The $100B megadeal between OpenAI and Nvidia is on ice
(wsj.com)347 points by pixelesque a day ago
347 points by pixelesque a day ago
Not only has OpenAI's market share gone down significantly in the last 6mo, Nvidia has been using its newfound liquid funds to train its own family of models[1]. An alliance with OpenAI just makes less sense today than it did 6mo ago.
[1] https://blogs.nvidia.com/blog/open-models-data-tools-acceler...
> Nvidia has been using its newfound liquid funds to train its own family of models
Nvidia has always had its own family of models, it's nothing new and not something you should read too much into IMHO. They use those as template other people can leverage and they are of course optimized for Nvidia hardware.
Nvidia has been training models in the Megatron family as well as many others since at least 2019 which was used as blueprint by many players. [1]
Nemotron-3-Nano-30B-A3B[0][1] is a very impressive local model. It is good with tool calling and works great with llama.cpp/Visual Studio Code/Roo Code for local development.
It doesn't get a ton of attention on /r/LocalLLaMA but it is worth trying out, even if you have a relatively modest machine.
[0] https://huggingface.co/nvidia/NVIDIA-Nemotron-3-Nano-30B-A3B...
[1] https://huggingface.co/unsloth/Nemotron-3-Nano-30B-A3B-GGUF
Some of NVIDIA's models also tend to have interesting architectures. For example, usage of the MAMBA architecture instead of purely transformers: https://developer.nvidia.com/blog/inside-nvidia-nemotron-3-t...
Oh those ghastly model names. https://www.smbc-comics.com/comic/version
Yeah. Even if OpenAI models were the best, I still wouldn't used them, given how the Sam Altman persona is despicable (constantly hyping, lying, asking for no regulations, then asking for regulations, leaked emails where founders say they just wanna get rich without any consideration of their initial "open" claims...). I know other companies are not better, but at least they have a business model and something to lose.
Sorry, not leaked emails, but it's the Greg Brockman's diary and leaked texts.
I didn't find the original lawsuit documents, but there's a screenshot in this video: https://youtu.be/csybdOY_CQM?si=otx3yn4N26iZoN7L&t=182 (timestamp is 3:02 if you don't see it)
There's more details about the behind-the-scenes and greg brockman's diary leaks in this article: https://www.techbuzz.ai/articles/open-ai-lawsuit-exposed-the... Some documents are made public thanks to the Musk-OpenAI trial.
I'll let you read a few articles about this lawsuit, but basically they said to Musk (and frankly, to everyone else) that they were committed to the non-profit model, while behind the scenes thinking about "making the billion" and turning for-profit.
And the whole AI craze is becoming nothing but a commodity business where all kinds of models are popping in and out, one better this update, the other better the next update etc. In short - they're basically indistinguishable for the average layman.
Commodity businesses are price chasers. That's the only thing to compete on when product offerings are similar enough. AI valuations are not setup for this. AI Valuations are for 'winner takes all' implications. These are clearly now falling apart.
When you have more users you get more data to improve your models. The bet is that one company will be able to lock in to this and be at the top constantly.
I'm not saying this is what will happen, but people obviously bet a lot of money on that.
I think there are two things that happened
1. OpenAI bet largely on consumer. Consumers have mostly rejected AI. And in a lot of cases even hate it (can't go on TikTok or Reddit without people calling something slop, or hating on AI generated content). Anthropic on the other hand went all in on B2B and coding. That seems to be the much better market to be in.
2. Sam Altman is profoundly unlikable.
> Consumers have mostly rejected AI.
People like to complain about things, but consumers are heavily using AI.
ChatGPT.com is now up to the 4th most visited website in the world: https://explodingtopics.com/blog/chatgpt-users
We’ve seen many times that platforms can be popular and widely disliked at the same time. Facebook is a clear example.
The difference there is it became hated after it was established and financially successful. If you need to turn free visitors in to paying customers, that general mood of “AI is bad and going to make me lose my job/fuck up society” is yet another hurdle OpenAI will have to overcome.
Yeah, every single big website is totally free. People have complex emotions toward Facebook, Instagram and TikTok, but they don't have to pull out their wallet. That's a bridge too far for many people.
It’s incorrect to point out that consumers have rejected AI.
