Hacker News

> 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.

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.

> 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.

Not GP, and not saying I agree with them, but it may be worth remembering that Netscape had 90% market share at one point. Active user count may not be the moat you imagine.

But why are these users sticking to ChatGPT specifically ?

If it’s not the quality of their answers ?

yeah, ~1B active users + when non-tech people think of AI, they think of "ChatGPT" not many of the competitors.

How do you think this compares to Google and the AI search?

Users are not a moat because there is no network effect here.

700 million and declining with no clear story to levering either the attention economy or paying

I think you’re just describing how it’s circular.

It’s like Toys R Us not having enough money to pay Mattel for Barbie dolls and telling Mattel they can have partial ownership of the company if they just supply them with some more toys.

But the problem is that Toys R Us is spending $15, 20, or maybe even $50 (who knows?) to sell a $10 toy.

Toys R Us continues selling toys faster and faster despite a lack of profit, making Mattel even more dependent on Toys R Us as a customer. It blows up the bubble where a more natural course of action would be for Toys R Us to go bankrupt or scale back ambitions earlier.

Because it’s circular like this, it lends toward bigger crashing and burning. If OpenAI fails, all these investors that are deeply integrated into their supply chains lose both their investment and customer.

Nope wrong framing.

Nvidia is investing assets into OAI - it has to. Because OAI needs to become successful for Nvidia's story in the long-term to play out, to justify its current stock price.

Great analogy. ;-)

Doubt Jensen sees himself as a “dealer” but considering the vendor lock-in and margins, he pretty much is the Tony Montana of Ai Chips.

It’s nuts that this type of financing is legal.

Conversely it’s equity for an in-kind investment. Dave Choe taking the Facebook shares writ large.

I give you $100 cash and you give me $100 worth of stock in return. Now you give me $100 cash to buy something from me that cost me $80 to produce. I end up with $100 worth of stock in your company which cost me only $80. No?

NVIDIA gross margins lately are like 75%, so it's more like you give me $100 to buy something from me that cost me $25 to produce, hence I end up with $100 worth of stock in your company and it only cost me $25.

The problem is here:

> Let's say I give you $100 on the condition that you buy $100 worth of product from me. And let's say that product cost me $80 to produce. Isn't that basically the same as me giving you $80?

Why limit myself to $100 for a product that costs $80? I could just as well give you $1 000 000 to buy this same product from me. That way, I have a $1 000 000 share of your company, and I have $1 000 000 in revenue, and it only cost me $80.

This distorts the market for the product we're trading, and distorts the share price for both my company and yours.

> Isn't that basically the same as me giving you $80?

In your accounting, you can claim that you have an investment worth $100 and book $100 worth of revenue. You're juicing your sales numbers to impress shareholders - presumably, without your $100, the investee wouldn't have bought $100 worth of your product. The last thing your shareholders want to see are your sales numbers stop growing, or heaven forbid, start shrinking.

Nvidia is not the first company to "buy" sales of its own product via simple or convoluted incentive schemes. The scheme will work for a while until it doesn't.

That's like giving them* $20.

And inflate your revenue by $80.

Laws on competition make this kind of arrangements illegal, so you would have to exerce influence and have the invested in company pretends you happen to have been picked among competitors.

In any case the SEC will be focused on whether the filings aren't made up to fraud investors, so they could reject the IPO, of the invested in company. Your own entity also is at risk.

We all know MS gets away with it, they have good legal goons who find way to make all of it appears fair with regards to the law.

In exchange for 100$ of your stock AND making your revenue numbers look insane for the next cycle ?

Also Nvidia margins are waaay higher than 20%

How I see it is the companies want to jack their revenue and in turn jack the price of their stock and please shareholders. Those are the two main goals which this accomplishes, regardless of the underlying fundamentals.

For both Amazon and Nvidia, their marginal costs are probably much lower than their fixed costs.

The reason this doesn't make sense is that this is the math of monopoly creation! The government should be making sure companies don't go around throwing money at circular deals that will make them and their friends a fortune while cornering the market, but it seems that capitalism rules don't exist anymore in the US.

I'm not a finance expert, but it may be because investment and purchase are are taxed differently (I don't know). You gave $100 away as investments, got $100 back as revenue. Meanwhile you establish that your product are worth $100 (while costing $80) and you have $100 worth of shares. Without considering side effects, you gave away $80 worth of product for $100 (supposed) worth of shares. But shares are subject to side effects and those side effects can be quite nice (making the news, establishing price,...).

