SoftBank in talks to invest up to $30B more in OpenAI

https://www.wsj.com/tech/ai/softbank-in-talks-to-invest-up-to-30-billion-more-in-openai-8585dea3

by JumpCrisscross • 6 months ago

60 69 6 months ago

wsj.com

redrix• 6 months ago

https://archive.md/uc1G9

Ronsenshi2• 6 months ago

So, about 2 years worth of operations based on alleged $14 billion burn rate projected for 2026.

What an absurd amount of money - if only this was invested in energy sector scientific research and development, or healthcare or anything else practical.

I really hoped to see compact molten salt nuclear reactors in operation before 2030.

ActionHank2• 6 months ago

To be fair Softbank really likes to invest in lemons, so you know, let them do what brings them joy.

Love this for them.

joe_mamba2• 6 months ago

"90% of VCs quit investing right before hitting the jackpot"

- Softbank's motto

bix6• 6 months ago

if only this was invested in energy sector scientific research and development, or healthcare or anything else practical.

Haven’t you heard? AGI is going to solve every problem for us!!!

mekdoonggi2• 6 months ago

"Solving" problems is useless. Spending trillions building a robot that might be able to solve a problem is way better.

lumost• 6 months ago

This .. doesn't seem like such a terrible deal? At the purported growth rates, you'd expect OpenAI to reach 60-100 billion revenue by 2028. This is more or less the equivalent of building a new AWS.

Provided they keep cost growth slower than revenue and don't get disrupted by another model provider/commodification etc.

CodingJeebus2• 6 months ago

At the purported growth rates, you'd expect OpenAI to reach 60-100 billion revenue by 2028.

I hope that’s “real” revenue and not the cyclic quid pro quo that seems to be propping the whole thing up.

an0malous• 6 months ago

“My 3-month-old son is now TWICE as big as when he was born. He's on track to weigh 7.5 trillion pounds by age 10”

gjsman-1000• 6 months ago

Nonsense. To give you a sense about how much $100B in revenue is, that would be the equivalent of every person in the United States paying $25/mo. Obviously that’s not happening, so how many businesses can and will pay far more than that, when there’s also Anthropic and Gemini offerings?

oefrha• 6 months ago

$14 billion

Incidentally that’s how much SoftBank lost on WeWork.

NickC25• 6 months ago

You're not counting the money they paid to Adam Neumann to walk away, which was over a billion dollars as well.

Imagine doing what was effectively fraud, building a cult around you, everything going completely to the fan, and then the team you defrauded turns around and gives you a billion dollars.

And then, you get Marc Andreesen to write you a $350 million check not too long after.

amelius• 6 months ago

I suppose the idea is that the LLMs will invent the compact molten salt nuclear reactors. Double win.

forinti• 6 months ago

That's just magical thinking.

And Ethiopia couldn't get US$5 billion loan for a dam to service 60 million people.

The world is sick.

kurthr• 6 months ago

LLMs will create the pitch deck for molten salt reactors, provide progress reports, plans, and documentation, accept payment for delivery, and disappear into the night.

agumonkey• 6 months ago

2020s ai could be the first systemic stall I see. Let's assume agentic could really be a force for improvement but the cost model is unsustainable and will choke.

android521• 6 months ago

why are you obsessed with how other people allocate their money?

serf• 6 months ago

why are you obsessed with how other people allocate their money?

I suggest you stop viewing the actions of multi billion dollar multinational corporations as anything similar to individual action.

ForHackernews2• 6 months ago

Because Softbank are really bad at it, and they have lots of it.

https://www.reuters.com/business/softbanks-wework-once-most-...

wobblyasp• 6 months ago

Tu Quoque AND false equivalency. Impressive.

We should all care how resources are used, even if don't own them. That investment is going to make things more expensive for everyone. See RAM, SSD, and GPU prices.