The strategy here is more valid in my opinion. The value in AI is much more legible when the consumer uses it directly from their chat UI than whatever enterprises can come up with.
I can suggest many ways that consumers can use it directly from chat window. Value from enterprise use is actually not that clear. I can see coding but that’s about it. Can you tell me ways in which enterprises can use AI in ways that is not just providing their employees with chaggpt access?
Was the golden boy for a while? What shifted? I don't even remember what he did "first" to get the status. Is it maybe just a case of familiarity breeding contempt?
Instead of anecdotes about “what you saw on TikTok and Reddit”, it’s really not that hard to lookup how many paid users ChatGPT has.
Besides OpenAI was never going to recoup the billions of dollars based on advertising or $20/month subscriptions
good point.
I don't think it is at all
The CEO just has to have followership: the people who work there have to think that this is a good person to follow. Even they don't have to "like" him
Those who is publicly hating LLMs still use them though, even for the stuff the claim to hate, like writing fanfic.
HN is such a bubble. ChatGPT is wildly successful, and about to be an order of magnitude more so, once they add ads. And I have never heard a non-technical person mention Altman. I highly doubt they have any idea who he is, or care. They’re all still using ChatGPT.
> and about to be an order of magnitude more so, once they add ads.
How do you figure?
You have to give credit to Sam, he’s charismatic enough to the right people to climb man made corporate structures. He was also smart enough to be at the right place at the right time to enrich himself (Silicon Valley). He seems to be pretty good at cutting deals. Unfortunately all of the above seems to be at odds with having any sort of moral core.
Ermmm what?
He and his personality caused people like Ilya to leave. At that point the failure risk of OAI jumped tremendously. The reality he will have to face is, he has caused OAIs demise.
Perhaps hes ok with that as long as OAI goes down with him. Would expect nothing less from him.
I actually think Sam is “better” than say Elon or Dario because he seems like a typical SF/SV tech bro. You probably know the type (not talking about some 600k TC fang worker, I mean entrepreneurs).
He says a lot of fluff, doesn’t try to be very extreme, and focuses on selling. I don’t know him personally but he comes across like an average person if that makes sense (in this environment that is).
I think I personally prefer that over Elon’s self induced mental illnesses and Dario being a doomer promoting the “end” of (insert a profession here) in 12 months every 6 months. It’s hard for me to trust a megalomaniac or a total nerd. So Sam is kinda in the middle there.
I hope OpenAI continues to dominate even if the margins of winning tighten.
Elon is one of the most unlikable people on the planet, so I wouldn't consider him much of a bar.
He's definitely not. If Altman. Is a "typical" SF/SV tech bro then that's an indication the valley has turned full d-bag. Altman's past is gross. So, if he's the norm then I will vehemently avoid any dollars of mine going to OAI. I paid for an account for a while, but just like Musk I lose nothing over actively avoiding his Ponzi scheme of a company.
Altman is a consummate liar and manipulator with no moral scruples. I think this LLM business is ethically compromised from the start, but Dario is easily the least worst of the three.
> I actually think Sam is “better” than say Elon or even Dario because he seems like a typical SF/SV tech bro.
If you nail the bar to the floor, then sure, you can pass over it.
> He says a lot of fluff, doesn’t try to be very extreme, and focuses on selling.
I don't now what your definition of extreme is but by mine he's pretty extreme.
> I think I personally prefer that over Elon’s self induced mental illnesses and Dario being a doomer promoting the “end” of (insert a profession here) in 12 months every 6 months.
All of them suffer from thinking their money makes them somehow better.
> I hope OpenAI continues to dominate even if the margins of winning tighten.
I couldn't care less. I'm on the whole impressed with AI, less than happy about all of the slop and the societal problems it brings and wished it had been a more robust world that this had been brought in to because I'm not convinced the current one needed another issue of that magnitude to deal with.
ChatGPT is a goner. OpenAI will probably rule the scam creation, porn bot, and social media slop markets.
Gemini will own everything normie and professional services, and Anthropic will own engineering (at least software)
Honestly as of the last few months anyone still hyping ChatGPT is outing themselves.
"Please don't post insinuations about astroturfing, shilling, bots, brigading, foreign agents and the like. It degrades discussion and is usually mistaken. If you're worried about abuse, email hn@ycombinator.com and we'll look at the data."
