OpenAI is out of cash. It wanted to raise $30B last week but only $11b showed up. It’s now begging for an additional $9b (down from original request of $19b more) from plebs, but no one has committed anything. They want to raise money at a $1.25T valuation, while ANThropic is struggling to clear a $1.3T valuation for its IPO, and ANT is arguably worth double whatever OpenAI is worth, or more precisely OpenAI is half of ANT.
OpenAI is likely this week to lock in that $11b in commitments to prevent “cold feet clauses”, and then add incentives for the other cash it needs. Coreweave is another company that needs cash now, with no good options to raise any of it.
The AI circular financing bubble has OpenAI at the center. Instead of pretending it is worth $1T, all of the promises OpenAI has made have bankruptcy triggering clauses by the promise receivers, and under bankruptcy, selling off assets is worth less than $10b, and datacenters are dark without need for more of them, or more GPUs.
What seems surprising, is that even though the bubble fuckers know that collapse/pop occurs when OpenAI crashes, they are not stepping up with a measly $9b to keep it alive for a few months.
The economic hardship that everyone suffers when the music stops will be blamed on the results of the midterms by the loud cheetoh.
I got really excited, wanted to read more, and then realised there was no source linked.
I think they want to use the bubble bursting to punish attempts to regulate them, like a form of capital strike.
“Oh, you want to restrict data center development? Well we’ll blow up the economy! Fuck you!”
The bubble will stay inflated as long as they need it as a threat to keep the new Dem majority in line.
Yup, agreed. The ruling class seems content to keep shuffling IOUs around. If the bubble bursts, it’ll be because they want it to.
Q2/Q3 2027 that’s been my bet and will be my bet. Finance breaking down takes time, there are so many ways you can bail water.
What do you think gets triggered then? Is it just the ability to drag out consequences?
That date is when the majority of the loan obligations and investors returns come due. If they don’t have their profits by then (which they won’t) they essentially have to liquidate.
Its why you are seeing all of the AI companies try to go public right now, even though the timing is bad and the market isn’t ready for it. The AI bros want to get their bags before it all unwinds.
Also the date when most AI startups run out of runway with VC money, therefore no more money to Anthropic. Seriously, some of those startups are planning on AI thinking up a profit strategy. Watch the store shelves for powdered water.
Lol I haven’t heard about that. What company is or is planning to do that?
Various permutations of that joke have been floating around since dehydrated food hit the market
OK. ty. To be fair, $11b does buy them 3-4 months of burn. Any part of $9b that can stay open for those 3-4 months, is up to another 3 months of burn. They have to IPO after, because another private round below $1.25T triggers massive penalties to early investors. That does get us to Q2. I see a panic close on that $11b before anyone can walk away, as causing an immediate massive spiral down.
Any moment, ANY MOMENT
You’re not the first to claim this, but it sounds pretty convincing… I’ll have to see it with my own eyes before I believe it though. Not sure how excited I will be due to the economic repercussions such an event would have, and I might miss ChatGPT, but I am damn well aware that the longer this keeps on going the worse the repercussions will become.
Either way, if hardware prices are coming down I will be buying.
The models won’t disapear. In the end, I think saving $5T-$10T in repercussions from not giving them $9b, ends with giving them $9b. The quiet limbo part is telling. Everyone who pumped AI bubble is already too overextended. So much other investment is also being requested.
Companies like these are too big to go bankrupt, it will crash but OpenAI will make all the excuses to get whatever they need to avoid bankruptcy.
/yawns/
Will ya look up history of “too big to fail” for me?
“Too big to fail” (TBTF) is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected with an economy that their failure would be disastrous to the greater economic system, and therefore should be supported by government when they face potential failure.[1] The colloquial term “too big to fail” was popularized by U.S. congressman Stewart McKinney in a 1984 Congressional hearing, discussing the Federal Deposit Insurance Corporation’s intervention with Continental Illinois.[2] The term had previously been used occasionally in the press,[3] and similar thinking had motivated earlier bank bailouts.
So exactly what I said. They might get bailouts to avoid failure.
Refer to my comment here from some time ago:
https://feddit.nl/comment/28196083
I am aware of this possibility and its likelihood, but even so, it will be bad. Not all of the companies are too big to fail. Just the big ones like OpenAI and Anthropic.
True. Many smaller companies will go bankrupt.
Read Ed Zitron.
Just throwing out that they wanted $30b and got $11b: those are b’s, not m’s. It’s shocking to think that $11b would not be enough to keep a company like OpenAI running.
A lot of what we’re seeing is tacit leveling of absolutely insane numbers. OpenAI has doubtless a lot more wiggle room than they’ll tell investors, and that’s from someone who really wants this bubble to burst.
That said, if investors stop investing en masse, that’s pretty much the burst. The product has literally never made money. There’s a reason why Altman is desparate to control narrative, because it really is as fragile as “when the rich stop giving us money, there is nothing left”. He needs to convince people to continue to take the risk.
lol “bubble fuckers.” I am definitely stealing that.