Ronsenshi2• 6 months ago

What made you think that I'm "obsessed" with how other people spend money?

bigbadfeline3• 6 months ago

It's not their money.

trhway• 6 months ago

A major cost in building and operating datacenters is energy, so it does mean that significant share of those money would go into energy development. Large demand is one of the best things for stimulating technology development, and in this case we'd definitely see investment in solar and compact/safer nuclear of which MSRs are a part of.

xAI already brings gas turbines on-site, and i think the trend of on-site energy generation will grow, which will open opportunity (by providing well finaned demand) for compact/mobile/safer nuclear, and BigTech companies are among the best for any new tech development. I expect nuclear engineer positions get opened with Google and the likes :)

josu• 6 months ago

invested in (...) anything else practical.

I don't understand how this is the top comment. LLMs have unlocked a lot of value for me personally, and arguably for the society as a whole. They are also one of the coolest technologies I've tried in years. As a technologist, I'm really glad that money is pouring in and allowing us to find its limits.

mekdoonggi2• 6 months ago

Not sure if this is the same sentiment, but I feel that even though the technology is handy, the investment is speculation. Billions and billions are being spent on developing this technology hoping to create a unicorn that turns billions into trillions.

I know it's unrealistic, but imagine you took $30b and just started ploughing into a random city. Real estate, development grants, EV charging infra, renewable projects, transit. Just boring existing technology, but concentrated investment to make the other investments more valuable. You could turn that $30b into $60b in a few years while changing the lives of an entire city.

But American capital says no, and gambles it, because it's just a game to the people in charge.

Money is responsibility. While I pinch my pennies and show up to my day job, the people with the keys throw billions on an oil fire hoping it magically turns into gold.

bigbadfeline3• 6 months ago

LLMs have unlocked a lot of value for me personally, and arguably for the society as a whole.

The second part doesn't follow from the first which, in turn, is irrelevant here because we aren't talking about any value for society, we're trying to figure out if that value is greater than its opportunity cost.

The "AI" has been with us for several years now but it hasn't improved overall productivity in any meaningful way and while it's use is already plateauing it keeps sucking in capital like a giant black hole.

As a technologist, I'm really glad that money is pouring in and allowing us to find its limits.

That's not a good thing when it happens at the expense of the rest of society.

It's only natural that workers at NVIDIA and other suppliers of AI-related products would like the gravy train to travel their way in perpetuity, but they are literally wasting capital, which isn't theirs, for their own enrichment, while creating inflation, shortages and misallocations on a grand scale.

ethbr12• 6 months ago

The issue isn't whether LLMs are useful: it's whether OpenAI is positioned to deliver substantial future profitability.

Given their competition consists of the largest tech companies in the world, several of which are vertically-integrated, have advanced AI research programs, and own the last hardware mile to the customer...

OpenAI better hope it can maintain a performance lead, while being able to run inference cheaper than its competitors, while also launching a must-have device it controls (AR/audio glasses?).

trolleski• 6 months ago

I think it should be 70 billion, scratch that, 125 billion, scratch that - 180 trillion. I'd rather have pictures of crocodile Trump on the Moon than a warm house, scratch that, rather than kids, scratch that, rather than any decent future at all. Great move, guys, can't get enough of it.

captain_coffee• 6 months ago

So ... will the crash be bigger that the one causing The Great Depression or smaller? Any bets?

rvz• 6 months ago

Before 2030, especially if the frontier AI labs begin to IPO before then.

mhitza• 6 months ago

I'm really eager to see how Anthropic's IPO this year (if it even happens) will pan out.

CodingJeebus2• 6 months ago

The Great Depression saw 25% unemployment and a third of farmers losing their land. Millions could die if it gets that bad today.

lifetimerubyist2• 6 months ago

This sounds good to the "earth is overpopulated" crowd.

zvqcMMV6Zcr• 6 months ago

Not even close. The 2008 financial crisis is better comparison. And even then I think most negative effect will come from investors pulling money away from everything non-AI, than OpenAI/Anthropic/Oracle crashing and burning.

