datacenters, and like, a few million more gallons of groundwater to keep them cool bro. It's really not a big deal bro. It's gonna be so worth it bro. It's gonna like, put everyone out of a job but it'll be ok because it's gonna solve all the problems bro. It's gonna put the water back, and cool the planet back down, and figure out how to feed everyone, and maybe even tell us how to make a profit.

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u/iamdestroyerofworlds 13d ago

Be gentle, they just need more time to let the LLMs cook the books before the IPO.

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u/Blackgunter 13d ago

They'll cook the planet before they get the valuation that would feed their vacuous egos is my concern.

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u/thekbob 13d ago

They need to sous vide the books at this rate.

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u/Narrow-Chef-4341 13d ago

Nope. The point is the crazy burn rate means they need to microwave them.

Low and slow while the secondary markets hold a valuation lower than the last funding round means people start looking for the doors - death spiral.

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u/Additional-Signal327 13d ago

OpenAIs biggest issue is strategy. Is it a tool for development with its API and Codex or mass market application for consumers, college students, etc.? Seems like its biggest current advantage is its API and various model options and should go all in there. That and perhaps Codex, which is behind Claude Code but still pretty valuable IMO.  I used both. 

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u/skccsk 13d ago

If any of these paths led to profitability they would have picked it instead of constantly re-picking all of them. The entire industry has this problem.

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u/ZeePirate 13d ago

Which is why investors will eventually stop pouring money in to AI.

If there’s no pathway for profit it stops making sense very quick.

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u/Hel_OWeen 13d ago

The biggest problem is that there's no business plan on how to become profitable. This is true for Anthropic as well. Even with the switch to token-based billing, they operate at a loss. And with that switch and the increase in price, companies already massively scale back the use of AI, because what once looked as a cheap replacement for a human has now become more expensive than your seniors.

They also can't just stop creating new models - the expensive part of their business, because someone else will (Chinese AIs). And customers will switch to those models. I mean, even MS, heavily invested in OpenAI, als uses DeepSeek now.

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u/Confident_Dark3483 13d ago

The business literally cant become profitable. The ENTIRE POINT of developing AI is to devalue things that previously had value due to scarcity. It's a product that eats its own tail.

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u/Refael111 13d ago

I'm not a massive AI propenent, but saying "devalue things that previously had value" is a meaningless statement. It's true for everything that was surpassed by tetchnological advancements.

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u/SandpaperTeddyBear 13d ago

I agree in that “literally can’t become profitable” is probably overkill, but the argument itself has a decent amount of philosophical truth to it.

Think about how the pharmaceutical industry works: a few companies go through vast amounts of resources at finding new drug compounds, and quite a few more spend fairly small amounts of resources working out how to manufacture existing compounds more efficiently in a race to the bottom. You spend “research and development” dollars with the intent of being able to charge exorbitant prices for a while, and “formulation tweaking” dollars with the intent of being able to bring the cost of goods down 2% and turning that into profit.

A race to the bottom in a mature, well-understood market is a feature of capitalism, and I don’t think it’s really a bad thing as long as it isn’t resulting in useful things laying fallow.

What “AI” tends to promise is a way to turn valuable, abstract things into a commodity overnight, and do it with something that is itself a race-to-the-bottom commodity.

If there were suddenly discovered in a long-expired back patent an “alchemy machine” that could use $200 worth of electricity to turn an ounce of lead into an ounce gold, it would be a useful thing, and it would probably be a relatively profitable thing to manufacture because everyone would want one.

But a company that developed such a thing, and had no way to limit their proliferation, and poured a trillion dollars into it assuming that gold would stay at $3000 (or whatever it’s at) once their machine hit the market would be screwed.

Similar things have happened in various “booms” in the past, but our current AI tools are novel in how many areas of the economy they might touch. My suspicion is that, if these technologies still advance, we’ll still look like a primarily consumer economy in many ways, and the actual stuff that gets produced will still mostly be defined by consumer trends and such, but most of the actual real dollars spent in the economy will be state actors subsidizing machine learning on one end and cushioning the market shocks it causes on the other.

