In the last week Alphabet has positioned itself to go on the offense, going after exccess liquidity and excess compute.
I fear that OpenAi and Anthropic would not be able to compete against an adveserial Alphabet which owns it's own models, hardware, large corpus of data, talent and network effects. My prediction is that OpenAI and Anthropic will eventually be crushed by Alphabet as they run out of investment and compute, leaving Alphabet to have a monopoly on AI, at least in the west.
This is why I think OpenAI and Anthropic should really be one company, if they join forces and pool together investments and compute they'll stand a chance.
> This is why I think OpenAI and Anthropic should really be one company
I think the more companies there are, the better. Having 3 top labs competing, with 2 more trailing is better for consumers than having a monopoly/duopoly in goog or goog vs. the world. There'll be pressure on innovation, cost, availability and so on.
I agree, generally competition is a good thing, but in this case I think we're having a divide and conquer scenario that works in Google's advantage.
We're seeing that compute and investment liquidity is effectively a zero-sum game and by having Google go after the excess compute and liquidity (which they don't really need) will most likely weaken the competitors to the point where they aren't competitive. But if OpenAI and Anthropic merge they can pool resources and be more competitive.
To be fair the fact that Google overcame not being the default browser is incredibly impressive. It's easy to forget now just how dark the days of IE6 were.
Huh? I don't think there's much doubt out there that there are 3 top labs that are mostly at the same level - oAI, Anthropic & Goog (not necessarily in this order, depending on the month, but they've been trading SotA status on various verticals for a while now).
There's also 2-3 other trailing labs in MS, xAI and Meta. All of them are blundering behind, but at one point or the other they've been up there for some verticals as well.
I think this is good. Having one clear winner would be worse than this SotA of the week rotating thing they've got going on. For us as consumers anyway.
> I fear that OpenAi and Anthropic would not be able to compete against an adveserial Alphabet which owns it's own models, hardware, large corpus of data, talent and network effects.
Many people thought Google+ would stomp all over Facebook, and that GCP would kill Azure and AWS for most of the same reasons.
I think the ideal, but politically infeasible outcome would be passing regulation to prevent hyperscalars from hosting their own models (or requiring wholesale leasing of infra), akin to other country’s telecom line-sharing regulations. Essentially convert machine intelligence to a regulated-utility industry rather than a competitive enterprise.
Consolidation is inevitable, so let’s lean in and ensure society, not shareholders, reap those benefits.
> My prediction is that OpenAI and Anthropic will eventually be crushed by Alphabet as they run out of investment and compute, leaving Alphabet to have a monopoly on AI, at least in the west.
It's the other way around (but the result would be the same): Alphabet has no need to make a 100x exit for the investors, and so can offer the service at cost + %markup, while Anthropic and OpenAI are VC funded, meaning that they need to show 10x - 100x exit for the investors.
IOW, there is no moat, Alphabet would have market-related pricing while VC-backed corps cannot offer market-related pricing.
>It's the other way around (but the result would be the same): Alphabet has no need to make a 100x exit for the investors, and so can offer the service at cost + %markup, while Anthropic and OpenAI are VC funded, meaning that they need to show 10x - 100x exit for the investors.
If this was true, Alphabet wouldn't currently be charging more for a worse product than OpenAI and Anthropic.
>I fear that OpenAi and Anthropic would not be able to compete against an adveserial Alphabet which owns it's own models, hardware, large corpus of data, talent and network effects.
You might as well say the same about GCP vs AWS. At the end of the day, in spite of how much superior engineering prowess it has, Google still treats its customers like it views them as a steaming, fly-covered pile of crap. This reflects just as much in Gemini as in their other products; after their initial competitive Gemini 2.5 Pro release, they just kept dumbing it down and reducing quality of service while charging the the same amount, trying to pull a bait-and-switch, and with their latest Gemini Flash release they're charging customers even more for a worse product. No amount of engineering or hardware can overcome such a customer-hostile corporate culture.
Fun idea, but they may be better competition coming Competing with Google with different teams, models, and business strategies. Im sure google will also be happy selling the adds they put in their models for 1/3 of the revenue.
The scary thing for google is if the AI companies start moving into ad targeting and open sales portals.
As it happens in large orgs, with mixed results. The biggest irony being the whole Transformer architecture being actually conceived at Google, only to be implemented as a product/service by another company.