Ekaros• 6 months ago

Is this pre or post hyperinflation 30 billion? As things might be heading there and that might make a difference.

randomtoast3• 6 months ago

as part of the startup’s [OpenAI's] efforts to raise up to $100 billion

At this stage, why not go public? Yes, they would need to manage quarterly financial reports and answer to shareholders, but they have reached a size where they are in the top 20 range on the NASDAQ. These public companies doing well, so it seems like a logical next step.

zpeti• 6 months ago

I actually think the public markets have a lot less faith in openai than softbank does. They need these crazy investors. Public markets would not value openai at $1.4trn. So they can't go public. It would reveal how bad things are.

disgruntledphd2• 6 months ago

I used to hold this theory, but apparently Anthropic are planning to IPO, and surely both of them would be valued similarly?

Anthropic don't have all the free users, but they're also raising absurd amounts and have similar costs.

edoceo• 6 months ago

The reporting creates "transparency" - there are 1000s of analyst ready to pounce on this (with AI assistant). What skeletons would they find?

dgrin91• 6 months ago

I think they are still crazy r&d heavy, which it's not what investors like to hear. Investor pressure would make them stagnate from r&d side

On the other hand they would probably set things up in a way where they still control all the voting power

randomtoast3• 6 months ago

Okay, but I don't think we can call OpenAI a startup until it has reached the number one spot on NASDAQ with a $5 trillion valuation. Therefore, I believe now is a good time to focus on more realistic fundamentals, rather than fueling the hype by burning even more cash on the way to the absolute top, which is typical bubble mentality.

hnthrow02873452• 6 months ago

I'm pretty sure I could become a billionaire just by meeting Masayoshi Son and having a chat for 15 minutes. I've never seen a better case for a fool and his money being parted.

randomtoast3• 6 months ago

That may be true, but in order to meet Masayoshi Son, you have to be a billionaire to begin with.

hnthrow02873452• 6 months ago

I'm a billionaire in EVE Online, and even though that counts for nothing, it'd still be enough for him

rvnx2• 6 months ago

It can be also just a trade part of a deal; like in YC companies, where investor Y buys company A from investor Z, and in exchange investor Z buys company B from investor Y, so the choo-choo train keeps running.

lifetimerubyist2• 6 months ago

hahahah, have fun with that

libraryofbabel2• 6 months ago

All of these things can be simultaneously true (and I would say, are true):

1) We are in a huge investment bubble right now and it's going to burst.

2) LLMs are extremely useful right now for certain niche tasks, especially software engineering.

3) LLMs have the potential to transform our world long-term (~10 yr horizon), on the order of the transformations wrought by the internet and mobile.

4) LLM's don't lead directly to AGI (no continuous learning), and we're not getting AGI any time soon.

This is an extremely obvious point, but bears repeating. I feel the assumption of an implicit link (in both truth or falsehood) between these fairly independent assertions can cause people to talk past each other about the really important questions in play here.

Regarding The Great Bubble, I am very very bearish about OpenAI in particular. They've had a good run for three years with consumer mindshare due to their first-mover advantage, but they have no moat, trouble monetizing most of their users, not much luck building out products that stick among consumers that aren't chatbots, and their models are no better than Anthropic's, Google's, or even the best Chinese open weight models 6 months later.

My bet would be on Google and Apple together (with Gemini powering Siri, for now) destroying OpenAI in the consumer AI market over the next 2-3 years. Google has first-rate models... but more than that, both Google and Apple have the enormous advantage of owning underlying platforms that they can use to put their own AI chat in front of consumers. Google has a mobile OS, the leading browser, and search. Apple has the premium hardware and the other, premium, mobile OS. They also have the advantage of the current regulatory climate being less antitrust than it was. And they don't have to monetize their AI offerings (no ads in gemini; ChatGPT is adding them) and can run them at a loss for as long as it takes to eat up OpenAI's market share. If they partner up, as they seem to be doing, OpenAI should very very afraid.

WarmWash3• 6 months ago

2) LLMs are extremely useful right now for certain niche tasks, especially software engineering.

Don't get lost in the tech scene sauce, programming is a small sliver of what people are using LLMs for. OpenAI's report in September pegged it at ~4% of tokens being for software generation. Sure Anthropic is probably 80% or something, but only a small sliver of LLM users are using Anthropic. The reality is probably even less if you count Google's AI overviews. We hate it, but I have never seen a regular person skip over it.