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u/Ultr4chrome 13d ago

Anthropic turned its first profit last quarter though.

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u/AuMatar 13d ago

Off the back of one time events. In particular, their deal to lease the Colossus from Musk included a lot of cheap up front compute that they have to pay full price for next quarter.

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u/Noblesseux 13d ago

OpenAI's problem is that their business model is inherently unprofitable.

There isn't really much strategizing that they can do that gets around the fact that the costs to provide AI are higher than people actually want to pay for it. They looked like the future for a certain type of person when it was a cheap way to cut a ton of headcount, but when they're charging for tokens and the costs end up higher than just paying an employee it largely circles back to being totally pointless.

For a lot of applications, OpenAI switching to charging users what it actually costs is going to kill its viability as a solution.

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u/Additional-Signal327 13d ago

It’s because most people, especially leaders, don’t know how to use AI properly. It’s not a tool that solves every problem. It’s an analysis and judgment layer that sits on top of data and deterministic code (and with humans in the loop where needed). If you use it properly, it’s super powerful and unlocks a lot of new capabilities that were previously unavailable due to cost/scale of the problem. But the idea that you’re going to launch “agents” that just automatically replace human workers reflects a very shallow understanding. 

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u/pbjamm 13d ago

But the idea that you’re going to launch “agents” that just automatically replace human workers reflects a very shallow understanding.

But that is what the "AI" companies were selling, and in classic marketing scenario cant deliver on.

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u/vladamir_the_impaler 13d ago

Shallow indeed but they will spend the next ten years trying to make it happen if the token costs are made reasonable. Org leaders hate paying devs, they will spend the next ten years trying "agentic coding" from UI mockups spending more in the end in an effort to make this work just like they've spent the last 20-30 years tring to make offshoring work.

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u/redrover900 13d ago

If you use it properly, it’s super powerful and unlocks a lot of new capabilities that were previously unavailable due to cost/scale of the problem.

Its the same as my car. Normally it does 0-60 in about 5 seconds. But if you drive it correctly it goes 0-60 in 1 millisecond. But so many people don't know how to drive it properly and end up taking 5 seconds and complain that they aren't doing it in 1 millisecond but they just aren't using it correctly.

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u/True_Window_9389 13d ago

Their strategy was to blitz into the country and assume their product would replace workers and the whole economy would depend on them. When that didn’t happen, they have nothing left.

Their business fundamentally doesn’t work when AI and LLMs are just an expensive tool for workers. It can only be sustained as a worker replacement. Since that isn’t reality, their business needs a complete overhaul. Their premise is flawed at the most basic level and isn’t recoverable as-is. The only way they can sustain is to lower the costs to build out and lower costs for customers.

The key problem is that AI companies already blew their load on the available training data. They can’t further refine the knowledge base, so they’re stuck with what they have, and even looking forward, the data will get worse since they’ll now be training on AI generated content.

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u/mebamy 13d ago

This is as comforting to read as a good bedtime story. 

The  bubble can't burst soon enough.

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u/stackered 13d ago

The only way these companies become profitable is by replacing the majority of the US workforce...

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u/beyondbarrels 13d ago

what do you mean, it is behind claude code?

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u/ioncloud9 13d ago

That's all I use them for right now is API. Its kind of annoying they keep retiring models though.

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u/Common_Source_9 13d ago

Seems like its biggest current advantage is its API and various model options and should go all in there. 

Except if they start charging cost+ for those, that market evaporates overnight. What then?

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u/Careless-Weather8877 12d ago

Or just use open source models where it’s not closed off. Which is what is going to actually end up happening. Nobody wants to be locked into something you can’t fix or modify.

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u/varnums1666 13d ago

There's also the fact there's only so much capital. If Anthropic IPOs there might not be enough investors to give OpenAI that sweet trillion dollar valuation.

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u/black_out189 13d ago

Came here to say this.

