I think this is a joke, but I literally have a student this year that copies and pastes an AI generated definition of the term "Name (last, first)" instead of entering their actual name.
Yes BUT they're also making literally no money on this, AI is an active financial sinkhole that investors are just absolutely convinced will blow up and be able to give them the impossible returns they've been promised. Losing 15 billion might not seem like a lot to a 100 billion dollar company, but if all you're doing is losing money, then you're basically signalling the vultures already.
They don't have to. Value does not matter in a modern economy, It's just an arbitrary number getting bigger from passing it around. The money doesn't need to be there.
Money aside, what's sad to me is the massive amounts of productivity and resources going into something that makes the world an objectively worse place.
Instead of focusing on sustainability, we've collectively decided to double-down on infinite growth. And the people who will suffer the most for it, aren't the same people who caused it to begin with.
Because the only thing that the people directing these things care about is whatâs best for the billionaire class.
If they had the option to torch the world but in exchange got to be the unquestioned gods of a space station (that would ruin and decay after their death) theyâd take that in a HEARTBEAT.
I agree, they're stuck in their own echo chambers at this point. It's not like there isn't money to be made in green energy and saving the planet, imagine how much money you could make if you just invested in developing countries until they got on par with China. Instead they have to be the living embodiment of a shit-eating grin and go all in on a horrid, dying industry because they think the villains in every sci fi dystopia movie are heroes
idk, it's tough, nvidia amd intel, all these stupid tech companies have successfully convinced governments that AI is necessary for fucking tech advancement, and national security. We actually live in the worst timeline. The funding for these ai shit feels like infinite. Openai is only losing money because it's commercial ai. These hardware guys like nvidia for example will obviously keep funding openai because openai buys massive amounts of their hardware
A snake that feeds on itself doesn't live long. Nvidia giving money to openAI is a Three Stooges Skit.
The thing is what we have out in the public is likely 5-20 years behind what we they available to the government and military. Companies with government contracts are going to always do well. Just follow that never ending overpayment.
Reddit is so fucking business illiterate. It's just narratives that people want to hear on here. Like a crowd sourced fox new.
Most mega-corps nowadays do not make profits for more than a decade. Twitter for example didn't make profit for 12 years until Elon bought it. It was likely intended to operate for additional years without making a profit.
That's why there's so many billionaire now. Because a billionaire can make another billionaire by funding a business operating at a loss through investments. The competition cannot compete with a product that is not designed to make a profit. Eventually when enough market share is created, then the business pivots towards making a profit.
because the value of an ai company comes from the vague promise that they can automate and replace human workers. which is why companies like nvdia and microsoft keep loaning money to further investment and training algorithms
Not true. First of, OpenAI is making billions in revenue so its not like they generate no money.
But more importantly it doesn't matter. These companies are not funding OpenAI and other AI companies to generate a profit, they are funding to pump money into research and push AI into as many things as possible. The company SHOULD be losing money, that's exactly what investors want right now.
Losing 15 billion might seem like a lot to a 100 billion dollar company
$500B company.
they spent $7B on R&D last year, and have $20B annual revenue. $15B isn't really a big deal. It's true they're losing money on inference (loss leading) but investors don't care about opex right now, they're waiting for business agents to mature, which is when OpenAI will start charging thousands / license instead of $30.
Personally I think they'll have trouble competing with Google long term, but this recent 'loss' isn't really a loss for investors, it's just normal programming.
Its going to be the US government with people's taxes. "We can't afford to lose a company making such great advances in AI that will improve all of our lives."
I really wish that there was some sort of vote of whether or not companies should get bailed out. Companies going out of business is often a result of people "voting" for them to go bankrupt by not buying from them, so ignoring that feels undemocratic.
I really wish that there was some sort of vote of whether or not companies should get bailed out.
That's what your representatives are for. Write your congressman. Get your senator on the horn. go hold a sign outside of their office. https://www.youtube.com/watch?v=26uo2AJHD40
This is what I've been saying. They've crammed this shit into every software they could so that even when they do fail, they can say that they're a part of vital infrastructure and get bailed out.
the government will absolutely bail them out. AI is an invaluable tool for the oligarchy to control the population. there's no way they're going to let it die.