This is relatively common historically. Two examples I can recall to mind without doing any research are Xerox/Apple and IBM/Oracle. I can only imagine there must be millions of other instances.
No, this is why anti trust regulation should be created and/or enforced. It’s insane to me that the “free market” simps don’t understand that you cannot have a free market without regulation. If you get rid of these regulations, you end up with corporate socialism, which is the absolute worst form of economy.
I'm just anticipating the next version of “Community-based EBITDA" that sama rolls out in the latest attempt to convince everyone that spending >$1 to earn $1 is a good idea.
It is increasingly look like OpenAI, Anthropic, and SpaceX (xAI) are going to burst their own AI bubble by going public. Their businesses aren't ready for that kind of quarter-by-quarter grinding scrutiny. It is going to be bad when their lockup periods end.
Bubble has to burst at some point, so IPO now and at least get some exit liquidity. If you wait too long you’ll never be able to exit at all.
I think that’s the thought process and why they’re in such a rush. In fact all three are in a sort of race, you probably don’t want to be the last one to IPO
The bubble burst when they bought all the ram wafers to stifle global and local competition. They can't compete and the real costs are insane. Scale won't solve it even if they pave the continent.
> It is increasingly look like OpenAI, Anthropic, and SpaceX (xAI) are going to burst their own AI bubble by going public.
They don't really have a choice - there is a finite amount of money in the open market, and the first one to IPO is going to get the lion's share of that money.
They need to financially engineer a good looking quarter beforehand.
Perhaps Larry Ellison can cut them a nice quid pro quo for a few months to make OpenAI look profitable (like the SpaceX/Anthropic deal), although that's probably unlikely given the debt Oracle is taking on to build it's infra.
I understand the scepticism around Google's deal with SpaceX, given the former holds a stake in the latter. But Anthropic buying SpaceX's compute doesn't have any related-party smell to it. That genuinely looks like SpaceX having cornered some valuable compute.
I'm actually talking about both. WSJ publishes Anthropic artificial profitability. Days later the reason for the profitability appears in SpaceX S-1; it's compute costs were artificially suppressed. Both are going public. It's a quid pro quo.
This is a reasonable accusation! It doesn't make a lot of sense–the Journal article is worth a hell of lot more than SpaceX referencing Anthropic's profitability. And we have zero evidence for it–one could raise this accusation against any compute partner Anthropic were to buy from.
Reasonable. The influencers who just learned the term circular financing are mostly idiots. The ones pointing out the conflict of interest with Google are technically correct, but the conspiracy takes so many moving parts to yield such little gain that it would have to be particularly stupid in vision yet competent in execution to pull off.
But asking if there is a quid pro quo between Anthropic and SpaceX? Like, there could be. We have no evidence of it. The S-1 mention doesn't make any sense. But they're both going public and if I were a journalist I'd look into it.
The base case, that there is commercial value to xAI's datacenters that folks in the frontier-model space are competing to get access to, does seem to be one folks here are actively rejecting.
> That's nice way to say "invested in AI that turned out to be flop nobody wants to pay for so they are selling spare capacity"
Both takes are true. xAI invested in capacity that was supposed to yield frontier-model-maker margins. Grok failed to generate enough interest. So now they're selling it.
That's absolutely a good business, in a way that's more certain than the frontier-model one. But it's also lower margin, which doesn't support the sort of valuation SpaceX is going for.
What I don't understand is how it's even a good low-margin business. Maybe I'm missing something but:
Data centers (before recently) are low margin businesses because all the inputs are commodities: you buy power (joules), power (PDU), cooling hardware, physical racks, etc.. from the same vendors as everyone else. Worse, your biggest potential clients have the scale to just build it on their own and cut you out because of their scale and because you don't bring anything unique (outside of maybe physical proximity to an interesting market)
xAI has all the same commodity inputs plus another huge upfront capital expense (GPU/storage/networking), and their customer base is exclusively the well-funded companies who would normally just build it on their own.
I assume that they can't get better deals from nvidia than (e.g.) Microsoft because of their scale, so the unit cost of their inputs is the same or worse than their clients.
So the whole game is hoping that they hope to charge more now because people can't build fast enough and try to recoup their upfront costs before either a) other capacity comes online and b) the installed hardware becomes obsolete.