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...
Nobody. Did you talk to all the models? Can you actually have a non-coder, human conversation?
Last paragraph is informative:
> Anthropic relies heavily on a combination of chips designed by Amazon Web Services known as Trainium, as well as Google’s in-house designed TPU processors, to train its AI models. Google largely uses its TPUs to train Gemini. Both chips represent major competitive threats to Nvidia’s best-selling products, known as graphics processing units, or GPUs.
So which leading AI company is going to build on Nvidia, if not OpenAI?
"Largely" is doing a lot of heavy lifting here. Yes Google and Amazon are making their own GPU chips, but they are also buying as many Nvidia chips as they can get their hands on. As are Microsoft, Meta, xAI, Tesla, Oracle and everyone else.
How about Apple? How is Apple training its next foundation models?
To use the parlance of this thread: "next" foundation models is doing a lot of heavy lifting here. Am I doing this right?
My point is, does Apple have any useful foundation models? Last I checked they made a deal with OpenAI, no wait, now with Google.
They are in housing their AI to sell it as a secure way to AI, which 100% puts them in the lead for the foreseeable future.
Nvidia had the chance to build its own AI software and chose not to. It was a good choice so far, better to sell shovels than go to the mines - but they still could go mining if the other miners start making their own shovels.
If I were Nvidia I would be hedging my bets a little. OpenAI looks like it's on shaky ground, it might not be around in a few years.
Another comment had this:
https://blogs.nvidia.com/blog/open-models-data-tools-acceler...
Interesting times.
They do build their own software, though. They have a large body of stuff they make. My guess is that it’s done to stay current, inform design and performance, and to have something to sell enterprises along with the hardware; they have purposely not gone after large consumer markets with their model offerings as far as I can tell.
That’s interesting, I didn’t know that about Anthropic. I guess it wouldn’t really make sense to compete with OpenAI and everyone else for Nvidia chips if they can avoid it.
The elephant in the room is China also being partially successful with their chips
The moment you threaten NVDA's livelyhood, your company starts to fall apart. History tells.
It's almost as if everyone here was assuming that Nvidia would have no competition for a long time, but it has been known for a long time, there are many competitors coming after their data center revenues. [0]
> So which leading AI company is going to build on Nvidia, if not OpenAI?
It's xAI.
But what matters is that there is more competition for Nvidia and they bought Groq to reduce that. OpenAI is building their own chips as well as Meta.
The real question is this: What happens when the competition catches up with Nvidia and takes a significant slice out of their data center revenues?
the chinese will probably figure out a way to sneak the nvidia chips around the sanctions
This video that breaks down the crazy financial positions of all the AI companies and how they are all involved with one called CoreWeave (who could easily bring the whole thing tumbling down) is fascinating: https://youtu.be/arU9Lvu5Kc0?si=GWTJsXtGkuh5xrY0
Yeah I see coreweave as a canary in the coal mine. They’re not doing so hot and basically got a bailout by Nvidia a few days ago.
https://techcrunch.com/2026/01/26/nvidia-invests-2b-to-help-...
Coreweave acquired WandB last year. https://www.coreweave.com/blog/coreweave-completes-acquisiti... . Strategic.
And the loans given to nvidia, the collateral are old and rapidly discounting GPUs
I don’t think so. I think it is positioning for the unknown future and hedging.
For example, Amazon isn’t able to train its own models so it hedges by investing in Anthropic and OpenAI. Oracle, same with OpenAI deal. Nvidia wants to stay in OpenAI and Anthropic’s tech stack.
It’s all jockeying for position.
Oracle is a perfect example of using empty AI partnership announcements to goose the stock price and also a perfect example of how unsustainable of a strategy it is.
We know that it is all a grift before the inevitable collapse, so everyone is racing for the exit before that happens.
I guarrantee you that in 10 years time, you will get claims of unethical conduct by those companies only after the mania has ended (and by then the claimants have sold all their RSUs.)
It’s probably not really related, but this bug and the saga of OpenAI trying and failing to fix it for two weeks is not indicative of a functional company:
https://github.com/openai/codex/issues/9253
OTOH, if Anthropic did that to Claude Code, there wasn’t a moderately straightforward workaround, and Anthropic didn’t revert it quickly, it might actually be a risk-the-whole-business issue. Nothing makes people jump ship quite like the ship refusing to go anywhere for weeks while the skipper fumbles around and keeps claiming to have fixed the engines.