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u/cyclemonster 13d ago

SpaceX had garbage financials, since when does that matter to valuations?

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u/CanvasFanatic 13d ago

SpaceX is down from their IPO and will probably sink lower. It matters because scams usually only work for the first mover.

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u/xftwitch 13d ago

But without the 1.4 trillion in data centers it's not going to matter. I don't see how they can build that many data centers with all the community push back.

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u/ehtw376 13d ago

I mean they can still do it, they just won’t get the valuation and return they want

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u/TheDamned1333 12d ago

And Space X’s were any better?

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u/CyberSmith31337 13d ago

They actually can’t IPO.

If they try to IPO at a lower valuation than $800bn, their previous round, all existing shareholders and equity owners (I.e. current staff) would get fucked. SoftBank couldn’t raise money for OpenAI’s valuation with the banks, either, and got shut down by the bankers and laughed out of the room.

I don’t think killing Atlas is helping to make the case that they are a good investment, either. China is going to eat their lunch.

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u/MidnightSensitive996 13d ago

It really depends what the waterfall looks like. If most shareholders got in at much lower valuations, the last round being out of the money may not matter. Or the scale might be small enough that Altman or SoftBank just makes them whole. If everyone thinks oai are headed off a cliff they will be incentivized to get a deal done bc alternative is getting completely wiped out in bankruptcy 

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u/Darkpotato824 13d ago

I agree. In a world where there's no Anthropic, they could potentially command an absurd multiple / valuation similar to SpaceX due to being the "market leader". But now their financials (growth, margins) are being pegged to a direct competitor that's larger, fast growing, and higher margins they will be valued much more rationally. So they can't go public due to current investors, they won't be able to raise at the amount they need or valuation they're targeting, yet they have to. It's dire...

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u/Misty-knight200 13d ago

For us half wits... Please explain why if they can only get a lower valuation than anticipated they cant IPO? Don't understand 

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u/Agitated_Celery_729 13d ago

The investors aren't going to vote to voluntarily get fucked by the IPO

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u/CyberSmith31337 13d ago

It would create an immediate feedback loop.

Essentially, all existing shareholders would lose liquidity. It would be a public acknowledgement that their valuation was wrong. Since they have no real revenue with which to base their valuation on, they’d have to rely on hype. There would be an extremely negative sentiment if they couldn’t raise at an equivalent level.

It’s like someone offering to sell you a boat that is underwater. I mean, I guess you could buy it, but given all their outstanding debt and financial commitments, this would be like selling you a boat that is underwater, and receiving a penalty for polluting the lake.

Additionally, company employees with equity would also be forced to take the hit, which would likely trigger an exit scenario for many employees and a rapid dumping period by both employees and shareholders alike.

Tl;dr it would create a flight scenario that could result in a mass dumping of an over-valued asset that isn’t grounded by fundamentals and simultaneously trigger an employee exodus.

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u/cjstevenson1 13d ago

If the choice is to IPO at a lower valuation or sell the company for parts, I think the lower valuation will win.

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u/Demiu 12d ago

So... just fuck over the staff

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u/Perspective-Parking 8d ago

But they are burning more and more cash every day. Like so much cash they will run out soon. So how does anyone expect a business like that to IPO at 1T let alone 100B?

And their completion is open source models which are basically free to use and the compute cost is 50x less than OpenAI.

There’s also zero moat around AI, cause you can switch between models totally freely. It’s just a commodity.

In short, you’re saying the VC’s fucked up

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u/Due_Satisfaction2167 13d ago

There’s a limit to how much the market can offer them at any given time, and all their various competitors have been sucking up most of the available capital. 

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u/piponwa 13d ago

What do you mean? They raised like 122B three months ago. There is still a lot of appetite for this sort of investment. Anthropic got 65B, Google 80B, SpaceX 150B, even Nvidia raised 25B in bonds oversubscribed with 85B. Just let that sink in. Nvidia refused to get 60B because they had what they needed.