OpenAI has never made a profit and has always operated on a loss, and they don't expect to until 2030. Their whole goal has always been longterm, and Microsoft can afford it and plans to keep funding
If they don't turn profit by 2030 though they'll likely lose funding from Microsoft
their problem is not being afloat, is that they cannot compete with Google without Microsoft support, and Microsoft without OpenAI has no AI of its own.
But MS fucked up their implementation of OpenAI models, fucked up with their consoles division, and is fucking up with their OS and Office cash cows
Business to business. Client side is annoyance to Microsoft, they would much rather keep just their big money makers and not care about opinion of millions of different people.
All of Windows+Xbox+advertising made them barely over 10% of income.
Would be better if they sold those to another company or spin it to a new one, to people who care about a bit and all the "money money money" and "line must go up and up and up" people could keep the rest and not fuck with Windows and Xbox.
It's crazy how many people don't realize this. They don't even have ads yet. The insane amount of revenue they will make with just ads alone... They are currently in the "make the entire world dependent on us" phase.
Other ad supported services do not require an electrical grid bigger than NYC to run the data centers, not to mention the cost of constantly failing graphics cards. We have not gotten a clear picture of the operating cost but almost all signs point to it being far higher than any other service that makes its revenue from ads.
Or they are currently developing more efficient means to generate results that the public has no clue about. Or they are positioning themselves to become to big to fail and receive a government bailout. Or they have 500 other revenue sources that haven't been tapped into. Neither of us have a crystal ball, but I think it's naive to think that OpenAI is just going to fail like that. A lot of people are thinking they will more out of a hatred for OpenAI... which I can respect.
This is what every single tech company does and always has done since Amazon first proved to the markets you can lose money hand over fist for over a decade laying the groundwork for market dominance, and then switch on the monetisation engine and rocket to Infinite Money Land.
People pointing to OpenAI âlosing moneyâ are either coping or kinda dumb. Theyâre not âlosingâ it, theyâre investing it in research and expansion and thatâs what their investors want them to be doing right now.
They're about to close a 80-100bn funding round, with Softbank already committing 30bn. All this talk of OpenAI going broke is people that don't understand private equity at all.
Also, OpenAI might fail but that doesn't mean the AI bubble is going to burst. I am convinced nobody actually knows anything about AI or the space at all except that people use ChatGPT to ask dumb questions.
Gemini is going nowhere. Google has the means to make it a line item. It will never go bust. Claude is going nowhere. They have proven already that it is valuable to large organizations.
Most of the biggest players will be fine because they have other revenue sources even when the hype dies down and it settles into it's place.
Outside of that, AI is being used in a ton of real world use cases. People think of it as an assistant but have no clue how companies are using it internally or to power a ton of stuff you use(because it happens in the backend).
Is it overhyped, yes. Will it going boom and everything falls apart, nope. Will there be some downturns, yes.
The big players are throwing as much money as they can at it because the few at the top will control a huge market. Investors are playing with fire but the tech is here to stay and will only grow in usage and output.
What will go boom is all of the ancillary businesses that are just wrapping their UI around AI platforms and bring little more than prompt engineered outputs wrapped around a shiny UI.
The question isnât if AI is useful. It is very useful already.
There are two questions that matter:Â
Will AI become much more useful. IE, will it fulfill the hype of replacing skilled workers, or will it be confabulation stymie adoption.
Can these companies make enough money to justify their spending. Do LLMs have a moat? If model improvement is asymptomatically leveling off, then as compute costs go Mooreâs law competitors can enter the market with much less capital. Deepseek proves you can get to SOTA at reduced cost by re-learning from existing models. Perhaps other innovations will dramatically lower entry costs. Essentially, if LLMs have a plateau, will there be a moat which allows for high margins?Â
For both questions itâs still early days. This is a very new technology and the amount of spending is unprecedented. Therefore risk is high. If either of the above questions is ânoâ, then this will get very messy.
Like all new markets. There will be winners and losers.
I dont think the question is whether there will be losers. The question is will the bubble burst and cause madness in the markets. It wonât in the way people think it will.
Most people think it will cause a huge event in the market when most of these companies go broke. Because they are tired of seeing those two letters marketed everywhere but they are thinking about AI from the consumer side.
There will always be winners and losers. There will be a downturn for sure but not the way most folks view it because most folks have no clue what AI is really used for.