Also, the fact that it’s not major news that most business users cannot log in to the agent CLI for two weeks running is not major news suggests that OpenAI has rather less developer traction than they would like. (Personal users are fine. Users who are running locally on an X11-compatible distro and thus have DISPLAY set are okay because the new behavior doesn’t trigger. It kind of seems like everyone else gets nonsense errors out of the login flow with precise failures that change every couple days while OpenAI fixes yet another bug.)
I don't know what you're so surprised about. The ticket reads like any other typical [Big] enterprise ticket. UI works, headless - not (headless is what only hackers use, so not a priority, etc.) Oh, found the support guy who knows what headless is and the doc page with a number of workarounds. There is even ssh tunnel (how is that made in into enterprise docs?!) and the classic - copy logged in credentials from UI machine once you logged in there. Bla-bla-bla and again classic:
"Root Cause
The backend enforces an Enterprise-only entitlement for codex_device_code_auth on POST /backend-api/accounts/{account_id}/beta_features. Your account is on the Team plan, so the server rejects the toggle with {"detail":"Enterprise plan required."} "
and so on and so forth. At any given day i have several such long-term tickets that get ultimately escalated to me (i'm in dev and usually the guy who would pull the page with ssh tunnel or credentials copying :)
Sort of?
The backstory here is that codex-rs (OpenAI’s CLI agent harness) launched an actual headless login mechanism, just like Claude Code has had forever. And it didn’t work, from day one. And they can’t be bothered to revert it for some reason.
Sure, big enterprises are inept. But this tool is fundamentally a command line tool. It runs in a terminal. It’s their answer to one of their top two competitors’ flagship product. For a company that is in some kind of code red, the fact that they cannot get their ducks in a row to fix it is not a good sign.
Keep in mind that OpenAI is a young company. They should have have a thicket of ancient garbage to wade through to fix this — it’s not as if this is some complex Active Directory issue that no one knows how to fix because the design is 30-40 years old and supports layers and layers of legacy garbage.
Because approximately zero smallish businesses use Codex, perhaps?
It’s also possible that the majority of people hitting it are using the actual website support (which is utterly and completely useless), since the bug is only a bug in codex-rs to the extent that codex-rs should have either reverted or deployed a workaround already.
Many of us predicted OpenAIs insistence that the model was the product was the wrong path.
The tools on top of the models are the path and people building things faster is the value.
The model is the product. OpenAI themselves also build products on top of their models.
Those without models are hugely vulnerable to sudden rug pulls.
Only in a monopoly situation. If you have several companies with comparable models you can easily switch between, all desperate for revenue to recoup their massive capex. you’re fine.
But OpenAI has spent too much capital on their models and not balanced that with pragmatic product development.
They’re never gonna recover their investment and eventually their partners will run away.
The GPT models are not a moat.
Interesting to see this follow the news of their plan IPO in Q4 just yesterday. https://www.wsj.com/tech/ai/openai-ipo-anthropic-race-69f06a...
I felt anxious about all the insane valuations and spending around AI lately, and I knew it couldn't last (I mean there's only so much money, land, energy, water, business value, etc). But I didn't really know when it was going to collapse, or why. But recently I've been diving into using local models, and now it's way more clear. There seems to be a specific path for the implosion of AI:
- Nvidia is the most valuable company. Why? It makes GPUs. Why does that matter? Because AI is faster on them than CPUs, ASICs are too narrowly useful, and because first-mover advantage. AMD makes GPUs that work great for AI, but they're a fraction of the value of Nvidia, despite the fact that they make more useful products than Nvidia. Why? Nvidia just got there first, people started building on them, and haven't stopped, because it's the path of least resistance. But if Nvidia went away tomorrow, investors would just pour money into AMD. So Nvidia doesn't have any significant value compared to AMD other than people are lazy and are just buying the hot thing. Nvidia was less valuable than AMD before, they'll return there eventually; all AMD needs is more adoption and investment.
