Nvidia and OpenAI abandon unfinished $100B deal in favour of $30B investment

https://www.ft.com/content/dea24046-0a73-40b2-8246-5ac7b7a54323

130•zerosizedweasle•1h ago

Comments

marcyb5st•1h ago

Oracle debt holders are sweating profusely right now I imagine. How does OpenAI gets 300B$ to pay Oracle [1] when nVidia has to be convinced to shell out "just" 30B for actually purchasing nVidia hardware.

[1] https://www.ft.com/content/90aa74a5-b39d-4131-a138-367726cb1...

lm28469•1h ago

> How does OpenAI gets 300B$ to pay Oracle

Easy, they just have to sell their overpriced vram chips (which haven't been manufactured yet), from their GPUs (which haven't been bought yet) which are in their data centers (the ones they're planning to build "soon"). It really isn't rocket science

__patchbit__•55m ago

Reallocate the $70 billion split difference to orbital station AI datacenters and Moon mass driver launched life cycle renewal equipment resupplies.

rvnx•48m ago

Good point, let's all invest in the SpaceX.ai IPO

hshdhdhj4444•48m ago

Or as OpenAI has been trial ballooning for months, the government bails them out.

mnky9800n•46m ago

This reminds me when F22s blasted Chinese balloons out of the sky.

hagbarth•14m ago

I have no idea why they would do that. Outside blatant corruption, which we shouldn't discount.

SecretDreams•9m ago

> Outside blatant corruption

Are we acting like this is a low probability outcome?

pawelduda•48m ago

Maybe they could sell the RAM reserves they've been hoarding

Aerroon•40m ago

Can they? The articles said that they bought wafers, not finished RAM. Is there interest in buying something like that?

jimnotgym•34m ago

They could sell them, but not at the price they bought them for!

bandrami•33m ago

They would have to actually get fabricated first

this_user•1h ago

I am very curios if OpenAI's IPO attempt this year will turn into WeWork 2.0 where all the air suddenly comes out of the valuation once the market acknowledges that they have no moat and lack a clear path to profitability that would make these huge investments worthwhile.

onlyrealcuzzo•34m ago

There are at least plausible scenarios where OpenAI is a VERY valuable company in the near future.

There were not with WeWork.

The SpaceX/xAI IPO will be more interesting.

SecretDreams•10m ago

All of these things are vastly overvalued. Only one with tangible value is SpaceX because that's actually a moat-space. OAI holds no moat, has not done a good enough job to entrap their users, and has poor cost structure.

xAi isn't even a point of discussion.. it's just a scheme to rip off investors.

WeWork.. hard to take anyone seriously that ever invested in this bad boy.

paxys•8m ago

There’s a reason OpenAI and Anthropic are both trying to accelerate their IPO while still being wildly unprofitable. There is still unlimited AI hype in the market. If they go public this year the entire world is going to blindly buy them without looking at their books.

october8140•57m ago

This thing is about to pop.

lm28469•53m ago

You know it's bad when even scam altman calls for regulations. They spend their entire lives telling you regulations are bad and taxation is theft but as soon as they need to drown the competition they lobby for more regulations

https://www.yahoo.com/news/articles/openai-chief-sam-altman-...

mnky9800n•45m ago

Rules for thee not for meeeeeee

villgax•40m ago

Altman has been calling for it since 2023, lobbying world leaders meeting them to push on this Lol, were you under a rock or something?

Capricorn2481•23m ago

But he's been doing that for years too.

raincole•21m ago

This comment cannot be further from reality. Altman has always been a very loud advocate for AI regulation.

https://www.nytimes.com/2023/05/16/technology/openai-altman-...

raw_anon_1111•8m ago

Of course he has. Major incumbents want regulation that makes it harder for new comers

shmageggy•7m ago

Except when that regulation actually has teeth, which is why he opposed California’s SB 1047. I agree with GP that Altman (and all the rest) want regulation insofar as it protects their moat but no further.

criddell•40m ago

Have you moved your retirement account money out of stocks and index funds into something safer? I've actually been thinking about it...

marcyb5st•25m ago

I did. I moved to sovereign debt (not US), bonds and stocks of boring companies (staples, energy, medicine, ...) that have at least AA rating. Might miss out a few months of glamorous growth, but fuck that, it reached a point that just one company hiccuping will send the whole thing tumbling (IMHO).

criddell•21m ago

Energy and healthcare has big AI exposure too. If it pops, you're going to be better off but not totally spared. I suppose that's probably a smart move though...

hypeatei•17m ago

Valuations really aren't that crazy, but the incestuous deals between Nvidia, Oracle, and OpenAI might cause a decent correction. I'm not too worried about my portfolio personally. It'll be a small bump in the road and you're better off not trying to time the market.