The issue is that there's no organic force behind those changes and it makes everything hollow. You could create a market inside a deserted area and make it appear like a metropolis.

> I don't understand how this is some kind of cheat code. Let's say I give you $100 on the condition that you buy $100 worth of product from me. And let's say that product cost me $80 to produce. Isn't that basically the same as me giving you $80? I don't see at all how that's me "basically getting that investment back".

What if the product only costs you $20 to produce?

They had a first-mover advantage for sure.

It used to be revolutionary, but now there is a huge difference: plenty of competition, and a growing number of high-quality models that can run offline (for free!) or cheaper (Gemini-Flash for example).

They are in some way the Nokia of AI, "we have the distribution, product will sell", but this is not enough if innovation is weak.

They are even lagging behind (GPT-5 is a weaker coder than Claude, Sora is a toy compared to Seedance 2.0, etc).

One Apple releases the AIPhone, running offline models, with 32 GB of unified memory, with optional cloud requests, then it's going to be super though for OpenAI.

How will they make money on their product exactly? To the tune of being worth nearly a trillion dollars? There is no guarantee that inference will go down, we’ve seen some improvement with cheap models, but they aren’t what people want, and otherwise models stay expensive to run and use

The only reason to draw this comparison is to show SoftBank are not as competent as they'd like to appear to be - so putting their name in relation to investors of OAI does not strengthen the prospects we should share re. OAI.

It’s one of the worst takes I’ve heard. OpenAI creates the fastest growing app ever, spawns a revolution bigger than the internet, and this guys take is they are like WeWork…

Will they maintain an edge over other AI companies long term? With so many market participants will it become a race to the bottom?

This valuation puts their P/E around 40.

Anthropic $380B valuation on $13B ARR. P/E around 30.

5 years ago Uber was in similar territory. Tesla... Well we won't mention Tesla.

How far the volatility ripples out will give us a real look into just how self-reinforced the financials truly are.

They don't need to reach AGI. They just need to put all of the engineers on HN out of work.

A year ago I would have said that was crazy. In the last month, I've been using Claude Code to write 20kloc of Rust code every day (and I review all of it).

A week is now a day. If that figure doubles, I have no idea what will happen to us. And I think it's coming.

At least in their Microsoft contract it means $100 billion in profit, though they don't need to have actually made that money, they just need to show they're on track to do so.

The definition used to be "passes the Turing test" .. until LLMs passed it.

The problem with AGI is not that it's undefinable, but that everyone has a different one. Kinda like consciousness in that regard.

Fortunately, OpenAI already wrote theirs down. Well, Microsoft[0] says they did, anyway. Some people claimed it was a secret only a few years ago, and since then LLMs have made it so much harder to tell the difference between leaks and hallucinated news saying this, but I can say there's at least a claim of a leak[1].

[0] https://blogs.microsoft.com/blog/2026/02/27/microsoft-and-op...

[1] It talks about it, but links to a paywalled site, so I still don't know what it is: https://techcrunch.com/2024/12/26/microsoft-and-openai-have-...

> fundamentally undefinable

Incredible, how an entire religion has sprung up around AGI.

That’s still $100B unaccounted for, and I’m pretty sure Amazon would expect fair treatment if other investors get a bailout. More likely, OpenAI is the one to receive the bailout, likely at the behest of the bigger investors, Amazon included.

https://www.axios.com/2026/02/27/altman-openai-anthropic-pen...

> Sam Altman says OpenAI shares Anthropic's red lines in Pentagon fight

90% chance it's all PR but who knows

Probably something like NVLink Fusion. AWS has been doing deals with suppliers for which the smallest unit of deployable compute is a 44U rack (e.g. Oracle), so this is more of the same.

https://www.nvidia.com/en-us/data-center/nvlink-fusion/

Is this really the con? Be part of the in-group and buy pre-IPO shares to dump them on joe-six-pack shortly afterwards?

I've subscribed to a few AI tools for the last 3 years now. I'm someone who almost never subscribes to anything.

I'm sure that $50b has my money in there somewhere.