- Every frontier model provider out there has invested billions to get models to the advanced state they're in today. But every single time they advance the state of the art, open weights soon match them. Very soon, there won't be any significant improvement, and open weights will be the same as frontier, meaning there's no advantage to paying for frontier models. So within a few years, there will be no point to paying OpenAI, Anthropic, etc. Again, these were just first-movers in a commodity market. The value just isn't there. They can still provide unique services, tailored polished apps, etc (Anthropic is already doing this by banning users who have the audacity to use their fixed-price plans with non-Anthropic tools). But with AI code tools, anyone can do this. They are making themselves obsolete.
- The final form of AI coding is orchestrated agent-driven vibe-coding with safeguards. Think an insane asylum with a bowling league: you still want 100 people to autonomously (and in parallel) knock the pins knocked over, but you have to prevent the inmates from killing anyone. That's where the future of coding is. It's just too productive to avoid. But with open models and open source interfaces, anyone can do this, whether with hosted models (on any of 50 different providers), or a Beowulf cluster of cobbled together cheap hardware in a garage.
- Eventually, in like 5-10 years (a lifetime away), after AI Beowulfs have been a fad for a while, people will tire of it and move back to the cloud, where they can run any model they want on a K8s cluster full of GPUs, basically the same as today. Difference between now and then is, right now everyone is chasing Anthropic because their tools and models are slightly better. But by then, they won't be. Maybe people will use their tools anyway? But they won't be paying for their models. And it's not just price: one of the things you learn quickly by running models, is they're all good for different things. Not only that, you can tweak them, fine-tune them, and make them faster, cheaper, better than what's served up by frontier models. So if you don't care about the results or cost, you could use frontier, but otherwise you'll be digging deep into them, the same way some companies invest in writing their own software vs paying for it.
- Finally, there's the icing on the cake: LLMs will be cooked in 10 years. I keep reading from AI research experts that "LLMs are a dead end" - and it turns out it's true. LLMs are basically only good because we invest an unsustainable amount of money in the brute-forcing of a relatively dumb form of iteration: download all knowledge, do some mind-bogglingly expensive computational math on it, tweak the reasults, repeat. There's only so many of that loop you can do, because fundamentally, all you're doing is trying to guess your way to an answer from a picture of the past. It doesn't actually learn, the way a living organism learns, from experience, in real-time, going forward; LLMs only look backward. Like taking a snapshot of all the books a 6 year old has read, then doing tweaks to try to optimize the knowledge from those books, then doing it again. There's only so much knowledge, only so many tweaks. The sensory data of the lived experience of a single year of life of a 6 year old is many times more information than everything ever recorded by man. Reinforcement Learning actually gives you progressive, continuously improved knowledge. But it's slow, which is why we aren't doing it much. We do LLMs instead because we can speed-run them. But the game has an end, and it's the total sum of our recorded knowledge and our tweaks.
So LLMs will plateau, frontier models will make no sense, all lines of code will be hands-off, and Nvidia will return to making hardware for video games. All within about 10 years. With the caveat that there might be a shift in global power and economic stability that interrupts the whole game.... but that's where we stand if things keep on course. Personally, I am happy to keep using AI and reap the benefits of all these moronic companies dumping their money into it, because the open weights continue being useful after those companies are dead. But I'm not gonna be buying Nvidia stock anytime soon, and I'm definitely not gonna use just one frontier model company.
I've thought about this too. I do agree that open source models look good and enticing, especially from a privacy standpoint. But these solutions are always going to remain niche solutions for power users. I'm not one of them. I can't be hassled/bothered to setup that whole thing (local or cloud) to gain some privacy and end up with an inferior model and tool. Let's not forget about the cost as well! Right now I'm paying for Claude and Gemini. I run out of Claude tokens real fast, but I can just keep on going using Gemini/GeminiCLI for absolutely no cost it seems like.
The closed LLMs with the biggest amount of users will eventually outperform the open ones too, I believe. They have a lot of closed data that they can train their next generation on. Especially the LLMs that the scientific community uses will be a lot more valuable (for everyone). So in terms of quality, the closed LLMs should eventually outperform the open ones, I believe, which is indeed worrisome.
I also felt anxious early december about the valuations, but, one thing remains certain. Compute is in heavy demand, regardless of which LLM people use. I can't go back to pre-AI. I want more and more and faster and faster AI. The whole world is moving that way it seems like. I'm invested into phsyical AI atm (chips, ram, ...) whose evaluations look decently cheap.