SecretDreams•8m ago

> Valuations really aren't that crazy

Okay

baggachipz•14m ago

Yes. Went from 100% S&P500 fund into a gold ETF and a high-dividend fund (SCHD). Still a good portion in S&P but gotta hedge some.

2OEH8eoCRo0•8m ago

No for a few reasons. I'm not close to retiring, I already own a good deal of bonds, and moving money because of emotion defeats the purpose.

I rebalanced the same as I always have.

SirensOfTitan•47m ago

Regardless of the promise of the underlying technology, I do wonder about the long-term viability of companies like OpenAI and Anthropic. Not only are they quite beholden to companies like Nvidia or Google for hardware, but LLM tech as it stands right now will turn into a commodity.

It's why Amodei has spoken in favor of stricter export controls and Altman has pushed for regulation. They have no moat.

I'm thankful for the various open-weighted Chinese models out there. They've kept good pace with flagship models, and they're integral to avoiding a future where 1-2 companies own the future of knowledge labor. America's obsession with the shareholder in lieu of any other social consideration is ugly.

chasd00•43m ago

I think google ends up the winner. They can keep chugging along and just wait for everyone else to go bankrupt. I guess apple sees it too since the signed with google and not OpenAI.

piker•42m ago

And what about Microsoft?

napolux•39m ago

See Apple in my previous comment

mrbungie•38m ago

They don't have the know how (except by proxy via OpenAI) nor custom hardware and somehow they are even worse at integrating AI into their products than Google.

raw_anon_1111•10m ago

They don’t need to. Just like Amazon they are seeing record revenues from Azure because of their third party LLM hosting platforms only being gated because no one can get enough chips right now

napolux•39m ago

downvote all you want. google has all the money to keep up and just wait for the others to die. apple is a different story, btw, can probably buy openai or anthropic, but for now they're just waiting like google, and since they need to provide users AI after the failure with Apple Intelligence, they prefer to pay for Google and wait for the others to fight against each other.

openai and anthropic know already what will happen if they go public :)

aurizon•29m ago

Google is vulnerable in search and that already shows as we see a decline as many parallel paths emerge. At the beginning it was a simple lookup for valid information and it became dominant - then pages of pay ranked preference spots filled pages that obscured what you wanted = it became evil.

raw_anon_1111•12m ago

We see no such thing. Google just announces review revenue and profit and Apple hinted at it not seeing any decline in revenue from their search deal with Google which is performance based.

wooger•6m ago

And Gemini is already integrated into the results page and gives useful answers instantly, alongside advertising... What problem for google are you seeing?

r0b05•23m ago

What will happen if they go public?

mrcwinn•7m ago

That’s not a well informed argument. Even if Apple could finance the $1T+ it would cost to buy Anthropic - they’re not making that money back by making the iPhone a little better. The only way to monetize is by selling, as Anthropic does, enterprise services to businesses. And that’s not Apple’s “DNA,” to use their language.

sethops1•35m ago

This is the conclusion I came to as well. Either make your own hardware, or drown paying premiums until you run out of money. For a while I was hopeful for some competition from AMD but that never panned out.

m-schuetz•32m ago

Also Gemini works absolutely fantastic right now. I find it provides better results for coding tasks compared to ChatGPT

logicallee•23m ago

have you compared it with Claude Code at all? Is there a similar subscription model for Gemini as Claude? Does it have an agent like Claude Code or ChatGPT Codex? what are you using it for? How does it do with large contexts? (Claude AI Code has a 1 million token context).

airstrike•20m ago

it's nowhere near claude opus

but claude and claude code are different things

frde•18m ago

Don't want to sound rude, but anytime anyone says this I assume they haven't tried using agentic coding tools and are still copy pasting coding questions into a web input box

I would be really curious to know what tools you've tried and are using where gemini feels better to use

m00x•13m ago

Gemini is a generalist model and works better than all existing models at generalist problems.

Coding has been vastly improved in 3.0 and 3.1, but Google won't give us the full juice as Google usually does.

f311a•4m ago

It's good enough if you don't go wild and allow LLMs to produce 5k+ lines in one session.

In a lot of industries, you can't afford this anyway, since all code has to be carefully reviewed. A lot of models are great when you do isolated changes with 100-1000 lines.

Sometimes it's okay to ship a lot of code from LLMs, especially for the frontend. But, there are a lot of companies and tasks where backend bugs cost a lot, either in big customers or direct money. No model will allow you to go wild in this case.

nobody_r_knows•13m ago

ChatGTP isn't even meant for coding anymore, nor Gemini. It's OpenAI Codex vs Claude Code. Gemini doesn't even have an offering.

kdheiwns•5m ago

I've had the same experience with editing shaders. ChatGPT has absolutely no clue what's going on and it seems like it randomly edits shader code. It's never given me anything remotely usable. Gemini has been able to edit shaders and get me a result that's not perfect, but fairly close to what I want.

