| ▲ | redanddead 13 hours ago |
| >3. They need revenue yesterday. Increases in borrowing rates means access to capital isn't what it was in the 10s This is a huge problem, why is it like this |
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| ▲ | 13 hours ago | parent | next [-] |
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| ▲ | rsalus 13 hours ago | parent | prev | next [-] |
| they've borrowed so much they're directly competing with national governments in capital markets. |
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| ▲ | nl 13 hours ago | parent | next [-] | | OpenAI has hardly borrowed anything. They have a $4B revolving credit line but have hardly touched it. They haven't issued any bonds. Investment isn't debt. | | |
| ▲ | MisterMunchkin 2 hours ago | parent | next [-] | | They owe people hundreds of billions, possibly even over a trillion. They've just been very clever in how they've structured it, so on paper they have low debt. | | |
| ▲ | Tanjreeve 2 hours ago | parent [-] | | I think there’s some crossed wires here with the wider data centre build outs. OpenAI have their own flavours of sketchy behaviour but I’m not aware of them solely being on the hook for those amounts short of some weird accounting of Microsoft cloud costs onto them or something. | | |
| ▲ | estearum an hour ago | parent [-] | | Don’t they have a fully committed preorder for like $500 billion in compute from Oracle starting in 2028? And Oracle is funding that buildout with junk debt? |
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| ▲ | CoolestBeans 9 hours ago | parent | prev | next [-] | | The rates environment directly dictates what capital is available to OpenAI and at what terms. When potential investors can get x% virtually guaranteed, then they are less willing to give cash for equity to OpenAI. | |
| ▲ | bigyabai 12 hours ago | parent | prev [-] | | > Investment isn't debt. ...yet. | | |
| ▲ | nojvek 11 hours ago | parent [-] | | SoftBank is very leveraged with …… debt. One of the biggest AI investors. | | |
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| ▲ | Tanjreeve 2 hours ago | parent | prev [-] | | That’s mostly not the Frontier Labs. They’re definitely creating a lot of the demand but the people taking out those loans are Neoclouds and Big Tech (hence why Facebook + Google et al suddenly all have terrible cash flows after years of having more money than can be spent). AnthropenAI are the ones driving a lot of that infrastructure spending when they’re such big consumers of compute but they’re not the ones feeling the brunt of the infra spending. Although those costs will bubble up to them indirectly eventually. | | |
| ▲ | aenis an hour ago | parent [-] | | Indirectly? They have contracted the capacity with the likes of Oracle, this is not 'debt' in accounting sense, but it is a financial commitment that will require either taking on debt, or getting more investors. |
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| ▲ | rayiner 13 hours ago | parent | prev | next [-] |
| The 10s were totally fake due to ZIRP. |
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| ▲ | georgemcbay 13 hours ago | parent | prev [-] |
| > why is it like this In part it is like this because they've already borrowed so much. |
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| ▲ | nl 13 hours ago | parent [-] | | They have borrowed almost nothing. Investment isn't debt. | | |
| ▲ | alt227 an hour ago | parent | next [-] | | So all those hundreds of billions of dollars investors ploughed into OpenAI was just a gift was it? No expectation of a return of any kind? What if that investment money was originally borrowed by the investors? | |
| ▲ | fwlr 5 hours ago | parent | prev | next [-] | | Investment isn’t debt, but investment and debt demand revenue in functionally identical ways, and OpenAI has taken an enormous amount of investment, so they are subject to broadly the same pressures as a hypothetical company that had borrowed lots, no? | |
| ▲ | timothyduong 13 hours ago | parent | prev | next [-] | | Isn't investment like a form of debt, or well obligation to make returns? If VC provide you funds, there is an expectation of returns, otherwise the board would vote you out. Yeah it's not a traditional loan from a bank, but it's not a 0% interest loan either. | |
| ▲ | Tanjreeve 2 hours ago | parent | prev | next [-] | | Exorbitant Cloud costs and spending 22 million to solve a 1 million dollar maths problem isn’t investment though. | |
| ▲ | georgemcbay 12 hours ago | parent | prev [-] | | The duopoly AI labs haven't technically borrowed much, but a metric ass-ton of money has been borrowed by various other entities in service of them as infrastructure proxies. That's what is driving up the cost of debt and teetering some of these companies into junk status. | | |
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