I think you should reconsider the idea that frontier models will be superior, for a couple reasons:
- LLMs have fixed limitations. The first one is training, the dataset you use. There's only so much information in the world and we've largely downloaded it all, so it can't get better there. Next you can do training on specific things to make it better at specific things, but that is by definition niche; and you can actually do that for free today with Google's Tensors in free Cloud products. Later people will pay for this, but the point is, it's ridiculously easy for anyone to fine-tune training, we don't need frontier companies for that. And finally, LLM improvements come by small tweaks to models that already come to open weights within a matter of months, often surpassing the frontier! All you have to do is sit on your ass for a couple months and you have a better open model. Why would anyone do this? Because once all models are extremely good (about 1 year from now) you won't need them to be better, they'll already do everything you need in 1-shot, so you can afford to sit and wait for open models. Then the only reason left to use frontier cloud is that they host a model; but other people do cloud-hosted models! Because it's a commodity! (And by the way, people like me are already pissed off at Anthropic because we're not allowed to use OAuth with 3rd party tools, which is complete bullshit. I won't use them on general principle now, they're a lock-in moat, and I don't need them) There will also be better, faster, more optimized open models, which everyone is going to use. For doing math you'll use one model, for intelligence you'll use a different model, for coding a different model, for health a different model, etc, and the reason is simple: it's faster, lower memory, and more accurate. Why do things 2x slower if you don't have to? Frontier model providers just don't provide this kind of flexibility, but the community does. Smart users will do more with less, and that means open.
On the hardware:
- Def it will continue to be investment-worthy, but be cautious. The growth simply isn't going to continue at pace, and the simple reason is we've already got enough hardware. They want more hardware so they can continue trying to "scale LLMs" the way they have with brute force. But soon the LLMs will plateau and the brute force method isn't going to net the kind of improvements that justify the cost. Demand for hardware is going to drop like a stone in 1-2 years; if they don't cease building/buying then, they risk devaluing it (supply/demand), but either way Nvidia won't be selling as much product so there goes their valuation. And RAM is eventually going to get cheaper, so even if demand goes up, spending is less. The other reason demand won't continue at pace is investors are already scared, so the taps are being tightened (I'm sure the "Megadeal" being put on-hold is the secret investment groups tightening their belts or trying to secure more favorable terms). I honestly can't say what the economic picture is going to look like, but I guarantee you Nvidia will fall from its storied heights back to normal earth, and other providers will fill the gap. I don't know who for certain, but AMD just makes sense, because they're already supported by most AI software the way Nvidia is (try to run open-source inference today, it's one of those two). Frontier and cloud providers have Tensors and other exotic hardware, which is great for them, but everyone else is gonna buy commodity chips. Watch for architectures with lower price and higher parts availability.
> There's only so much information in the world and we've largely downloaded it all, so it can't get better there.
What about all the input data into LLMs and the conversations we're having? That must be able to produce a better next gen model, no?
> it's ridiculously easy for anyone to fine-tune training, we don't need frontier companies for that.
Not for me. It'll take me days, and then I'm pretty sure it won't be better than Gemini 3 pro for my coding needs, especially in reasoning.
> For doing math you'll use one model, for intelligence you'll use a different model, for coding a different model, for health a different model, etc, and the reason is simple: it's faster, lower memory, and more accurate.
Why wouldn't e.g. Gemini just add a triage step? And are you sure it's that much easier to get a better model for math than the big ones?
I think you underestimate the friction this causes regular users by handpicking and/or training specific models, whilst the big vendors are good enough for their needs.
The circular funding scheme is finally becoming evident to people. Did my best to cover it in a video https://www.youtube.com/watch?v=Q5fSbuO8Q3k
Google has the data and the TPUs and the massive cash to advance.
Microsoft has GitHub - the world’s biggest pile of code training data, plus infinite cash.
OpenAI has …… none of these advantages.
And Google and Microsoft have huge distribution advantages that OpenAI doesn’t. Google and Microsoft can add AI to their operating systems, browsers, and office apps that users are already using. OpenAI just has a website and a niche browser. To Google and Microsoft, AI is a feature, not a product.
this is the argument i continue to have with people. first mover isnt always an advantage - i think openai will be sold or pennies on these dollars someday (next 5 years after they run out of funding).