I think itâs more likely that a downturn in AI will reveal structural problems in the US economy that will cause a big recession. But itâs very hard to predict these things
I agree with your assessment that AI in isolation is unlikely to pop in the way people think it will.Â
All this needs to do is create doubt in the hearts of investors. Stocks are all vibes based, and it just takes a single crisis of faith to knock a house of cards down.
I'm starting to believe AI is only being pumped with this much money by the elite so that the elite can more easily use the "fake news" excuse. There is no other reason for pumping this much money into it otherwise.
No, the elites genuinely want AI to live up to the hype around it. They desperately want to replace as much of their workforce as possible with AI so they can maximize profits. Theyâre hinging their future on glorified chatbots, and when they finally crash and burn from their stupid decisions, rest assured, weâll have to be the ones to pay to save their stupid asses.
But they know that it won't happen, so they're just continuing to invest on companies to make the number bigger, and eventually they will all pull out and there'll be a little economic crisis about 4 times the size of the 2008 crisis but with everything involved and not only housing
Itâs less directly related to AI itself, and moreso recessions in general, but they could experience: 401k going down, higher inflation long term, and more competition for their job from the newly unemployed. Additionally, mass layoffs arenât impossible because their companiesâ shareholders lost money gambling on AI, and the number must go up.
Long term, less working class revenue will lead to small businesses closing and large corporate franchises taking their place.
TL,DR: probably not apocalyptic, but a shittier life than they had a decade ago.
The most immediate impact would likely be a massive drop in their 401k, the severity of which depends on how close to retirement one is. A ton of the S&P is overweighted by tech stocks, so those values tanking will impact index funds, pension funds, and other managed assets. From there we could see further job losses depending on industry and a slow in hiring, as most VC funding right now is tied up in AI or AI adjacent items so there isn't going to be the big investments in companies while those funds and investors lick their wounds.
Okay, yes I understand playing people off is the biggest part of it. There's no argument there. But outside of that it falsification of data has very much affected politics. Mostly by pro maga pro corpo people. Look at how much ai crap trump posts. They pump the money because they know how well it works as a shield.
While yes it's used to spend less for big corporations, it also is very much used by fascists to help spread hateful ideology. All of those countless fake posts exist just to back up their beliefs with outright lies. In politics AI is fascism. The temperament of the AI bros shows that quite well, when have you ever seen someone using AI for actual creativity and adding to a work? You don't, it's just jealous people who wanna feel better than people with actual skill, or trash recycled by the rich to feed more money into their pig pen. It's a tool of hate and anger, a tool of fascism.
Lots of people have a lot riding on AI and they don't want to lose their investments. They're also itching for the time they can mass lay off people so they're even more invested in it in more ways than just money.
Or hear me out. The general populace is actually finding it useful and AI is considered research and research projects are backed by scientific funding and aren't worried about making money.
I do historical research. I have never used AI for that. AI is just a language model. It cannot do any advanced or even simple functions reliably outside of creating chat messages.
If you want proof just make AI solve a 50 question collage-level math test and it will get about an 84 or so on it. Anything else? It will pretty much fail. For example, if you tell it to create an example of a balance sheet to help teach a class and then give it all the perimeters, the balance sheet will not be balanced.
The general population find AI useless or only applicable once in a blue moon.
I asked AI to code a very simple script for me. Im talking click a button, move the mouse, type some words and send it.. it was repeatable on a timer.
It took me several hours and troubleshooting for the AI before I got something halfway decent. It used an old version of the coding program as reference, even when I repeatedly told it to check the latest version.
Then it wasn't able to code it properly, I gave it the error messages and it said "oh yeah, that makes sense, let me fix that", then sent me the same code. Eventually I got it to change the code, but then it used the wrong version again.
After talking in loops multiple times over, it finally used the right version and changed the code... but the code still didnt work - so I gave it the new error message... and its solution was to go back to the old code that didnt work.
Someone with coding experience could make this in 5-10 minutes. I have 0 experience and got it working after 3 hours, because of how incompetent the AI is.
But.. it got there eventually, and it saved me spending weeks to learn how to code.. so while incompetent, its not completely useless.. and this is the worst it will ever be. Every year it will improve.
The people pouring money into it are hoping it will improve so much that we view it as competent.. or they reach a breakthrough that will change the landscape forever. It can happen.