Its hottest service by far is completely free, the vast majority of users of its free service aren't converting to users of its paid services (and often stop using the free service too because they were just tourists seeing what all the fuss was about, or they were compelled to use the free service by their employer), and its data center plans are an impossible money pit.

The fact it's become a household name internationally (giving it the appearance of success) can't save it from spending dramatically more money than it makes. It's been coasting on investments, but it's not even close to being actually profitable.

Huge or well-known companies have collapsed before, even though - because people become so used to them existing - it never quite feels like it will actually happen until it does.

What source do you have the Gemini is profitable? Are you referring only to the chat app, or to Google'a AI Ventures division? Or including Google Cloud AI related revenue?

Interesting. I’m having anything on Gemini being profitable though, do you happen to have a source?

Actually it is the other way around; every upstart claims that their invention is the mostest revolutionariest thing ever. 99.9% of them are not. The nay sayers are right most of the time.

Recent high-profile examples include Segway, NFT, Crypto as a whole, pre-tranformers voice assistants and various "Design Thinking" projects like those Amazon prime buttons.

Thiel said around last autumn that AI is a bubble and exited Nvidia. Nvidia is now falling despite good earnings.

If OpenAI keeps getting circular financing, of course they will not collapse yet.

A competitive bloodbath plus OpenAI has investment valuing it like it will achieve agi rather than (merely) being a huge advancement in computing, but not a fundamental rewriting of how all work is done.

It's like government XX giving "help" or "grants" to countries at war so they can purchase weapons from XX.

Selling Shovels is quite lucrative whether there is an actual mining business or just a gold rush.

At one point Jensen Huang will be out (retired or forced by staginating sales) and can definitely look back on a very successful career. That much is certain.

Does anyone see the demand for coding agents that aren't subsided 90% by the AI company?

Oh I do think they did see it, considering how good they are they've probably been a tuning focus for a while.

The signal the agent usage is sending though is that Anthropic is way ahead since all we hear about is Claude these days despite OpenAI spending so much more money, Antrophic is also out trialling vending machines,etc.

ChatGPT apart from generating text was a bit of a query/research tool but now that Google has their AI search augmentation shit somewhat together I'm not feeling much need for ChatGPT as a research partner.

So now the big question is, with coding and search niches curtailed, where will OpenAI be able to generate profits from to justify their insane spending?

That's mean.

They also invested in Uber

No it's RSU now. But idk if anyone would want to join OpenAI at these levels. Are they really a $1T business?

At least Anthropic has some runway in terms of valuation and isn't bleeding all over some free tier.

Would the current administration bail out OpenAI?

Ya. The WeWork debacle and investing $300 million into Wag, an imploded Uber for dog walking, surely wasn't helping.

Exactly. A devalued dollar means higher number without adjustment

"I give you 30B$ worth of hardware that costs me <10B$ to make in exchange for 30B$ worth of shares in your company" would be a more accurate description.

Well, I won't pretend I know the answer :) . But I assume that a) they are partially betting on making a normal return on investment (i.e. OAI not crashing), b) they profit from running a huge expense/revenue cycle (a company making say a million of profit and having a billion revenue is favored better than the same but with only ten million revenue), and c) even if all goes wrong, it is still better to get back most of the investment even if not everything and zero profit, compared to a possibility of just losing it all like SoftBank or other investors.

In the end it's exchanging GPUs for OpenAI shares. It's not a non-trade, and in the current market Nvidia could really sell the stuff for cash. The marginal cost is very much sharply positive.

$30B in sales is worth more than $30B in stock appreciation...

Tesla is a car company with relatively small, and shrinking, sales, that is worth $1.5T on the promise of [Elons_Promise_of_the_Month]

Did it ever occur to you that an entire generation of developers are going to retire in less than 20 years? They are betting that the software industry will be autonomous. Really, think of our industry like AUV phenomena. We’re the drivers that are about to be shown the door, that’s the bet.

World will still need software, lots of it. Their valuation is based on an entire developer-less future world (no labor costs).

Exactly, the dot com bubble didn't mean that the internet was just a fad.

Didn't they already define it as "a system capable of generating at least $100 billion in profit"

It just needs to be anything that will force OpenAI to IPO.

They've previously defined AGI as an AI that can directly create $100B in economic value.

Altman Gets Investment?