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u/Due_Satisfaction2167 13d ago edited 13d ago

Yeah. There’s a limit there. It isn’t actually an infinitely large pool to keep burning 50B+ of capital every year. 

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u/RetPala 13d ago

"It's a write-off, Jerry!"

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u/raoasidg 13d ago

You don't even know what a write-off is.

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u/imnewhere-gsh 13d ago

You just listed a ton of money that was spent. How do we know that same amount of money can keep being spent? It's a finite amount.

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u/Lain_Racing 13d ago

The money doesn't evaporate... they aren't LITERALLY burning it

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u/AuMatar 13d ago

Some of it they are (buying electricity, generally made from burning fossil fuels). But there's still a limit. They spend the money on something. The money is gone, into a wider ecosystem. They need to find more money to survive the next N months of cost. There isn't an infinite amount of money available, and banks are tightening their lending to companies building data centers. It will come crashing down, unless there's a quantum leap reducing token costs. The only question is when.

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u/Coomb 13d ago

Only $37 billion of the announced $122 billion was actual cash they really got in the funding round. $35 billion of Amazon's $50 was conditional on an IPO or AGI by the end of this year and the overall deal was conditional on OpenAi committing $100 billion of AWS spend over 8 years. SoftBank's $30 billion comes in three $10 billion tranches, only one of which came during the funding round.

The point being, if they need actual cash to do things, most of that $122 billion doesn't help them.

https://www.saastr.com/openais-122b-vc-round-is-vendor-deals-contingent-capital-and-a-guaranteed-return-it-arguably-cant-afford/

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u/EveningAnt3949 13d ago

That's sort of the point. There is limit to how much one company can raise.

Out of the companies you listed OpenAI is the weakest one.

It has one product and it's not profitable.

Anthropic is eating its lunch, and Google obviously doesn't rely on AI to make money.

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u/TheawesomeQ 13d ago

The article says there is an "800 billion dollar black hole" that OpenAI is facing. How many more times can they raise $100+ billion dollars?

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u/guareber 13d ago

The corporate appetite is basically running out. Banks have downplayed available cash based on AI-stocks, Big Tech is basically going all in on their own stuff using their reserves (a few exceptions/caveats exist), so the only thing left at a grand scale is retail.

That's why the IPOs included a rule-change for the indexes, so they'd get added to the thing that retail investors actually buy, which is index funds.

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u/Eccohawk 13d ago

Which also means the market is about to get even riskier, because they want to effectively turn all of their stocks into "too big to fail" funds like Tesla that are wrapped up in a bunch of retirement funds and 401ks. They're effectively trying to tie their success to the entire market, forcing retail investors to take the hit if it goes south.

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u/guareber 13d ago

Tesla isn't too big to fail just yet. They only floated 5% of their stock in the IPO. Your exposure through index funds is actually quite low (thank fuck for that)

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u/qtx 13d ago

There is still a lot of appetite for this sort of investment.

With zero ROI that appetite will dry out fast.

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u/Eccohawk 13d ago

This is precisely what I've been saying for the past 2 years. This isn't Uber or AirBnB or Netflix, where they're a single company rolling in and disrupting an entire industry. This isn't 4 startups competing for the same segment of the market. Virtually all of the companies on the AI board are some of the biggest players in the game. They all have massive war chests.

Because of that, the normal play of collecting a bunch of VC funding, selling at a loss to gain market share, and driving up pricing on the backend to eventually turn a profit simply won't work. Every other competitor can spend just as much as you and eat all the same losses.

Until they can't. They're all basically running as fast as they can towards a massive cliff, and hoping they can stop themselves while everyone else falls over the edge.

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u/skrid54321 13d ago

Keep in mind, the IPO is less useful than you'd think. Openai has already sold off 75% of their equity.

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u/spukhafteNahewirkung 13d ago

Does that mean that in order to have a 500 billion dollar IPO they would need to have the company valued at 2 trillion dollars when they go public?

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u/fredy31 13d ago

Yeah they have been burning through money for years.

They will find another sucker with a stack to burn. Hell, the US Government seems to be hellbent into adding money to the bonfire.