I'm being earnest -- it seems like they're trading one tiny margin service (datacenter) for another tiny margin service, with the added difficulty that there's an additional 10 figures of upfront expenditures and their viability depends solely on paying everything off before the price floor drops. Maybe it's staunching the bleeding, but it seems like not a great move
It's like buying a ticket for a concert, realizing you can't go and that you can resell it for more than what you paid.
You're right that long term it should stabilize into a low margin business.
Elon is also much less risk averse than others, which helps to build stuff fast, possibly cheaper, pushing legality to the limit. Colossus was definitely built much faster than anything else. I think building datacenters suits him better than a pure software play, where "move fast break things" is already the norm.
The concert analogy makes sense (I analogized it as "staunching the bleeding").
WRT SpaceX building data centers: I think there's a natural tension between a "low margin business" and "being risk adverse". SpaceX (the rocket business) did well because it was high risk and high reward. Building a 10b datacenter to hope to get a slice of a low-margin industry is high risk and low reward and just seems fundamentally like a losing strategy.
AI compute hardware is not a commodity. And in a shortage, commodities can command high margins.
xAI has lots of NVIDIA GPUs and HBM. It also has permits and power hook-ups, both things that are getting harder to come by day by day in the U.S. Natural gas is a commodity. Doesn't make having lots of right now bad business.
> the whole game is hoping that they hope to charge more now because people can't build fast enough and try to recoup their upfront costs before either a) other capacity comes online and b) the installed hardware becomes obsolete
Correct. But charging people now generates incumbency advantages that make beating (a) and (b) easier. (From what I can tell, (b) isn't an existential issue, at least for xAI, because they've basically already recouped their investment with commited contracts they'd have to fuck up on to lose.)
> AI compute hardware is not a commodity. And in a shortage, commodities can command high margins.
I don't see the distinction you're drawing about "commodity", but I'm happy to be wrong on that. My point was that spaceX's ai division is buying all their inputs from external vendors and can't meaningfully differentiate themselves from person Y who buys all the same hardware except for the fact they bought them first. Which...
> Correct. But charging people now generates incumbency advantages
I don't see now this is an "incumbency advantage". There's nothing that sticks their clients to stay there and sign up for the next data center.
In the west, there's no actual competitor to NVIDIA hardware. Yes, people make other chips, but nothing is a serious drop-in replacement for the nv stack. Between the networking and software, they're truly a different "thing" of accelerator, and I don't consider them fungible at all. The US government tried to build 3 supercomputers with each of nvidia/amd/intel accelerators and you can see how it went
Well, in a largely token-based AI market it doesn't matter what hardware you use to generate those tokens - Google use TPUs, Amazon/Anthropic use Trainium, Musk is apparently contracting with Samsung to have his own chips built...
I expect that Google are renting SpaceX NVIDIA GPUs so they can resell to corporate GCP customers at higher rates, but if the AI growth story remains intact then I would expect the GPU-agnostic token demand to be much higher than the NVIDIA-specific rental demand.
You're not wrong in the long term, either in general or for SpaceX.
In the long term, hopefully the market stabilizes, new entrants can challenge Nvidia etc. But of course maybe not!
However for SpaceX, this is a dead end move. They made a good decision on buying this compute when they did but they failed to use it to create a compelling model.
So they're selling access to recoup some of their investment (maybe a profit?). But what's the plan as these chips age out over the next three to five years? Become a compute company? They claim they want to... in space!
Regardless, they bought some valuable chips, failed to use them, but can now sell access and recoup over the next few years before they become outdated.
I wonder if they do have non-commodity AI capabilities, just, ones that don’t translate into a world-class frontier model.
Like they might have hired really good AI infra folks, gotten really good uptimes on their nodes, gotten folks who really know how to configure Infiniband (or whatever). But then, didn’t find the folks who knew what to run on that infrastructure. Or maybe Grok just had too much political drama around it.
Maybe they have something else im the books, I truly have no idea. But once you get down from the top rung of full-bandwidth cross section networking at the 100k node networking scale "AI" infra, theres no shortage of people who can do that. Most importantly, labor isn't the big chunk of the outlay. Even if they have 50 engineers clearing $1m/yr, that's pocket change for everything else
EDIT: said 50 engineers at $50m/yr originally and meant 50 @ $1m/yr
Datacenter is an ok business, but as you say it shouldn't be getting the same growth multiple (P/E) as a high margin rapidly growing software business.
