[Ninjak8051]

Props to the author for the well-researched original article.

I disagree with the conclusion. In the current environment, OpenAI can raise money as if were water pouring from a faucet. If SoftBank can't meet its agreements then there are 50 others waiting to take their place. In the current environment, OpenAI's revenue and capital requirements are not meaningful given their ability to raise.

The environment can change quickly, look at early year 2000 vs late year 2000 funding for .com for example - money went from on-faucet to you're-not-getting-a-dime in a few months. So if the funding environment for AI suddenly shifts, yes, OpenAI is cooked, but so is the entire AI industrial complex, from the smallest barely-billion-dollar startup all the way up to Nvidia.

My conclusion is that OpenAI is not a systemic risk, it's not going to fall or take down a large portion of the tech industry on its own, it will fall if investors sour on the entire AI industry for some reason.

[bloppe]

I agree that OpenAI is not technically a single point of failure because if it were to disappear, then all the companies that depend on it could simply switch to Gemini or Deepseek or Llama, etc. It's been well established that they have no moat and there are no significant barriers to switching.

I think the author is essentially using OpenAI as a synechdoche for the entire AI industry. Essentially every AI company is reliant on frequent, massive cash infusions to stay alive, and if the money starts drying up for OAI, it will dry up for everyone else as well. The author persuasively argues that OAI will need ~40B per year to stay alive through the end of the decade. Let's assume that the whole industry combined will need something closer to 100B. Assuming that faucet will stay open that long is seems pretty crazy to me.

[lukev]

So AI is in this interesting place because while it seems obvious that it's an amazing, powerful, transformative technology... that actually hasn't materialized at an economic level, yet. Arguably the only place where it has a proven positive impact on productivity is in software development, and even there it's pretty obvious it's not a silver bullet.

I'm not interested so much if or when it will materialize economic value (that gets discussed here ad nauseum) but... how long a runway do you think we have where investors are going to continue to invest based on the promise, before the funding environment does shift? Because it will, eventually. And the LLM industry better have something to show that justifies current valuations or things are going to get very messy.

My fear is that we've entered "too big to fail" territory in which too much of the tech sector has too much to lose to be the first ones to start backing out. But that only means the bubble is going to get that much bigger before it detonates (and takes down half the economy with it.)

[belter]

> Arguably the only place where it has a proven positive impact on productivity is in software development

There are no studies demonstrating this. Having to double check this randomly hallucinating pair programmer AI colleague, is not helping with productivity.

[jacobr1]

There is probably a difference here in a few different market segments. You have the AI tooling companies (foundation models, tooling frameworks, vector dbs, etcs...), AI product companies (Agents for Foo), Companies with existing business investing in AI projects, and also existing tooling/compute companies, especially the hyperscalers.

The AI tooling companies could loose a lot of hype and valuation, why the hyperscalers and companies just building incremental automation using llms/agents continue, albeit with less internal investment. How much would that take down the industry? How many existing tech players have fully bet on AI? Even a company like salesforce that has pivoted their marketing to all AI probably only has a small fraction of their revenue tied to it.

[trod1234]

Have you considered the monetary interactions of the full environment?

For instance the fact that that the only way to do this is through money printing, which non-reserve debt under Basel 3 modified (objective value) qualifies, and which itself creates artificial distortions that self-sustain throughout until something breaks?

This effectively drives inflation forward, while at the same time being in a negative GDP growth trend, which only further exacerbates a stagflationary environment.

Imagine the interest rate exposure risk in terms of an environment of uncontrollable higher interest from the petrodollar withdrawal where all production stalls because tech integration has been going on without anyone rational at the helm to mitigate systemic risk?

There really can be no part where OpenAI will become profitable because the profit is taken from jobs that would normally pay a wage.

A mechanical sieve if you will solely on the factor markets, that absorbs liquidity, creating and sustaining various forms of whipsaw distortions, an economic calculation problem that grows until something breaks.

The price of things generally speaking is the ratio of the amount in circulation to that which is available to the general worker. The less workers capable of using it, and there eventually is a point where a critical stall occurs and people stop transacting in the currency.

[ebiester]

I agree - and I don't think investors will sour. Considering that AI and accelerationism is becoming close to a religion, and that there are many wealthy people who are tied to it, I think that the money will go somewhere. Even if it doesn't go into OpenAI, it'll go into one of the competitors.

[gom_jabbar]

That the somewhere money flows to is AI - and more strongly, that money produces AI - is the core thesis of philosophical Accelerationism. [0]

[0] https://retrochronic.com

[bobxmax]

Yeah, well reasoned take.

Hackernews is way too defensive about AI. Open AI didn't go from 0 to $5b because of hype, it got there because of how useful it is.

[Capricorn2481]

It's useful alright, but not to us.

I wish people would understand ChatGPT is a toy for consumers, and the real prize of AI is handling the mountains of data tech has been leeching for years.

Sam puts out vague worries of AGI Armageddon so CNBC anchors, who can't even turn their computer on, can argue about that all day because it's juicy. These are the same people that thought the Metaverse was a huge deal, and not just unfinished plans for VR Second Life.

Meanwhile, any company with good AI tech and enough data can classify, minimize, eradicate, and automate as much of our lives as possible. There's going to be no regulation on it, because we have never been about to keep up with text regulation.

And we are told we signed up for it when we were 15, trying to log into an app store on the new device all of our friends had.

[bigstrat2003]

I strongly disagree with that, because it's not useful. That company exists on hype alone.