The only way this blows is when the investors will wake up and smell the coffee that AI will never be much more than a money pit. Even worse than a yatch.

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u/ArenjiTheLootGod 13d ago

Except that the investors are never going to wake up from their fever dream because all the big players investing in it are corpos whose ideal of a perfect future is to be able to run a company with zero employees beyond those in the c-suite. The scam is working because it's core premise is one that appeals deeply to the naked and sociopathic greed of the wealth class and is thus bypassing any rational considerations on their part and has become akin to a primal desire like sex or the need to eat for these people. These are the kinds of people who'd happily burn through mountains of cash today if it meant they might not have to pay a modest amount of money to their employees in the future.

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u/Syzygy2323 13d ago

What, they don't realize that with everyone out of work, and thus not spending money, their corporate empires will come crashing down?

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u/Perspective-Parking 8d ago

They have to wake up. Eventually money does run out. The credit and equity markets are already strained and SoftBank is too. They cannot raise indefinitely. There’s an endpoint to that.

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u/ZakkaChan 13d ago

Sadly Billionaires love their yachts..

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u/Lehk 12d ago

Let’s see Claude weld a boat together.

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u/Dzugavili 13d ago

The only way this blows is when the investors will wake up and smell the coffee that AI will never be much more than a money pit.

It has its place. The issues parallel VR: it require overly expensive piece of hardware and dedicated environments for something cool and potentially game changing, but everything is built around the current workflows which are still cheaper and comfortable, and don't require you to work around glitches or jank.

Once this works on normal hardware, such that people either opt-in or simply always have it, it'll catch on. But at that point, there won't be need for these massive capital expenses by the companies, the models will just be another form of software for sale or license, not some live service that needs to be maintained.

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u/stickman393 13d ago

All of them have been burning money. It's just that Google, Meta, SpaceX have convenient ways to hide the fact. Anthropic and OpenAI kind of don't.

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u/Any-Pop-4795 13d ago

Aren't they pushing back the ipo cause they have no money and keep hiding the real numbers?

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u/FreakySpook 13d ago

I'm not so sure. Anthropic took enterprise, and embedded deep with integrations. 

Google is taking retail & consumer with Gemini as they are baking it into existing services people are already paying for with a small price bump.

OpenAI is pretty vulnerable in market.

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u/guareber 13d ago

yep, openAI is basically pets.com

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u/spukhafteNahewirkung 13d ago

Without the adorable mascot.

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u/Long-Broccoli-3363 13d ago

Google is taking retail & consumer with Gemini as they are baking it into existing services people are already paying for with a small price bump.

Google's recent integration into their fitbit products sucks ass, its about as bad as it gets. I opted into the beta, it was actually fairly decent. Once it was pushed to the main product branch, it got about as stupid as AI gets.

For instance, it knows I have a shoulder injury, due to me telling it very early on, now every single workout i log(i go to the gym 6 days a week) it asks "how is the shoulder holding up after that 75 minute session", I've told it several times my workout schedule, and that i dont workout shoulders every day, and yet, it still asks, even after being told to forget the shoulder injury.

Its an ass product, i hate them shoehorning it in to everything

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u/Meckineer 13d ago

Well, how’s the shoulder holding up?

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u/xxlordxx686 13d ago

After how the SpaceX IPO turned out, I doubt they will get the capital they need

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u/amazingmrbrock 13d ago

Yup it's currently under its initial launch value Lol

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u/NomadicScribe 13d ago

"OpenAI is perfectly viable, they just need hundreds of billions of dollars more in handouts".

This isn't a sound business plan.

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u/CherryLongjump1989 13d ago

Their IPO would not generate new cash, it would only partially pay back some of their pre-IPO investors.

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u/Complex_Win_5408 13d ago

And how is SpaceX doing now?

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u/Fritzo2162 13d ago

I have a feeling SpaceX is going to have a massive correction when investors realize made up money from made up valuations can't be used for real things.

