Will OpenAI someday be seen as the WeWork of AI, as I have suggested several times, as far as back as late 2023? I still think so, and I think that moment is drawing close. They have, by any reasonable standard, seen rough times of late. Google and Anthropic have each largely caught up; various Chinese companies are closing in. More and more questions are being raised about their financing. (And more and more people are agreeing that AGI won’t arrive this decade).
I think they are toast. Anthropic looks better but they are all holding very small moats and AGI they are not. Better search and language translation.. amazing little probabilistic databases but no real intellect.
The lack of moat was clear early and always made the massive spending questionable. The fact that Altman so clearly has a loose relationship with the truth means that few will cry if they go down. Shoutout to Karen Hao’s work.
On an entirely unrelated note, Open AI just announced that the winner of the Best Ever Peace Prize has been determined. "We asked all our employees and 106% were in agreement," gushed Sam I Am. "Soon to be announced!" (Spoiler alert: the award looks just like the FIFA peace prize except that the four grasping hands each have six fingers.)
I think I read the news yesterday that Alphabet’s projected capital spending in 2026 is around $180 billion. To help support this wave of investment, the company has even issued extremely long-dated debt, including a rare 100-year bond.
The total announced capex of Alphabet, Amazon, Meta, and Microsoft for 2026 is aound $650B, reportedly. These are profitable companies, lots of revenue, Open AI is not, keeping up isn't possible for them.
Siince $650B can't practicably be turned into actual compute in a year, maybe the point of the announcements was to scare off Open AI's investors. If so, could be working.
In what way do Anthropic‘s finances differ from those of OpenAI? Both are years from profitability and rapidly burning money. Like OpenAI, Anthropic announces financing deals at fantastic valuations.
November 18 Microsoft & NVIDIA with $13 billion at $183 billion valuation.
This isn’t the behavior of companies nearing positive cash flow, let alone the more difficult bar of profitability. Their increasing need for cash suggests the opposite. These companies are valued based on the latest press releases and investors’ dreams.
I am using Chinese model for coding (GLM) and I quite like it. Even in the benchmarks (which don't always project real world performance, I know) it's only a few points below Opus, but much cheaper (maybe 10x, depends on the plan).
It's also open weight, so if you have your own server farm (or can rent one), you can run it entirely on your own.
The last but not least thing I like about GLM is that I don't even know their CEO.
The old joke really does apply: “We lose money on every sale, but we make it up in volume.”
As the cost of tokens is greater than the revenue acquired, this is a loss on variable costs alone, and nota case of apportioning the overhead. Zitron was hammering away at this issue for ages, and I don't believe anything has fundamentally changed. OpenAI could reduce its fixed costs to $0, and it would still go bankrupt. This is probably why it is now trying to offset costs with advertising, a futile approach given the cost structure of the "business".
We may be past the "gradually" stage of going bust and entering the "fast" stage. Is RIP OpenAI approaching?
without SoftBank openAI might not have made it through 2025. 7 and 1/2 billion early and then another 22 billion just 2 months ago. That would be an awfully quick reversal. Poor Sam.
"Talent will make a beeline for competitors." The "talent" is worthless - AI needs people who understand what words mean. Not people who don’t. “he cried out in public” – is that a public outcry? There is a subtlety in words that some people will never get.
AGI needs people to work on large hard problems that are beyond us, not trivial stuff like the Tower of Hanoi, or an AI overview of a phrase. It needs to shake out the people who want to continue as programmers. Maybe the AGI folk could call themselves Complex Systems Engineers to make clear the difference.
You may be pleased that OpenAI is landing with a thud, but did its competitors learn anything in the process – that LLMs weren’t the way? Don’t think so.
AGI is a rich man's distraction to avoid solving actual issues (malaria, poverty, etc, etc.). The fact that OpenAI keeps dangling this to investors is no different from mister Musk repeating that Mars is the future of mankind, until it's not. That said, I think that negative sentiments towards OpenAI or SpaceX, for that matter, are misplaced. These companies employ human beings who are certainly doing their very best to create value, and we owe them respect.
I can see any of these AI companies on the verge of failing might give the US Government a 10% or more stake, similar to what Intel did to continue to encourage business funding, perhaps at a slower rollout. The reality is that the US requires some sort of transformative technology to escape its national debt by pushing new capital into new industries and retire the legacy rent-taking companies. In that sense these, yet to be founded companies, are too big to fail. This will be interesting history in the making. Can the US reinvent itself and the world, or will it shrink into obscurity.
As you may know the Federal Reserve refunds excess interest back to the Treasury after accounting for operations. It’s just that these past few years there has been no excess due to the post COVID quantitative easing. But yes, there is a mechanism by which effective interest payments are reduced. Over half of the T-bills are held domestically. Hopefully this gives enough breathing room to allow a new economy to take shape.
I think they are toast. Anthropic looks better but they are all holding very small moats and AGI they are not. Better search and language translation.. amazing little probabilistic databases but no real intellect.
The lack of moat was clear early and always made the massive spending questionable. The fact that Altman so clearly has a loose relationship with the truth means that few will cry if they go down. Shoutout to Karen Hao’s work.
On an entirely unrelated note, Open AI just announced that the winner of the Best Ever Peace Prize has been determined. "We asked all our employees and 106% were in agreement," gushed Sam I Am. "Soon to be announced!" (Spoiler alert: the award looks just like the FIFA peace prize except that the four grasping hands each have six fingers.)