There is also a question of how sustainable this datacenter rental demand is. It would seem unexpected if Anthropic and Google continue renting from SpaceX for more than a few years, and both contracts can be cancelled with 90 days notice.
I think the reference was to Elon giving Dario a two-month discount on compute as part of the deal and Dario immediately announcing a profitable quarter based entirely on that discount.
When Anthropic spends on xAI, it benefits Google. When google spends on xAI, it benefits Google. When xAI spends on Google, believe it or not, that benefits Google.
This is how a Ponzi -style circular financing scheme typically works.
> When Anthropic spends on xAI, it benefits Google
Unless Google is directing these transactions, this is not a novel issue. (We see a similar effect with mutual funds owning most companies [1]. It's a weak effect.)
> This is how a Ponzi -style circular financing scheme typically works
No. It's potential conflicts of interest. It's not circular financing. Circular financing follows the cash. When NVIDIA invests in OpenAI so OpenAI can buy NVIDIA chips, that is circular financing.
I think it depends on how you view the payout google will get when these companies IPO and give Google exist liquidity and a nicer looking balance sheet, if needed, either or.
> it depends on how you view the payout google will get when these companies IPO and give Google exist liquidity and a nicer looking balance sheet
Google has a fantastic balance sheet with or without these investments. None of the recent deals have uniquely enabled an IPO. So they'd be playing to increase their stakes' value by a few points ahead of a dump, a dump that would almost certainly wipe out much more than they'd stand to gain by trying to make someone else a dollar so they get nickels and dimes out of it.
If you were to treat all the hyperscalars as one company with one 10-K then Anthropic buying compute from SpaceX/xAI is an internal bookkeeping transfer between two departments. It isn't the same as top-line revenue into the AI companies. It is still mostly just financing money that Anthropic raised being transferred to SpaceX.
> If you were to treat all the hyperscalars as one company with one 10-K then Anthropic buying compute from SpaceX/xAI is an internal bookkeeping transfer between two departments
This is literally true for any revenue. Treat the buyer and seller as a single company and their transaction is internal.
Because it is hiding the fact that there's very little external revenue coming into the AI sector compared to the costs. AI companies doing business with each other isn't net revenue into the sector. Treating the whole sector as a single entity isn't arbitrary.
> it is hiding the fact that there's very little external revenue coming into the AI sector compared to the costs
There is a lot of revenue dumping into this sector. If there weren’t, you’d have a point about manufactured numbers. But I don’t think anyone seriously doubts Anthropic and Google are hauling in serious dough.
The question, as you point out, is how much they are keeping. But xAI selling compute doesn’t really hide any of that. If anything, given the prices Musk is getting, it adds to the cost line. (And xAI isn’t masking compute revenue as Grok’s.)
Hyperscalar capital spending for 2026 is going to be in the close neighborhood of $700B, which is over 2% of US GDP. That is about 3x the GDP spend of peak Apollo program in the 1960s, and about the same as the telecom/fiber buildout of the late 90s and the railroad buildout of the 19th century (both followed by a collapse). And there just isn't that much revenue coming into the system, and there aren't the productivity gains coming out of it. When 95% of corporate AI initiatives are still failing, the value proposition isn't there. And if you try to look at something like Microsoft's reported $37B in AI revenue a lot of that is really internal spend from leasing compute to OpenAI, which it partially owns. The real revenue coming into the AI industry is likely well under $100B this year, and the productivity gains to end consumers is likely much less. So if you think a few $10B/yr here or there is "serious dough", it just isn't enough to fill the gap. And OpenAI should burn through $14B this year, up by a factor of 3x over last year. Anthropic has a projected revenue for 2026 of $26B and is running around cash flow neutral, but that doesn't approach the $700B spending gap. And that is with accounting that depreciates GPUs on 5-6 year schedule instead of the more realistic 2-3 year schedule--so Anthropic may kick the can down the road a bit, but in 2-3 years they'll still be depreciating GPUs that they're throwing away and having to replace (of course this may be WHY Anthropic is leasing compute from xAI since then that accounting hit falls on xAI instead of Anthropic).