Google has data, TPUs, and a shitload of cash to burn
I'm not sure because google was by far the best search engine for a long time in the early 2000s and there are a lot of models close to what openai has right now.
Name recognition only gets you so far. "Just Google it" happened because Google was better than Hotbot/Altavista/Yahoo! etc by orders of magnitude. Nobody even bothered to launch a competing search engine in the 2000s because of this (until Microsoft w/ Bing in 2009). There is no such parallel with ChatGPT; Google, Bing, even DuckDuckGo has AI search.
First mover advantage matters only if it has long-lasting network effects. American schools are run on Chromebooks and Google Docs/Slides, but these have no penetration in enterprise, as college students have been discovering when they enter their first jobs.
People talk about an AI bubble. What we actually have is a GPU bubble. NVidia makes really expensive GPUs for AI. Others also make GPUs.
Companies like Google produce and operate AI models largely using their own TPUs rather than NVidia's GPUs. We've seen the Chinese produce pretty competitive open models with either older NVidia GPUs or alternative GPUs because they are not allowed to buy the newer ones. And AMD, Intel and other chip makers are also eager to get in on the action. Companies like Microsoft, Amazon, etc. have their own chips as well (similar to Google). All the hyperscalers are moving away from NVidia.
And then Apple runs a non Intel and non NVidia based range of workstations and laptops that are pretty popular with AI researchers because the M series CPU/GPU/NPU is pretty decent value for running AI models. You see similar movement with ARM chips from Qualcomm and others. They all want to run AI models on phones, tablets, laptops. But without NVidia.
NVidia's bubble is about vastly overcharging for a thing that only they can provide. Their GPU chips have enormous margins relative to CPU chips coming out of the same/similar machines. That's a bubble. As soon as you introduce competition, the companies with the best price performance wins. NVidia is still pretty good at what they do. But not enough to justify an order of magnitude price/cost difference.
NVidia's success has been predicated on its proprietary software and instruction set (CUDA). That's a moat that won't last. The reason Google can use its own TPUs rather than CUDA is that it worked hard to get rid of their CUDA dependence. Same for the other hyperscalars. At this point they can do training and inference without CUDA/NVidia and its more cost effective.
The reason that this 100B deal is apparently being reconsidered is that it is a bad deal for OpenAI. It was going to overpay for a solution that they can get cheaper elsewhere. It's bad news for NVidia, good news for OpenAI. This deal started out with just NVidia. But at this point there are also deals with AMD, MS, and others. OpenAI like the other hyperscalers is not betting the company on NVidia/CUDA. Good for them.
> People talk about an AI bubble. What we actually have is a GPU bubble. NVidia makes really expensive GPUs for AI. Others also make GPUs.
Yes it is. I think even for multiple reasons. Competition in that space not sleeping is one but it's also a huge overestimation of demand combined with the questionable believe those GPUs and the Datacenters housing them can actually be built and put into operation as fast as envisioned.
> The reason that this 100B deal is apparently being reconsidered is that it is a bad deal for OpenAI. It was going to overpay for a solution that they can get cheaper elsewhere. It's bad news for NVidia, good news for OpenAI. This deal started out with just NVidia. But at this point there are also deals with AMD, MS, and others. OpenAI like the other hyperscalers is not betting the company on NVidia/CUDA. Good for them.
I think in case of OpenAI both may be true. While what you are saying makes sense, NVs first mover advantage obviously can't last forever, OpenAI currently does have little to no competitive advantage over other players. Combine this with the fact that some (esp. Google) sit on a huge pile of cash. In contrast for OpenAI the party is pretty much over as soon as investors stop throwing money into the oven so they might need to cut back a bit.
Idk about this news specifically but oracle cds prices are moving. The below link says 30k layoffs may hit Oracle which I feel is a bit hyperbolic so this article may not be grounded in reality.
https://www.theregister.com/2026/01/29/oracle_td_cowen_note/
Edit: Another src https://www.cio.com/article/4125103/oracle-may-slash-up-to-3...