Obviously in a way they get the $35B.

i find codex 5.3 roughly on par with (though tbh still not quite as capable as) sonnet models, which are not even anthropic's flagship model family.

And the OpenClaw guy

https://paintraincomic.com/comic/first-date/

Oh the "investment" is definitely taking place on paper. Whether any money actually changes hands... doubtful.

Normally, there's at least a locked suitcase full of newspapers racking up frequent flier miles...

Definitely with regard to Nvidia.

Oh; good point. The great economic crash of 2029+ will be caused by the democrats cleaning up Trump's mess. (Sort of like "Biden's" inflation.)

> By then, they will "announce" "AGI"

It’s already a joke to call the slop generators “AI”, so giving it another fake name won’t really make much of a difference any more. Nothing short of a miracle will be able to top the “creative marketing” we already have.

Agreed it's not really good signal (many sampling biases) but user count is not relevant, most money is from heavy API users. 900M users with free or cheap subscription are nothing compared to even 10k heavy API users.

On the other hand, big users don't use openrouter. At $work we have our own routing logic.

Model rankings are irrelevant. No one cares.

The differentiating factor will be access to proprietary training data. Everyone can scrape the public web and use that to train an LLM. The frontier companies are spending a fortune to buy exclusive licenses to private data sources, and even hiring expert humans specifically to create new training data on priority topics.

> At what point are the models going to all be "good enough", with the differentiating factor being everything else, other than model ranking?

It's already come for vast swathes of industries.

Most organizations have already been able to operationalize what are essentially GPT4 and GPT5 wrappers for standard enterprise usecases such as network security (eg. Horizon3) and internal knowledge discovery and synthesis (eg. GleanAI back in 2024-25).

> If I recall correctly, the OAI-Microsoft deal just defined it as “AI-shaped tech that can generate $100 billion in annual profits”, which I think is actually close to the correct answer

So if they hit 100 billion annual then it's AGI but if Kellogg's launches “FrostedFlakes-GPT" and steals 30% of the market it's no longer AGI at 70 billion?

nit: I think you mean tranches

*tranche

Sarcastically, it's "the vibes intensifying".

(Vibes ~ Vibrations ~ Heat)

Tbf it's a reasonable question... I think it's a little tricky to pin down the equivalent of "kinetic energy" in purely economic terms, though you might look at the rate of flow of money as some analogy for the speed/energy of particles (speed of individual dollars changing hands). In that sense, the more frequent and larger these deals get, the hotter the market is. This is not a novel analogy.

work good even if work literally eating shit

surely that behavior leads to a good society and doesn't encourage nefarious behaviors

> the most selfish people become the most selfless

You reminded me of this Stewart Brand quote:

> Computers suppress our animal presence. When you communicate through a computer, you communicate like an angel.

I scratch your back for a $10M IOU.

You scratch my back for a $10M IOU.

The debts cancel out.

How is the economic gain calculated?

I like to point out that he was fired for egregious dishonesty.

3D printing is helpful too. The infrastructure created during the dot-com bubble of the late 1990s was also helpful. The UK is still profiting from the railway infrastructure created during the railway craze of the 1840s (https://en.wikipedia.org/wiki/Railway_Mania). The question is just how much of the valuation of AI companies is because they are useful and how much is speculation...

> 3D printing were craze

That's certainly a take, industry loves it. Sure, all that "everybody will print widgets at home instead of going to the store" stuff was never going to happen, but 3d printing is nonetheless here to stay.

It can be both a craze and a technology shift. AI isn't going away, it will transform some industries. But right now it's overhyped, overfunded and due a trip back to reality.

3D printing has a CAGR of 18-25%, not exactly 'were craze'

It most definitely COULD be a craze from the perspective of scope of investment, societal impact and timing. No one surfing the crest of this wave could be described as "conservative".

So how much are you willing to pay for it?

> It’s not craze. It’s technology shift.

It is a bubble with extreme levels of debt + funding from too many promises from companies that are in these sort of rounds.

People being consumed by the hype will also be completely consumed by the crash.

Comments like this is exactly how a 2000 and a 2008 style crash will happen.

"This time it's different!"

> Bitcoin and 3D printing were craze.

What bitcoin gave us essentially? Huge pump and dump schemes coordinated by big hands? Crypto investments which made 95% of investors poorer? What's left? Maybe 0.01% of it was beneficial.