In 10 years, we probably will have $700B/yr in productivity gains and revenue from LLMs, but we're not going to be able to sustain $700B/yr in capital spending until we get there. And the problem is much worse than the fiber buildout of the late 90s. Fiber built out in 1998 was still usable 10 years later. The GPUs that are being built out today are going to be obsolete trash in 3 years.
Anthropic basically did that by getting two months of free compute from SpaceX. As I recall, this is how they were able to claim that they were profitable. But in reality, they are only profitable for those two months.
that's not the issue, Elon is just a petulant child that is losing the ai game ever since he left OAI. Elon wanted full control, and that dispute over control is the central issue.
Elon is 100% a for profit person, it's just a 10 year rivalry between Sam and Elon.
SpaceX IPO is slated to be $75-80bn — the market has size for that. We also have seen robust options and finance markets for AAPL and NVDA over the last years that make the broader ecosystem not overly worrying in my armchair opinion.
I’m not clear how much crossover demand there is between SX and Anthropic/oAI — that seems like the more interesting question. I’m guessing if we had Anthropic/oAI launching at the same time we’d see some pretty interesting capital dynamics.
None of these companies are worth the numbers being tossed around, but SpaceX especially so.
Its Schrodinger's IPO: the space business is so successful how could you question the company's worth? You can't afford to miss out on the next biggest AI business to invest in!
What's going to happen is the music will stop and it's just a question of who cashed in when it does. OpenAI are easily the most vulnerable here.
> if we had Anthropic/oAI launching at the same time
Don't we have exactly that? There are S-1 announcements for SpaceX, Anthropic, and OpenAI. Google is selling to raise money for infra (IIRC). There's an absurd amount of money flowing in at present (prospectively at least).
The reality is that the large banks running these IPOs will know, to an extreme level of granularity, how much demand for the IPO there is at the chosen price point, and will advise accordingly.
None of the companies needs an IPO right now, with the possible exception of oAI — I haven’t looked at their financials recently. But SX is cashflow positive as of today, and Anthropic is able to become so without giving up much on their R&D program. So for those two, it’s a matter of timing.
Like a video game release schedule or a film release, SX has carved out a window and is going first, and regardless of messaging, all the teams are going to be watching it VERY VERY carefully. If it goes well, I’d expect Anthropic to jump next.
If that goes well, oAI would likely go right after. If it goes mid, oAI may wait to improve their financial story or fundraise private at worse valuations for a while, or, or, or.
Agreed that the dream for the next guys down the road is to pick up some recycled capital gains from sx and of course some new capital. If SX is a flop, then these IPO dreams will slow down for a minute.
I prefer this tone to fake marketing speak. If they’d done a proper job here they’d be accused of having GPT write it. At least this is organic laziness!
Their tone is just as fake as typical fake marketing speak - they are trying to come off as nonchalant. I bet this announcement was wordsmithed to hell.
Apple has completely dropped the ball on every single detail of AI rollout for the last 5 years - why do you think they will suddenly stop now? My prior is that the new siri stuff is just as vaporware as the previous "apple intelligence" rollout
Jury is out on that one -- will have to see what happens in the next couple of years. I don't think you can say better off with full confidence right now. Very possible you could say that in the future..
> will have to see what happens in the next couple of years. I don't think you can say better off with full confidence right now
We can't say for confidence they'll find a niche in the AI world. But we can say they probably sat out some value-destroying capital investment. Like, I don't think Apple is going to wind up strategically worse off than Meta. But it won't have blown a metaverse on this.
Most everyone outside of a core believer knew metaverse was a bad investment and total value destruction.
Im not sure that Apple's strategy will pay out -- they may avoid the heavy capex lift but if that strategy is successful they ill have missed the strategic upside. Thats the part the jury is out on.
They've taken a more deliberate approach which might be the winning one ... tbd. We should re-check this in 3-5 years to re-assess.
That would be a valid explanation if they hadn't totally oversold and underdelivered on "apple intelligence". In reality, this explanation is just cope
Ehhh if you squint, everything they announced today was announced in 2024.