I know OpenAI isn't a popular company here (anymore) but the doomerism in this thread seems a bit too hasty. People were just as doomy when Altman was sacked, and it turned into nothing and the industry market caps have doubled or even tripled since.
Well, they might have gotten a little wary from previous boom and bust cycles. Perhaps they are a bit wary about the economic sustainability of the whole AI thing. However, perhaps they also might be driven by greed at this point. Why not just constrain supply and increase margins whilst they are no real competitor?
I've been designing chips since 1997. The first 2 companies I was at had their own fabs. It's been a boom and bust industry for 50 years or more.
https://www.macrobusiness.com.au/2021/05/the-great-semicondu...
Here is a long article from last year about Sam Altman.
https://www.nytimes.com/2024/09/25/business/openai-plan-elec...
https://finance.yahoo.com/news/tsmc-rejects-podcasting-bro-s...
> TSMC’s leadership dismissed Altman as a “podcasting bro” and scoffed at his proposed $7 trillion plan to build 36 new chip manufacturing plants and AI data centers.
I thought it was ridiculous when I read it. I'm glad the fabs think he's crazy too. If he wants this then he can give them the money up front. But of course he doesn't have it.
After the dot com collapse my company's fabs were running at 50% capacity for a few years and losing money. In 2014 IBM paid Global Foundries $1.5 billion to take the fabs away. They didn't sell the fabs, they paid someone to take them away. The people who run TSMC are smart and don't want to invest $20-100 billion in new fabs that come online in 3-5 years just as the AI bubble bursts and demand collapses.
https://gf.com/gf-press-release/globalfoundries-acquire-ibms...
I started working during the dot com boom. I was getting 3 phone calls a week from recruiters on my work telephone number. Then I saw the bubble burst in from mid-2000. In 2001 zero recruiters called me. I hated my job after the reorg and it took me 10 months to find a new one.
I know a lot of people in the 45+ age range including many working on AI accelerators. We all think this is a bubble. The AI companies are not profitable right now for the prices they charge. There are a bunch of articles on this. If they raise prices too quickly to become profitable then demand will collapse. Eventually investors will want a return on their investment. I made a joke that we haven't reached the Pets.com phase of the bubble yet.
The article references an “undisciplined” business. I wonder if this is speaking to projects like Sora. Sora is technically impressive and was fun for a moment, but it’s nowhere near the cultural relevance of TikTok, but I believe significantly more expensive, harder to monetize, and consuming some significant share of their precious GPU capacity. Maybe I’m just not the demo and missing something.
And yes, Sam is incredibly unlikable. Every time I see him give an interview, I am shocked how poorly prepared he is. Not to mention his “ads are distasteful, but I love my supercar and ridiculous sunglasses.”
I hate to say it but there will likely come much more annying things that'll disturb your gaming experience.
AINFTs! You're right, and it's a bit depressing. Seems more and more that cloud gaming is the only long term solution the industry will tolerate...I hate it.
This seems unfair and biased. After all, I’ve never seen a more obviously capable CEO.
https://preview.redd.it/sam-altman-on-the-model-v0-7u2a2o7lr...
Does this mean OpenAI won't be needing all that RAM after all...?
sadly micron/sandisk bubble is going full steam ahead
Literally the whole economy has "over-raised its fundamentals" though. Not everyone is going to fail in exactly this way, but (again, pretty much literally) everyone is exposed to a feedback-driven crash from "everyone else" that ended up too exposed.
We all know this is a speculative run-up. We all know it'll end somehow. Crashes always start with something like this. Is this the tipping point? Damned if I know. But it'll come.
This is reasoning from a mistake. Market valuation is about VALUE, which is an abstract idea assigned by the market, which is not the same thing as MONEY, which can be "printed"[1]. Market values go up and down on their own, irrespective of the amount of money in circulation. They reflect consensus (often irrational) for what the securities "should be trading at", and that's all. If the currency inflates or deflates, the markets do too.
[1] Though recognize that by engaging in that frame you're painting yourself as an unserious amateur being influenced by partisan media. Real governments do not "print money" in any real sense, and attempts to conflate things like bond debt with it run afoul, yet again, of the money/value mistake.
Important for what? Google and anthropic's models are already better, and google actually makes money, and both are US companies. What strategic relevance is there to Open AI?
https://archive.is/BXlAP