Genuine question: what are the doing with that money? Buying future components from sellers? Buying land? Paying labour? That’s a lot of money going into something that is essentially a ‘service’ entity. They’re not producing anything tangible.
each datacenter gw, before nvidia price hikes and construction inflation, is $60b. They have promised to rent 33gw of future datacenters. A large chunk of dumbass bubble fuckers have been building these with upfront cash/debt thinking this is possible.
The other problem for OpenAI is that they lose big money just running their existing models. They raised over $21b in March of this year, with even more in “compute credits” and now its gone. They have a 20% tax on revenue to pay MSFT, and in total outside of compute expenses, $2B/month cash burn.
Ooooohhh sounds like fun, need to set aside some cash for the firesale of hard drives and gpus soon to flood ebay lol
Probably all going to be bought by cryptominers.
Wouldn’t make much sense if there are ASICs
Maybe, is that even profitable anymore with exchange prices crashing?
Unless energy prices go down a bunch I don’t see it being profitable, but I could be wrong
My kid might actually get a new gaming PC for Christmas!
That depends, has you kid been born yet?
/s
Unfortunately, the shit they’ve already made can’t be reused for gaming. CPUs ram and gpus are not made for home PCs.
You can’t repurpose a DC/clippy 2.0 GPU for gaming, the CPUs while you can put a server CPU into a home workstation, it’s not going to be as good or as cheap electric wise as a consumer PC CPU. (I have a epyc CPU with ecc ram, it’s great for hosting dedicated servers, but is pretty weak for actual gaming). Same goes for the GPUs, most don’t even have display ports on them, and those that do, it’s usually just one or two at the most.
You can’t repurpose a DC/clippy 2.0 GPU for gaming
If it’s AMD hardware, you’re SOL - they removed ROPs entirely ~4 gens ago.
If it’s nVidia, it depends on what it is- firstly you need to get PCIe versions not SXM (unless China makes an SXM to PCIe adapter) then If it’s Hopper (2 gens ago) or Blackwell (Latest), it will perform badly for the specs, but it’s possible, if it’s Lovelace (last gen) or Ampere (3 gens ago), you could make it happen.
Hopper and Blackwell both skip RT cores and only have 24 ROPs no matter what model. Lovelace and Ampere are full-fat. An L40 should actually be a better GPU than an RTX4090 for the most part.
Yea they make the adapters for like $100 on eBay for smx2/3 cards. They’re reference designs and loud as fuck. So you have to retro fit proper fans to them. So it’s doable.
The L40s are expensive as fuck right now being a recent gen and all but shit if the bubble pops, then might see them getting sold for few hundred a piece. That’d be cool.
All current datacentre hardware is being run at power and density levels that hover somewhere between “operational” and “pile of glowing silicon slag”.
I’m sure some enterprising Chinese companies will take all the surplus hardware and create underclocked “consumer-capable” versions for inference. I’d happily pick up a couple of cards that are 75% of cutting edge performance if they’re a hundred bucks a pop.
Naa they’d be doing this already. There are tons of AI slop GPUs on eBay for super cheap. The only thing they have done with them is retrofitting them for pcie and cooling so you can put them into your PC to run local LLMs.
Can you provide some salient search terms? I would like to look what’s there.
Just go to eBay and search for smx2 or smx3 or v100 for stuff that’s still semi sane prices. Tons of stuff pops up
Here’s one that’s diy others are put together already.
Thanks, very reasonable prices. Need to look for some 32-64 GB HBM parts, provided these don’t run too hot.
Oh but I’ll be buying a few 1U /2Us with some H100/H200 for sure.
When the bubble bursts, will the components really go back to pre-bubble prices?
no because inflation, but the price will probably fall to what it would naturally grow to if the bubble didn’t exist.
datacenters need to be cancelled, or more specifically NVidia GPU orders cancelled. Then ddr5/6 ram can be made instead. gddr ram too. If OpenAI implodes (they absolutely need cash f’n now not to), there is no way that huge cancellations of Nvidia GPUs don’t happen.
They will be below prebubble prices for a short while while things rebalance. But, no, not long term, at least not for quite a while.
One can only hope 🤣
Another AI company will buy it in a heart beat, for the IP and its data centres.
The other AI companies are the same or worse.
That is possible. They need to bundle in all of the talent. OpenAI has a $2b cash burn/month before any compute costs. The future datacenters are not cheap, either. But as per last paragraph, only $9b is needed to save the bubble from Armageddon. Path that seems to be set is to pick up the scraps for cheap instead of saving entire industry.
Whether Musk/SpaceX has GOP/Zionist money behind him to buy up all of OpenAIs promises, is the main potential buyer
Maybe Ewong will buy it in bad faith 😍
Yah you’re likely correct for the majority, but not all of these will be bought up…