Doesn’t seem like they changed their ideas much (I’m sure some iteration occurred but still) and the issue was the tech didn’t took 2 years to become workable
I'm not saying they played 5D chess. Maybe they got lucky. But they're coming out of this infrastructure boom with the second-highes P/E ratio in the Magnificent 7 [1], dividend intact, and tens of billions of cash on balance sheet unburned (and their stock and balance sheet unincumbered by new debt or stock sales).
But it seems likely that in the coming years, people will expect Apple's products to include the latest cutting edge AI (I don't mean useless AI shoved into every possible thing, I mean something closer to a useful Siri). Giving everyone else a 10+ year head start on you is not a good position to be in.
If you choose to outsource your AI to OpenAI/Anthropic/whomever, now you're beholden to another (risky), and for a critical feature of your ecosystem that your customers have grown accustomed to and to expect. And it's not just that they might jack up prices on you, but they can just... get acquired, or go bankrupt, or fall behind on model development...
Why would Apple even want to be a big player? They aren't major players in search or advertising, so it seems less likely to disrupt them if they sit it out. There are reasons why shareholders might want companies to stay out radically different Technologies unless they are at risk of losing their business model.
It's not an existential risk to them unless they make it one by going all in.
Apple is pretty famous for dropping the ball for years on various things, and then coming out with a "slick version" so good that everyone forgets how late they were to the party.
The most famous would be the iPod, but there are others.
What was that Warren Buffett's quote about everyone trying to leave the party seconds before midnight in a room where there are no clocks? I think it was at peak of the dot com bubble
The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.
Maybe lay down some concrete numbers and timelines, hold yourself accountable, otherwise you risk confirmation bias with your predictions like millions before you.
"implode" is not testable. A good prediction is specific, time bound, measurable, etc. Otherwise you can flatter yourself however you like with confirmation bias. This is basic stuff.
OpenAI CEO Sam Altman pitched the idea of turning over shares in his company to Trump in early 2025 and discussed the matter again with senior officials in recent weeks
From what I understand, SpaceX has been engineered such that all kinds of passive investment funds (pension funds, ETFs) will buy into it at their first rebalancing, and as such it should get a decent amount of volume after open.
Having said that, it’s the company I have least faith in due to the recent acquisition of xAI / Twitter.
> SpaceX has been engineered such that all kinds of passive investment funds (pension funds, ETFs) will buy into it
Pension funds are rarely passively run. They tend to be sophisticated investors. For example, several pension funds are already investors in SpaceX.
NASDAQ 100 will include SpaceX after a couple weeks. But it's a tech fund. It's strange to complain about buying the largest tech company in a tech fund. Similarly, S&P total market and Russell total market will buy early. But again, those are total-market funds. If you want to actively manage your portfolio, don't buy total-market funds.
> the rule changes which would allow SpaceX to be auto bought by those funds has been blocked
Nothing was blocked. S&P 500 never adopted them. Influencers misunderstood what a consultation document is and presented a question as a fait accompli.
NASDAQ 100 changed its rules, as did S&P and Russell's total-market funds. But for NASDAQ 100 I'm going to go ahead and say this was a brilliant market move, since nobody ever talked about that index before this.
> But for NASDAQ 100 I'm going to go ahead and say this was a brilliant market move, since nobody ever talked about that index before this.
Most people know the NASDAQ100 as its ticker QQQ. Also known as the high risk - high reward investment.
After reading how Nasdaq changed the rules in order to court all the mega IPOs to list with them, I will never ever consider a Nasdaq fund again. The rule change about the available float is especially shocking.
> After reading how Nasdaq changed the rules in order to court all the mega IPOs to list with them, I will never ever consider a Nasdaq fund again
We have zero evidence for that chain of causation. And we have zero evidence of significant outflows for NASDAQ 100 since this rule change. (There is early evidence of inflows, but I suspect that's just because nobody talked about the NASDAQ 100 before and this turned out to be a brilliant marketing move.)
I agree with you that this might be a good marketing move overall.
And I don't really care about the chain of causation. The change of rules for the available float and the fact those funds will buy based on the market cap and not the float makes it a completely irresponsible investment at this point.
> fact those funds will buy based on the market cap and not the float makes it a completely irresponsible investment at this point
It's an index. The conventional way to market weight is to use market cap. The float rules are mostly for technical reasons around transaction costs for very large indices. There is a theoretical argument for float weighting, inasmuch as if you bought the stock market you'd be buying the float, not all of all of the companies. But I haven't seen research to say one way is definitively better than the other.