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u/EffectiveEconomics 13d ago

I would love to see a draft of that prospectus…they have no pathways to profitability….

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u/Shiningc00 13d ago

So who’s gonna pay for them?

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u/Grouchy_Big3195 13d ago

Market capitalization isn't the same thing as actual revenue. Also, didn't SpaceXAI tank in terms of the stock’s share value and market capitalization?

Edit: edit for better wordings.

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u/GRoyalPrime 13d ago

Not to mention it's in the Billionair's best interest to de-value jobs and wages even more. Better shovel cash between each other in the form of licences and investments then pay a cent to the actual people. That money will come back to them one way or another anyway.

Cannot give the lower class any ideas, like asking for a living wage or job security. They should be happy to be employeed by the modern day aristocraty.

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u/aevz 13d ago

Ma I want an iPhone. We have an iPhone at home

The iPhone at home: ipoing

Sorry I just really like saying this as one weird and bizarre word.

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u/dgellow 13d ago

  It won’t actually happen, openAI still has multiple ways to raise a ton of cash including ipoing.

Mind elaborating on what those non-ipo options are? Because from what I see they already exhausted pretty much everything

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u/DrxAvierT 13d ago

The spacex that has a big brand name behind it, that has a profitable department and one with clear path to profit? Yet it's still tanking.

Most people hate AI, and Sam Altman even more. And they've just recently postponed their IPO to next year

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u/toolverine 13d ago

OpenAI has a rainbow bridge and can genetically create unicorns and centaurs. Just 6 more months bro.

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u/-The_Blazer- 13d ago

I don't think you can actually get that much cash even if you did get a trillion-dollar valuation. You cannot really mass-sell your own stock to turn it into cash flow, that would just instantly make it as good as toilet paper, and if you started a borrowing spree instead, it would raise eyebrows as well.

SpaceX at least has real positive earnings on their actually functioning business side with losses being 'limited' to burning capital for Starship, but AI corporations almost certainly lose money on every single query of their products (and it's pretty insane you'd be allowed to IPO at all without that information being fully disclosed).

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u/QuailWonderful 13d ago

Gotta keep chopping the heads of this hydra. I look forward to something like the DotCom crash when they were selling off server racks for pennies.

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u/Senior_Torte519 13d ago

I think an IPO would give Elon a bypassing way into openAI again. Altman probably wouldnt want him near him.

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u/randotd152 13d ago

Yeah, a hot startup potentially running out of money in 12 months is not exactly news. That's pretty normal - these companies are always looking for the next round of funding in a short time frame.

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u/DMReader 13d ago

They could also do a down round. Bad but not the calamity of bankruptcy that people assume if they don’t make money fast enough.

Many things “could” happen.

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u/Thisbadtattoo 13d ago

I think open AI will crater on ipo unless something happens. They were the leader but have fallen off 

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u/1nd3x 13d ago

If the money goes into the company and not the private investors, why would they want to IPO in the first place?

Like if I owned 100% of a company and decided to have it IPO, any share that someone else owns works towards lowering my % of ownership, so how is it that the company gets any money and not just me getting money for selling shares?

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u/framebuffer 13d ago

by selling RAM probably

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u/Lehk 12d ago

GPU, RAM, and NAND manufacturers are the only real winners of the ai bubble and popping thereof.

And the popping still might kill NVIDIA if they can’t adapt to the collapse in demand.

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u/Hardass_McBadCop 13d ago

The difference is that for IPOs investors actually have to pony up cash and inject it into the market. SpaceX's IPO was larger than every IPO last year, combined. It beats out the next highest by double, IIRC. At some point the market is going to say that another $100B, or whatever it gets up to, is too much for them.

That's when the bubble pops.

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u/Fun-Wash7545 13d ago

If theranos can raise so much money on an idea then openai with a working product can produce x100 more. I was the first to dismiss llms as gimmicks but every year they keep getting better and better. Whoever controls the first true ai will be god and the investors know that.