Aboutplants•32m ago

The minute Apple chose Google, OpenAI became a dead duck. It will float for a while but it cannot compete with the likes of Google, their unlimited pockets and better yet their access to data

awongh•20m ago

I think it points to OpenAI trying to pivot to leveraging their brand awareness head start and optimizing for either ads or something like the Jony Ive device- focusing on the consumer side.

For now people identify LLMs and AI with the ChatGPT brand.

This seems like it might be the stickiest thing they can grab ahold of in the long term.

dakolli•15m ago

Ads in GPT, might literally be the worst business decision ever made. Google can get away with Ads, its expected from them, but not OpenAI

_aavaa_•8m ago

Sergei and Brin were pretty vocal about the problems with ads and why they don't belong in search engines when they started.

The only reason it's expected now is because of a slow boil.

raw_anon_1111•15m ago

OpenAI is not going to fund themselves with $20 subscriptions and advertising enough to be profitable.

neya•16m ago

Google is the new Open AI. Open AI is the new Google. Guess who wants to shove advertisements into paying customers' face and take a % of their revenues for using their models to build products? Not Google.

Forgeties79•13m ago

Don’t worry, Google is profiting off of your data one way or another lol

SecretDreams•12m ago

> Guess who wants to shove advertisements into paying customers' face and take a % of their revenues for using their models to build products? Not Google.

But, also, probably google.

ipaddr•9m ago

The majority of people who use Google for AI encounter it at the top of an ad filled search engine.

pell•7m ago

>Not Google.

Google's main revenue source (~ 75%) is advertising. They will absolutely try to shove in ads into their AI offerings. They simply don't have to do it this quickly.

techpression•42m ago

How is censorship / ”alternative information” affecting them? Genuinely curious as I’ve only read briefly about it and it was ages ago.

delaminator•41m ago

Anthropic is also using lots of Amazon hardware for inference.

jpalomaki•31m ago

Both Anthropic and OpenAI are working hard to move away from being "just" the LLM provider on the background.

ulfbert_inc•23m ago

>LLM tech as it stands right now will turn into a commodity

I am yet to see in-depth analysis that supports this claim

wejwej•23m ago

To take the other side of this, as computers got commodified there still was a massive benefit to using cloud computing. Could it be possible that that happens with LLMs as well as hardware becomes more and more specialized? I personally have no idea but love that there’s a bunch of competition and totally agree with your point regulation and export controls are just ways to make it harder for new orgs to compete.

AznHisoka•17m ago

Anthropic at least seems to be doing well with enterprises. OpenAI doesnt have that level of trust with enterprise use cases, and commodization is a bigger issue with consumers, when they can just switch to another tool easily

nvarsj•11m ago

I don't think you can put OpenAI and Anthropic together like that.

Anthropic has actually cracked Agentic AI that is generally useful. No other company has done that.

enceladus06•3m ago

OpenAI and Anthropic don't have a moat. We will have actual open models like DeepSeek and Kimi with the same functionality as Opus 4.6 in Claude Code <6mo IMO. Competition is a good thing for the end-user.

cmiles8•40m ago

There are serious balance sheet concerns for these companies with exposure to OpenAI, Anthropic and such.

It’s all fun and games till it’s not. All this capital investment is going to start hitting earnings as massive deprecation and/or mark-to-market valuation adjustments and if the bubble pops (or even just cools a bit) the math starts to look real ugly real quick.

jimnotgym•30m ago

The market is not there at all though is it? Nobody is paying what it actually costs to deliver AI services. It is not clear to me that it is cheaper than just paying people to do the work.

zerosizedweasle•14m ago

Someone did a calculation using heat generated - energy usage (which is ultimately the base cost of the universe) - and the human brain and body is just incredibly most cost efficient than how we're doing AI. So for basic tasks it's just absurdly expensive to be using AI instead of a human.

jimnotgym•35m ago

Now the only question is when. When does this bubble burst?

Great promise, replace all your call centre staff, then your developers with AI. It is cheaper, but only because the AI companies are not charging you what it really costs to do the work.

raw_anon_1111•4m ago

One of my specialties is implementing hosted call centers using Amazon Connect - the AWS version of the call center that Amazon uses internally.

The fully allocated cost of one call to a human agent is $3-5. That pays for a lot of inference.

aurizon•35m ago

I wonder how the huge slug of memory that might now have to re-direct mid-ramp as this (and other AI pullbacks) ramify forward? Will Crucial re-enter the desktop market? Or will it create a slow/fast subsidence in memory? We will live in interesting times..

baggachipz•11m ago

Follow the ball... which shell is the ball under? Keep an eye on the ball!

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