I agree they should have probably paired the float-rule change with a gradual onramp. But again, NASDAQ 100 isn't big enough to really need to care about this. (Half a trillion is obviously a lot of money. But not relative to the equity markets, and not when spread across a hundred of the largest names.)
> It's an index. The conventional way to market weight is to use market cap. The float rules are mostly for technical reasons around transaction costs for very large indices.
No the float rule is to avoid having to buy so much stock compared to the available stock that it would create irrational prices. This is probably going to happen with those IPOs. It's pure offer and demand!
To put it differently: Imagine a company is valued at 100B$ but only released 1% of its stock for sale (1B$). The NASDAQ100 includes it in its index based on the market cap only and because of that now needs to own about 100m$ of that stock. You are now trying to buy 100m$ out of only 1B$ available stocks. Prices are going to skyrocket artificially.
If it was weighted on the float, it would only have been required to buy 1m$, which would make way more sense.
And an index can be whatever the company behind it wants it to be. The SP500 can decide absolutely whatever they want and every index fund will just have to agree and comply and buy based on those decisions.
But as everything if they do something stupid they lose credibility and customers. This is one of those instances in which they changed the rules in a way that made no clear sense and they will be remembered for that.
> No the float rule is to avoid having to buy so much stock compared to the available stock that it would create irrational prices
Correct.
> this is probably going to happen with those IPOs
Not due to any index-following investor.
> SP500 can decide absolutely whatever they want
Yup, S&P 500 is a committee-based index.
> one of those instances in which they changed the rules in a way that made no clear sense and they will be remembered for that
S&P never changed the S&P 500's rules.
NASDAQ 100 did. But from what I can tell, that was a brilliant piece of marketing. Nobody talked about them before. (QQQQ doesn't appear to have gained or lost net assets in that time, which isn't unexpected, it's a volatile fund.)
Yes. For their total-market fund. That makes sense. (CRSP is probably the most-significant index to make the change. But even then, it won't be a significant source of demand. Total market means lots of components.)
Once the SEC declares a registration statement "effective," the company is subject to the Exchange Act's reporting requirements. Theoretically one can do this and not list one's shares. That's dumb, so nobody does it.
In practice, we'll get a couple weeks to possibly days ahead of the listing. That process is partly governed by the SEC accepting the company's S-1. It's mostly down to negotiations between the company, its underwriters and IPO investors.
Unless the picture and trajectory changes dramatically I don’t see OpenAI managing to pull off a successful IPO. If they do manage to go public it will likely only be at a fraction of what they’re worth now, with existing investors rushing for the exits to avoid completely losing their shirts.
The revenue trajectory is now anemic, no clear sign of stopping the cash burn anytime soon, and all the liability associated with all things Sam Altman at this point. Frankly it’s a mess.
In Warren Buffet’s Cinderella party scenario it’s 11:59 at the party and someone just found an accurate clock.
Growing worry I have are the dozens of newly minted corporate elites that will continue to wreck havoc on the tech industry mandating their golden paths while America still lacks medicare for all, college for all, and universal childcare.
If you think Sam Altman is bad for the industry, imagine what 200 of him will be like!
i think i was trying to make the point that the type of person to make a shitload of money tends to be the type of person to hold onto a shitload of money
We had universal childcare until we converted single-income families into dual-income families in order to make the boomers who they bought houses from rich.
Women want their own income stream because of the innumerable ways men get into trouble. If her man gets into trouble, she wants a plan B, for her and her children. I don't think anyone was thinking about how that would prop up the housing market 30 years later.
That's a nice story, but the truth is when women first entered the workforce in meaningful numbers, it was primarily unmarried women. Society strongly expected women to leave the labor force once married, and businesses actively banned married women from working
No one has full agency over their life. The men who generally work harder, longer, and for more of their lives, that are shorter as a result, don't have fully agency. Having a boss isn't agency.
Having to work is less agency than not having to work. Being able to choose to work, and choose a nice lifestyle career while your husband has to work a hard job to afford the lifestyle is far more agency than men have.
> Having to work is less agency than not having to work.