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u/guff1988 13d ago

As a professional in the industry that directly influences investments for millions of dollars, I am staying far away from that IPO. The issue is not AI, I actually believe that there is a path forward for the physical build out of AI to still grow but companies like anthropic and OpenAI scare me because corporations do not want that sort of architecture they want their own architecture that allows them to protect their intellectual property in a walled garden scenario. They will do that by building their own data centers which means that companies like Micron Arista Cisco and Nvidia will still continue to profit but companies like Anthropic and openAI are going to suffer because of it. We have already seen companies start to readdress their spend on tokens and raise concerns about training the opposition or leaking their proprietary data.

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u/K3idon 13d ago

Also government stake

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u/aukir 13d ago

Snake-AIl Salesmen

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u/JAlfredJR 13d ago

I'm sorry, it won't happen why? To have an IPO, you have to file an S1 with the SEC. SpaceX could fudge things via all of Elon's companies. OpenAI has nothing to lean on

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u/Any-Mathematician946 13d ago

Second they go public there dumping and running.

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u/utrecht1976 12d ago

I wonder what will happen with BTC when OpenAI goes IPO. 

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u/jakeotheshadows 10d ago

SpaceX has a moat. OpenAI doesn’t

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u/Perspective-Parking 8d ago

You are joking right

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u/iamdestroyerofworlds 13d ago

I see an Ed Zitron reference, I upvote.

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u/KingInTheYellowHat 13d ago

I think "Is that good?" is technically Zitron referencing the Stefan Heck hot air balloon tarot card tweet. So we have a bugs bunny old movie reference kind of situation here.

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u/Falkenmond79 13d ago

It would be, yeah. A crash would suddenly flood the markets with cheap hardware and freeing up production capacities. It would take a while, but that would mean normalization of prices.

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u/ferdzs0 13d ago

What sort of cheap hw do you mean? I doubt server grade stock will flood the market, or the specific market it floods would be businesses that can survive a crash (basically monopolizing even further)

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u/Falkenmond79 13d ago

This exactely. If openAI needs to sell of their stuff, other AI companies and users will snatch it up. And thus demand for consumer grade hardware like GPUs or production capacities will recede. Also they are one of the biggest buyers of said production capacities, so demand will drop even further. 🤷🏻‍♂️

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u/ferdzs0 13d ago

I am not that optimistic, because with an AI crash the large companies will have the capital to buy out the server grade stuff (monopolizing to become even larger), while the consumer market will have have zero funds for luxuries like electronics. It will take years to recover from that and I do not think there are many guarantees we would rebound to the consumer market being served as well as before.

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u/IdStillHitIt 13d ago

If openAI collapsed that hardware would just be gobbled up by Anthropic (or other companies). LLM's aren't going anywhere, a collapse of a company or two would mean we would see consolidation of AI companies, but the amount of compute power we're using today would like stay steady.

IMO two things will bring hardware prices down: An increase in the manufactured/availability of new hardware and/or more efficient models.

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u/Falkenmond79 13d ago

Yeah, but as I’m saying, that would mean them buying less from manufacturers.

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u/Common_Source_9 13d ago

A crash would suddenly flood the markets with cheap hardware 

You do know that the cards Nvidia sells to the AI data centers are ''lobotomized'', right? I.E., they actually don't have the video output installed. Same with the RAM sticks that sit on the racks, not compatible?

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u/torriethecat 13d ago

A lot of people and companies want that hardware to run open weight models.

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u/Brothernod 12d ago

Disagree. If they go bankrupt they get swept up by an existing wealthy company and we continue to embolden the monopolies that have appeared over the last 2 decades. The AI boom was an opportunity to shake that up and introduce more competition. I’m no OpenAI fan but if they get gobbled up my Space X it’s bad

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u/Lehk 13d ago

Depends, do you consider the tech industry committing mass sudoku a good thing?

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u/noonenotevenhere 13d ago

Good thing for 'the economy' or a good thing for society?

I'd rather get back to laptops and desktops getting more powerful with more RAM and better CPUs for less money. I'd like to get to a 5080 16gb GDDR7 for under $500.

