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| ▲ | lelanthran 7 hours ago | parent | next [-] | | > Oh! What’s his reputation? The people who are completely sold on the belief that AI providers are running at a profit believe him to be utterly, totally and completely wrong in every one of his predictions. The people who are completely sold on the belief that AI providers are running at a loss they can never recover from believe him to be utterly, totally and completely correct in every one of his predictions. The reality is that it's not his predictions that matter, but his data, which is almost always correct as of time of writing. If you ignore his opinions, the data presented on liabilities, spend, revenue, loans, commitments, etc across Coreweave, Stargate, Oracle and all of the usual AI companies is, as far as I can tell, correct. IOW, when it comes to his opinions, it's all about your priors. His data is good, though. | | |
| ▲ | disgruntledphd2 5 hours ago | parent | next [-] | | > The reality is that it's not his predictions that matter, but his data, which is almost always correct as of time of writing. If you ignore his opinions, the data presented on liabilities, spend, revenue, loans, commitments, etc across Coreweave, Stargate, Oracle and all of the usual AI companies is, as far as I can tell, correct. Yeah, I think that he does well with sources and data. I also think that his editorialising can be off-putting for lots of people. I kinda enjoy it, but accept that I have niche tastes. | | |
| ▲ | simianwords 4 hours ago | parent [-] | | > Yeah, I think that he does well with sources and data He's not even good at that, here's him not understanding what ARR means and fumbling a simple calculation and refusing to fix it. https://x.com/binarybits/status/2031392856401666362 Not only not understanding ARR, he simply doesn't do data analysis properly - he misses some few months and days in his calculation to prop up his point. This is a mistake chatgpt would have caught. https://x.com/binarybits/status/2034377838883700953 | | |
| ▲ | lelanthran 4 hours ago | parent | next [-] | | > He's not even good at that, here's him not understanding what ARR means and fumbling a simple calculation and refusing to fix it. Do you have a link to his blog where he gets the ARR wrong? True, I haven't much of his posts, but the one or two I recall reading with ARR in it didn't seem to have fumbled the calculations. | |
| ▲ | disgruntledphd2 4 hours ago | parent | prev [-] | | > understanding what ARR means Can you share me the official meaning of ARR? Preferably on a GAAP basis. Should be no problem, right? | | |
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| ▲ | TonyStr 4 hours ago | parent | prev | next [-] | | I don't think anyone believes the major AI providers are running at a profit? They are openly investing heavily into R&D and building out infrastructure, and according to these numbers way more than revenue. It wouldn't make sense for any of these companies to run at a profit right now as they're still aggressively expanding. The question is whether they will break even in the future, and capture a large enough market segment to sustain the business, allowing revenue to outgrow costs. If these numbers are real, revenue is already higher than COGS which is a really good signal for them. I think the question is more about whether people believe this is a sound business in the long term, which imo isn't possible to tell based on these numbers yet. | |
| ▲ | JeremyNT an hour ago | parent | prev [-] | | > The people who are completely sold on the belief that AI providers are running at a loss they can never recover from believe him to be utterly, totally and completely correct in every one of his predictions. It's funny, because you can both believe that these entities are bleeding money on every token and also believe that "financial engineering" will bail them out when they IPO despite this fact. The fundamentals of running a business that sells products or services for more than the cost to produce them seem increasingly decoupled from the financial success of the company and its owners. |
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| ▲ | simianwords 5 hours ago | parent | prev | next [-] | | Poor but that doesn't stop innocent from taking his thesis seriously and leaning on to the doom scenario. What do you think of his reputation? | |
| ▲ | thepasch 6 hours ago | parent | prev [-] | | Up until this post, I thought he was someone with good financial insight, analytical chops, and business sense, stuck with an audience that thinks it's still 2023 and ChatGPT 3 is still the pinnacle of the technology, and that he therefore has to pander to in order to pay the bills. After this supposedly being the reveal for his bubble-bursting massive revelation that will send the industry flying and lead to journalists kicking in his door for interview requests and exposés, I think... well, not that anymore. I thought "the frontier labs are losing money" was rather universally understood, and this really isn't even as bad as the stuff that's publicly visible; the fact that they keep raising hundreds of billions of dollars that they'll one day supposedly be required to show returns on? | | |
| ▲ | disgruntledphd2 5 hours ago | parent [-] | | > After this supposedly being the reveal for his bubble-bursting massive revelation that will send the industry flying and lead to journalists kicking in his door for interview requests and exposés I mean, the fact that lots of expenses are not scaling with revenue (sales and marketing 5xed versus revenue 3xing) and that the losses are very very large is important. More importantly, these are audited figures which haven't been seen before. | | |
| ▲ | thepasch 36 minutes ago | parent | next [-] | | Right, but this still isn't exactly new information. I don't think anyone was assuming that the labs are close to being profitable or that the losses wouldn't be rather large. The way this was announced was as if it was going to be a bombshell, but it just confirms what everyone (including the investors) was assuming anyway. Now if he had concrete numbers about whether inference at API pricing is profitable, that'd be a different thing (and it's what that hype bit was heavily implying since it's something he constantly keeps harping on, and rightfully so), but as it stands, nothing about these numbers says anything about whether this fundamentally has a road to profitability. It just says that this is a super high-risk high-reward investment, which isn't new information. | |
| ▲ | simianwords 19 minutes ago | parent | prev [-] | | Part of the losses are because of valuation increase and the real operating losses are much lower. https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb... this uses the same sources and answers more honestly and Ed Zitron doesn't touch on this. > As OpenAI’s worth rose, the increased value of those investor rights created a roughly $30bn charge, added the person. The charge is not expected to recur following the restructuring, they said. > Stripping out the charge and other non-cash expenses, such as stock-based compensation of staff and computing credits from Microsoft, OpenAI’s losses were $8bn, according to the person. Whom would you trust? FT or Ed Zitron? |
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