The question is if regular people will pay cell phone level subscription costs ($70-$100/mo) for LLMs. If so, then we are probably not in a bubble, and the ROI will have a 5-10 yr horizon, which is totally tenable.

500,000,000 people paying $75/mo is $450B/yr. Inference is cheap too, it's training that is ludicrously expensive. Don't be fooled by the introductory pricing we have today either, that's just to get you dependent.

And yeah, chinese models, but look at what they did to tiktok. No way they are going to let the Chinese government be peoples confidants and no way is more than 0.01% of people gonna home lab.

lossolo2• 6 months ago

500,000,000 people paying $75/mo is $450B/yr.

Majority of people use ChatGPT for free, that's why they are introducing ads. Normal people will not pay 70-100$ per month for LLM subscription. Your numbers are way off.

snapcaster• 6 months ago

Do you use cursor personally? the product is so good, i don't know why people aren't looking at the "companies will complain and pony up $20k a seat" isn't seen as a possibility here

libraryofbabel2• 6 months ago

You’re right to call out consumer use is what’s eating all the tokens. I suppose what was behind my way of putting it is: I haven’t seen much in the way of truly transformative products with LLMs in the consumer space. Sure, there’s a few power users doing some cool things, and lots of promises along the lines of “AI will plan and book you a whole vacation!”, but basically for the median consumer we have an “improved search”, and “fun image generation”, with people using it a couple times a week. So what is the product that changes the world and makes 500M people pay $100 a month? I don’t think it’s really here yet. This feels a bit like we’re in 1996 where people are still trying to figure out what the internet is for, and we don’t know if OpenAI will be 1996’s Amazon, or its AOL.

None of this is to deny how remarkable the underling LLM tech is. I never expected to see something like this in my lifetime; it feels far far more strange and new than when the iPhone came along. I use a coding agent daily and it’s dramatically changed how I work. But I still think we’re in a bubble here.

bigbadfeline3• 6 months ago

And yeah, chinese models, but look at what they did to tiktok. No way they are going to let the Chinese government be peoples confidants

You're playing wack-a-mole with a paper mallet against a tank brigade. It's not only China, the EU is going to compete too in the "5-10 yr horizon".

The Chinese manage to compete while deprived of top semiconductor gear, which happens to be made only in the EU.

The Chinese models don't have to stay in China, they can be fine-tuned and used by many other countries, named differently, etc. Even if you try to block them all, others won't which would put the US in a sever competitive disadvantage, inflated and isolated, the dollar will be in the sewer, who cares how much openAI would make.

ActionHank2• 6 months ago

You forgot to mention the case where the US economy craters because of political missteps leading to Google and Apple being distracted leaving it open for Chinese or other models to surge ahead.

cong-or• 6 months ago

At ~$100B in AI funding, the question isn’t capital—it’s physical constraints.

Data centers need power (H100s are ~700W each), and recent capacity additions were mostly pre-allocated. Chip supply is also constrained by CoWoS packaging, not fab capacity, and expansions take years.

If power, packaging, and GPUs are fixed in the near term, does $100B mostly drive inflation in AI infrastructure prices rather than materially more deployed compute? Are we seeing the real cost of a usable GPU cluster rise faster than actual capacity?

Has anyone modeled what $100B actually buys in deployable compute over the next 2–3 years given these constraints—and whether that figure is shrinking as more capital piles in?

stefan_• 6 months ago

Oh it is driving inflation alright, inflation for everyone else because OpenAI are buying things like a years supply of DRAM with money they don't even have yet (surely that should be an investigation?).

jaredcwhite• 6 months ago

Sure, let's throw more wild amounts of money at a wildly unprofitable company with no clear roadmap to profitability any time in the near-term, and in the long-term it's very probable that any arguably-useful use cases for LLM-based technology will be a commodity anyone can run anywhere.

My gosh, this bubble can't burst soon enough. It's a form of torture to keep waiting on the pain we all know is coming…

heyaco• 6 months ago

gotta rope in the japs.

SoftBank in talks to invest up to $30B more in OpenAI

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