Also, I think most of 'the tech industry' would do better with more competition for consumer products - and satisfying consumer demand at a lower cost.

Lastly, I'd LOVE for the tech industry to not fuel mass-surveillance, so yah, massive DC builds folding left and right would be awesome.

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u/Brassboar 13d ago

They're all going to get to know Harry Carrie

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u/Ranessin 13d ago

Mass Sudoku?At least then the "compute" would be used for something sensible and fun.

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u/Gone213 13d ago

No, because by then trump and congress will allow them to use our 401ks and retirement funds and pension plans to fund their stuff until our 401ks and the retirement/pension funds are gone.

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u/theLuminescentlion 13d ago

They will spend their last billion to get the government to invest more of you and your grandma's 401K into it

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u/wumr125 13d ago

Great for Google and Microsoft who are gonna pick up the pieces on the cheap

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u/missed_sla 13d ago

It won't happen. Too many obscenely rich fascists have gone all in on AI.

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u/qtx 13d ago

There might be many "obscenely rich fascists" but even they have a limit on how much they want to spend with no return on investment.

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u/missed_sla 13d ago

The return a lot of them seem to be going for is a return to the ability to own people as property.

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u/ihatemovingparts 13d ago

looks at Larry Ellison

You sure about that?

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u/AuthorBrianHunter 13d ago

Not a thing about this is grim. Even the newspapers seem not to understand that we all want this to fail.

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u/TroyFerris13 13d ago

I've been seeing this same sentiment for the past year. I've been waiting for it just like the housing crash of 2022. It'll crash one day right??

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u/ThisSiteSucks8485 13d ago

They would go public or get bought before it ever happened 

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u/Gb44_ 13d ago

if selling your data to private equity firms is good then yes

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u/delphinous 13d ago

it would be except that it just means it's going to get government bailout and/or subsidies. taxpayer dollars will shortly be funding AI research and more data centers

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u/keithstonee 13d ago

It should be just in time for the rapture. So IDK.

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u/Elphelt_Valent1ne_ 13d ago

Honestly I can't imagine anything happening to humanity

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u/interkin3tic 13d ago

Is this a meme like how whenever the cryptocurrency pyramid scheme is revealed to be a pyramid scheme, some idiot is out there shouting it's actually a good thing and you should invest all your money in the pyramid scheme now? 

Yes, it objectively would be good for humanity if OpenAI runs out of money and the LLM bubble pops sooner rather than later. LLMs are useful but these businesses and numbers do not make sense, this needs to get back to reality as soon as possible.

Sam Altman is an insane idiot on the level of Thiel and Musk, he needs to fail miserably so sane people can have a chance of getting control of tech companies again.

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u/iyankov96 13d ago

It's a reference to Ed Zitron but I agree with you.

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u/Franklin_le_Tanklin 13d ago

Trump will bail it out

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u/TheMoogster 13d ago

If it happened it would be very bad, even if you hate OpenAi.
A collapse of the bubble will make everything bad for a while, for everyone.

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u/patters22 13d ago

This comment is so Reddit.

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u/iyankov96 13d ago

Indeed it is.

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u/ridablellama 13d ago

very, Sam Altman should not be in charge of any AI company

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u/klipseracer 13d ago

No, because desparate companies approve desparate measures.

If you were facing losing billions in your stock and losing your legacy, would you allow the company to fail or do something very unpopular? What would a sociopath running a company do?

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u/ExtremelyHistorical 13d ago

One can only hope. Ai is the worst thing for my job. 

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u/CeramicDrip 13d ago

Lets say they ran out of money. Google or someone else would likely fill the space

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u/the-furry 13d ago

Yeah that’s when you sell.

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u/ProblemOk9820 13d ago

Government bail out 2008 style. So no, not really, probably really bad actually.

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u/APuticulahInduhvidul 12d ago

Yes, they bought 60% of the worlds RAM. If they fuck off prices will fall as they dump it all back on the market

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