Does OpenAI have $38 billion to buy this? Does AWS have sufficient free cash flow to pay for this “infrastructure” investment they speak of?
Recent analysis shows AWS is burning through Amazon’s free cash on AI buildouts which is very concerning if the bubble pops, leaving Amazon holding the bag of invested capital not making returns.
Amazon is a bit late to the party on these headlines, and lots of unanswered questions about what’s really going on here.
oAI is growing rapidly at over $1bn a month in revenues, maybe as much as $2bn if you read between the lines from Sam's interviews. Over 7 years will they see $38bn of revenue demand against inference? ABSOLUTELY. Is it an incredibly good trick to get access to that much infrastructure without having to run a datacenter while you pilot the fastest growth ever consumer tech company? I'd say it is. Others might disagree
No they just had a great quarterly earnings report that day. Try to put the absolute minimal effort into checking the obvious before you revert to conspiracy.
This looks quite concerning imo. We all know this is a bubble. When the transformer implosion happens, you can be sure that OpenAI will be ground zero. All these investors feeding OpenAI and all these adjacent companies exposing themselves to OpenAI will suffer huge losses. Everyone is chasing growth so hard that they are making questionable choices regarding returns from a far future that may never come. And let's be clear, the future that is going to pay this off is a future where this tech or a direct successor to this tech brings about a level of general learning skills and autonomy that should be pretty close to a third revolution. Anything else is massive loves for all of these companies.
I started working in 1997 at the height of the dot com bubble. I thought it would go on forever but the second half of 2000 and 2001 was rough.
I know a lot of people designing AI accelerator chips. Everyone over 45 thinks we are in an AI bubble. It's the younger people that think growth is infinite.
I told them to diversify from their company stock but we'll see if they have listened after the bubble pops
At this point these announcements are more PR posturing than anything that makes financial sense for shareholders.
I do worry what the other side of this looks like when the circular feedback loop driving hype up eventually reverses and drives things down with amplifying effect.
The negative drumbeat has started, and the narrative is changing to become critical. Every new fad reaches a saturation point, and people's attention spans are short. Already, I see folks piling onto the quantum bandwagon as if LLMs are passe.
Here, the clouds have pulled a trick to inflate their revenues with their own cashflows, and have not been punished yet for it by shareholders - except meta which is getting asked some difficult questions.
We all know this is going to pop at some point but I personally think Amazon would be a good investment for the next 6 months or so. They just did layoffs, can ride the OpenAI hypetrain, and they beat recent earnings. If they beat next earnings with a lower headcount and mention "AI" a couple times, I think their stock price easily goes to $300.
Not financial advice, obviously, but that's my personal outlook. I've said it before: Alphabet is probably the safest play long term as they haven't been infected by any NVIDIA or OpenAI deals (yet)
OpenAI is an existential threat to Google. They're both solving the same problem for consumers. Something like "there's information on the Internet that I want but don't know where it is". Almost all of Google's value derives from being the default solution to that problem. They can't give up that space to OpenAI. And, at least IMHO, it's obvious LLMs are the future in this area.
The other side to that coin is monetization. Google is dominant there as well. OpenAI can't yield that space to Google because it's how the value is extracted from the consumer.
Only 38 billion dollars? I thought we are in the age of triple digit billion sums by now in the LLM space. What is that paltry change worth for, a couple seconds worth of OpenAI daily expenses?
The main question I have with all of these deals: how much of the deal is OpenAI actually required to buy, versus how much of it is an option for OpenAI to buy? Because if you tot up all of these numbers, it's something like 10× current annual revenue that OpenAI is signing deals for, and if OpenAI is actually committing to all of that spend... there is a serious cash crunch looming. But if OpenAI is merely optioning to spend up to that much, and only has to commit to a tenth of those numbers, well, that's not as threatening to OpenAI as a going concern.
There’s been some buzz around the official opening of the Grand Egyptian Museum, which I visited last month. That project took 1.1 to 1.2B USD. Double its original budget estimate but still the museum looks fantastic and it feels, tangibly, like it’s worth a billion.
In contrast with all the money spent on AI, it just feels like monopoly money. Where’s the monument to its success? We could’ve built flying cars or been back to the moon with this much money.
I wouldn't be surprised if a few weeks later, Amazon was investing $38B in NVIDIA for new server processors... like nothing to see here folks, totally not a giant circular bubble...
I'd be happy if the industry/stock market proves me wrong, but I can't see this ending any other way than with a major crash that makes the dot-com boom seem like a minor blimp.
OpenAI is generating $13B a year in revenue. Let’s be generous and say $20B. They’ve signed commitments to spend something like $1.4 trillion on compute. An asset that to date has proven to have a hyper-depreciation cycle.
Someone has to come up with $1.4 trillion in actual cash, fast, or this whole thing comes crashing down. Why? At the end of all this circular financing and deals are folks that actually want real cash (eg electricity utilities that aren’t going to accept OpenAI shares for payment).
If the above doesn’t freak you about a bit at how bonkers this whole thing has become then you need a reality check. “Selling ads” on ChatGPT ain’t gonna close that hole.
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[ 3.9 ms ] story [ 60.9 ms ] threadRecent analysis shows AWS is burning through Amazon’s free cash on AI buildouts which is very concerning if the bubble pops, leaving Amazon holding the bag of invested capital not making returns.
Amazon is a bit late to the party on these headlines, and lots of unanswered questions about what’s really going on here.
Lots of questions on if this makes sense, and highly likely Amazon never gets $38B cash from OpenAI out of this.
In what context? This isn't fashion, being the 2nd mover has benefits which often outweigh the costs.
https://www.tomshardware.com/tech-industry/artificial-intell...
I started working in 1997 at the height of the dot com bubble. I thought it would go on forever but the second half of 2000 and 2001 was rough.
I know a lot of people designing AI accelerator chips. Everyone over 45 thinks we are in an AI bubble. It's the younger people that think growth is infinite.
I told them to diversify from their company stock but we'll see if they have listened after the bubble pops
I do worry what the other side of this looks like when the circular feedback loop driving hype up eventually reverses and drives things down with amplifying effect.
corporate would like you to find the difference between these two photos
Here, the clouds have pulled a trick to inflate their revenues with their own cashflows, and have not been punished yet for it by shareholders - except meta which is getting asked some difficult questions.
Not financial advice, obviously, but that's my personal outlook. I've said it before: Alphabet is probably the safest play long term as they haven't been infected by any NVIDIA or OpenAI deals (yet)
The other side to that coin is monetization. Google is dominant there as well. OpenAI can't yield that space to Google because it's how the value is extracted from the consumer.
There’s been some buzz around the official opening of the Grand Egyptian Museum, which I visited last month. That project took 1.1 to 1.2B USD. Double its original budget estimate but still the museum looks fantastic and it feels, tangibly, like it’s worth a billion.
In contrast with all the money spent on AI, it just feels like monopoly money. Where’s the monument to its success? We could’ve built flying cars or been back to the moon with this much money.
I'd be happy if the industry/stock market proves me wrong, but I can't see this ending any other way than with a major crash that makes the dot-com boom seem like a minor blimp.
ChatGPT has 800 million weekly users but only 10 million are paying.
Someone has to come up with $1.4 trillion in actual cash, fast, or this whole thing comes crashing down. Why? At the end of all this circular financing and deals are folks that actually want real cash (eg electricity utilities that aren’t going to accept OpenAI shares for payment).
If the above doesn’t freak you about a bit at how bonkers this whole thing has become then you need a reality check. “Selling ads” on ChatGPT ain’t gonna close that hole.