> each model is roughly 2x profitable on its own, but each next model costs 10x the last. The whole thing only works if scaling keeps delivering.

This is a decent argument, but it's not the death knell you think.

Models are getting 99% more efficient every 3 years - to get the same amount of output, combined with hardware and (mostly) software upgrades - you can use 99% less power.

The number of applications where AI is already "good enough" keeps growing every day. If the cost goes down 99% every three years, it doesn't take long until you can make a ton of money on those applications.

If AI stopped progressing today, it would take probably a decade or longer for us to take full advantage of it. So there is tons of forward looking revenue that isn't counted yet.

For the foreseeable future, there are MANY MANY uses of models where a company would not want to host its own models and would be GLAD to pay an 4-5x cost for someone else to host the model and hardware for them.

I'm as bullish on OpenAI being "worth" $730B as I was on Snap being worth what it IPO'd for - which it's still down about 80% (AFTER inflation, or about ~95% adjusting for gold inflation).

But guess what - these are MINIMUM valuations based on 50-80% margins - i.e. they're really getting about ~$30B - the rest is market value of hardware and hosting. OpenAI could be worth 80% less, and they could still make a metric fuck-ton of money selling at IPO with a $1T+ market cap to speculative morons easily...

Realistically, very rich people with high risk tolerance are saying that they think OpenAI has a MINIMUM value of ~$100B. That seems very reasonable given the risk tolerance and wealth.

> Models are getting 99% more efficient every 3 years - to get the same amount of output, combined with hardware and (mostly) software upgrades - you can use 99% less power.

Even if true, this still doesn't bend the curve when paying for the next model.

> If AI stopped progressing today, it would take probably a decade or longer for us to take full advantage of it. So there is tons of forward looking revenue that isn't counted yet.

If this is true, it's true for the technology overall, and not necessarily OpenAI since inference would get commoditized quickly at that point. OpenAI could continue to have a capital advantage as a public stock, but I don't think it would if the music stopped.

> 99% more efficient every 3 years

It's 2x efficiency. Then I'd take 50% less power instead of ridiculous 99% less power.

"If AI stopped progressing today, it would take probably a decade or longer for us to take full advantage of it."

AI stopped progressing, or LLMs? I really dislike people throwing the term AI around.

ok, but everything depends on your numbers being correct. 99% improved efficiency seems kind of a way too optimistic prediction.

> Models are getting 99% more efficient every 3 years

The LLM industry has only be around for like 4 years. Extrapolating trends from that is pretty naive.

We said all the same shit about VR, dude. Even had a global pandemic show up to boost everyone's interest in the key market of telepresence. Turns out the merry go round can stop abruptly.