I think I read the news yesterday that Alphabet’s projected capital spending in 2026 is around $180 billion. To help support this wave of investment, the company has even issued extremely long-dated debt, including a rare 100-year bond.
The total announced capex of Alphabet, Amazon, Meta, and Microsoft for 2026 is aound $650B, reportedly. These are profitable companies, lots of revenue, Open AI is not, keeping up isn't possible for them.
Siince $650B can't practicably be turned into actual compute in a year, maybe the point of the announcements was to scare off Open AI's investors. If so, could be working.
That makes sense!
Hey ChatGPT what do Sam Altman and Adam Neumann have in common?
In what way do Anthropic‘s finances differ from those of OpenAI? Both are years from profitability and rapidly burning money. Like OpenAI, Anthropic announces financing deals at fantastic valuations.
November 18 Microsoft & NVIDIA with $13 billion at $183 billion valuation.
https://www.nytimes.com/2025/09/02/technology/anthropic-funding-ai.html
January 7, $30 billion at $350 billion valuation. Closed today.
https://www.nytimes.com/2026/02/12/technology/anthropic-valuation-380-billion-funding.html
This isn’t the behavior of companies nearing positive cash flow, let alone the more difficult bar of profitability. Their increasing need for cash suggests the opposite. These companies are valued based on the latest press releases and investors’ dreams.
What a shame. Maybe Sam Altman can get his bribe back from Trump
Explains all the recent donations from Brockman. Doubling down on bribes in hopes of a bailout.
I am using Chinese model for coding (GLM) and I quite like it. Even in the benchmarks (which don't always project real world performance, I know) it's only a few points below Opus, but much cheaper (maybe 10x, depends on the plan).
It's also open weight, so if you have your own server farm (or can rent one), you can run it entirely on your own.
The last but not least thing I like about GLM is that I don't even know their CEO.
The old joke really does apply: “We lose money on every sale, but we make it up in volume.”
As the cost of tokens is greater than the revenue acquired, this is a loss on variable costs alone, and nota case of apportioning the overhead. Zitron was hammering away at this issue for ages, and I don't believe anything has fundamentally changed. OpenAI could reduce its fixed costs to $0, and it would still go bankrupt. This is probably why it is now trying to offset costs with advertising, a futile approach given the cost structure of the "business".
We may be past the "gradually" stage of going bust and entering the "fast" stage. Is RIP OpenAI approaching?
without SoftBank openAI might not have made it through 2025. 7 and 1/2 billion early and then another 22 billion just 2 months ago. That would be an awfully quick reversal. Poor Sam.
I have no sympathy. And he better NOT get a govt. bailout from the taxpayers.
A Ponzi scam collapses when the supply of new investors slows and the supposed profits evaporate. https://davidhsing.substack.com/p/openai-is-a-ponzi-scam-operation
A wider view... with the way this has gone down... with LLMs... is the quest for AGI... really worthwhile.
A trillion bucks on "look at this"!?
"Talent will make a beeline for competitors." The "talent" is worthless - AI needs people who understand what words mean. Not people who don’t. “he cried out in public” – is that a public outcry? There is a subtlety in words that some people will never get.
AGI needs people to work on large hard problems that are beyond us, not trivial stuff like the Tower of Hanoi, or an AI overview of a phrase. It needs to shake out the people who want to continue as programmers. Maybe the AGI folk could call themselves Complex Systems Engineers to make clear the difference.
You may be pleased that OpenAI is landing with a thud, but did its competitors learn anything in the process – that LLMs weren’t the way? Don’t think so.
They don't have a moat.
Google and Meta have independent revenue streams.
Apple isn't really playing.
Microsoft has independent revenue, but isn't strongly committed to OpenAI.
AGI is a rich man's distraction to avoid solving actual issues (malaria, poverty, etc, etc.). The fact that OpenAI keeps dangling this to investors is no different from mister Musk repeating that Mars is the future of mankind, until it's not. That said, I think that negative sentiments towards OpenAI or SpaceX, for that matter, are misplaced. These companies employ human beings who are certainly doing their very best to create value, and we owe them respect.
Germans have a word for rejoicing about someone else's misery: "Schadenfreude"(https://en.wikipedia.org/wiki/Schadenfreude). It's a very natural feeling, best avoided!
I can see any of these AI companies on the verge of failing might give the US Government a 10% or more stake, similar to what Intel did to continue to encourage business funding, perhaps at a slower rollout. The reality is that the US requires some sort of transformative technology to escape its national debt by pushing new capital into new industries and retire the legacy rent-taking companies. In that sense these, yet to be founded companies, are too big to fail. This will be interesting history in the making. Can the US reinvent itself and the world, or will it shrink into obscurity.
Can Trump persuade the Treasury to issue perpetual bonds with 0% coupons to bail out OpenAI? :P
As you may know the Federal Reserve refunds excess interest back to the Treasury after accounting for operations. It’s just that these past few years there has been no excess due to the post COVID quantitative easing. But yes, there is a mechanism by which effective interest payments are reduced. Over half of the T-bills are held domestically. Hopefully this gives enough breathing room to allow a new economy to take shape.
AI winter is coming...