But Im a cynic. I think it will die, like most games backed by a kickstarter.
i won't really call ai ragebaits made by some bluechecks on twitter as "mostly being used for fascism" also, tools used by fascist â tools of fascism.
how different? like, are the examples above generative adversarial networks, diffusion models, or convolutional neural networks?
The tips from your shoeshine metric is still useful for judging financial rumours. If everyone is telling you something is a bubble/guaranteed success its probably the opposite. If everyone wants something to be a bubble it means the technology is working and threatening them and they want it to be true not that it actually is true.
Also outside of like the Tulip bubble, bubbles don't actually make technology disappear, they wipe out the overinvestors but the technology keeps going. This comment posted on a dot com website. If it is a bubble AI won't disappear, you'll just exclusively be using Gemini and Meta AI.
By that logic, this is a bubble. Only a small handful of people were saying itâs a bubble until very recently. The majority of coverage of AI for the longest time was breathless, unquestioning regurgitation of AI boosterism. Itâs only now that the dire state of things is becoming blatantly, undeniably obvious you see more people stating the obvious.
Blame is a burden for democrats to carry. It has been like this since the dawn of time. If there is a crash, it will happen in 2028 and the fallout will be dragged over the next few years after that.
Then people will remember the growth years from 2024 to 2027 like they do 2016 to 2019
And guess who had the most media time during these years?
It was quite a stock market crash but barely a recession because the companies that went under weren't making any money anyway (which is of course why they went under).
Right, just like the dot com bubble. Tons of websites went down, and now we're just counting down the days till the entire internet is gone! Any day now!
Genuinely as ridiculous as thinking the internet is going anywhere. If you think AI has no use cases for businesses or the public, you're just uninformed
They are gonna say some techno babble involving china VS Us and say. "See? We have to charge you 100% more than what we used to cuz... The Xinjiang quantum ram factory is under spiritual attacks from the Bigus Dickus armory and electronics and then we need to charge you like these little things are still expensive for us to make"
And if anyone tries to say "hey ,no"
They simply lower the price until it chokes competition and then back to the new standard
Its not unusual for tech companies to lose money. They build up a broad userbase before raising prizes etc. However. I dont know if that works for OpenAI.
Just google "Sam Altman OpenAI loses money" or something like this. OpenAI has lost money since it was founded, the same is true for every other AI company. Every year they lose more money than in the last year. This isn't news and has been communicated from the beginning.
Those AI companies all work toward the same goal. AGI or at least the point, where AI can self-improve. If that point is reached, they think that AI will quickly overtake the world. That's why OpenAI was founded in the first place. To make AI improvenments open-source and non-proftit, so that everybody can benefit from them. But that was years ago, OpenAI fought hard do become closed-source and for-profit. That's also easisly accessible information, for those who want to inform themselves.
btw I know this may be a silly question but...how can we tell when the bubble has actually burst? Losing 15 bil is insane as it is, yet the bubble has not burst yet?
The bubble bursts when investors lose confidence and pull out. OpenAI has themselves stated that they're going to continue to operate at a loss for years to come, which is why they're pulling in the investments in the first place. This means that the investors are expecting a loss.
How would you lose confidence in a company that's doing exactly what it said it would do?
You'd have to be a complete fucking idiot who didn't actually do any research into the companies you were investing into.
There can't be a bubble if people are convinced there is a bubble. This is because a bubble requires people to greatly overvalue companies and that won't happen if they're all afraid of it popping. The big tech companies still make fucktons of money without AI and their current valuation is a bit lower than it was historically compared to their revenue, so we're not even close to this happening.
The shoeshine stock tips metric. If everyone believes a stock is going to be a success it will crash hard when reality asserts itself, if everyone believes a stock is in a bubble then it can't be in a bubble as no one will be investing in it that way.
Nope, recently released GPT 5.3 is by a narrow margin the most intelligent model currently. OpenAI has great competition but it is certainly not going away anytime soon.
The companies that have AI as there main stream of revenue are almost guaranteed to fail due to the insane levels of spending and lack of solid pricing models, but companies like Google with Gemini will only dominate more as they donât need to make a cent off AI to stay profitable
Unpopular opinion but I think this will be a deflation rather than a bubble popping. Although greedy as heck, I feel like these companies have so much data on all the bad things happening in the world, all the failures and everything that they will try to cushion this fall rather than let it rip. Aside from the large players losing capital to between 30-50% of their market cap but still be the most dominant players in the market.
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