Both are working. One is getting money that they get to decide what to do with, the other (the wife) doesn't get paid but gets room and board but very little autonomy - for example, they were expected to deliver sexual gratification on demand, mood or no.
It's honestly surprising to me how people seem to still not be aware of the amount of labor women at home do, especially in previous eras. Read any old book, you'll find wives cooking every single meal solo for every single person in the household, managing every aspect of the kids' lives, functioning as a secretary for the husband, cleaning the entire house, often doing the yardwork, managing the social calendar, all while keeping up appearances so they're an attractive wife. They worked way more hours than their husbands.
One of my least favorite things about AI is that every time you suggest you don’t want anything to do with it, there’s a horde of rapist-brained twits like you waiting in the wings to cry about how inevitable it is. Shut up and go away.
They expect someone to leak that they had submitted it, so they’re just saying it themselves. I don’t think they mean that the actual contents (like financial projections and all that) will be leaked.
The timing of all of these IPOs has a smell similar to both the US Mortgage company trend shortly before interest rates spiked and all those companies started shedding jobs progressively since, and/or the DotCom IPO boom.
While I agree on the smell I think that the situations are really different. I am not an economist but I think that other than the situation of the huge amount of money in play we are in a really different case. The general user (and I have noticed it especially with today's WWDC) basically doesn't get any benefit from AI (neither LLMs, image generation or photo editing). They were promised living like in Wall-e in 5 years and they are basically still living the same life. White collar jobs slightly benefited from the LLMs and same with programmers (while many say that they can get huge leverage the public results of what software companies produce didn't get the same benefit).
Everyone knows the market will crash, nobody knows how much.
My father in law owns a small manufacturing business and is not technical at all. His computer skills stop with some CAD and basic excel. He pays for ChatGPT as does his wife and her kids. The internet and dot com bubble didn't have millions and millions of non technical users paying cash for a product. Almost every coffee shop I go to has people talking about AI and ChatGPT even in areas with no tech populations.
I still think it could crash, but it's got real users and a mind share like nothing I've ever seen.
The internet and dot com bubble didn't have millions and millions of non technical users paying cash for a product
The dot com bubble was basically based on regular people buying computers and internet service, and then using them to buy products they used to buy in stores.
This seems to ignore the fact that millions of non-technical people did pay cash for a product: AOL. And in fact the AOL buyout of Time Warner coincided almost exactly with burst of the dot com boom.
These companies are never, ever going to make their money back off of retail customers. It's not even clear if those customers would be profitable at all, let alone enough to justify hundreds of billions in capital expenditures.
The question in my mind is persistence. Everyone goes through the honeymoon phase. I'm absolutely loathing the idea that phones are arriving soon with chatbot junk built deeply into it, enough that the thought is more what if I could maybe just stop using my phone so much. I threw myself at the Llama WhatsApp integration when I first got it, now the idea of having Llama in WhatsApp just feels so dumb.
I was a huge early fan of ChatGPT voice too, but I don't think I've used voice mode anywhere in at least 6 months. The question is what is the right level people are generally going to settle on for the use of these tools in the long term. 80% of my usage isn't much more than a better Google, I could live without it and I could live with cheaper options. I'm not sure the consumer money is going to be there en masse as hoped
Of course it still leaves a huge amount of business cases open, but I suppose the same principle applies. How soon will people tire of talking to robo-voice when they call their bank? etc.
I definitely believe in the broad existence of people like your father in law. What I’m not sure about is how many of them would keep paying if their subscriptions were priced profitably.
My parents love using ChatGPT, asking it all kinds of questions. My mom discovered Claude and helps her immensely with her job - where she would have to take it home and work a few hours to be able to finish the tasks on her computer, as her company that still uses Office 98, now Claude does it in 5 minutes.
They fixed so many random issues using it, it is insane. My dad had a bike issue which would otherwise be solved by either trying to find obscure manuals from 20 years ago on random forums with me translating it from english to our language, or by taking it to a mechanic which could take months. This way, he just snapped a few photos, said what the problem is, and in a few minutes he had the fix.
I've built software that uses LLM's for a specific usecase - besides general adoption, professionals in the field contacted me and thanked me for making their lives easier, as the tasks would often take a lot of manual work. These people are earning way more from using my software, than I am from their subscriptions, which is still about 20x more than my API costs are.
While most non-dev people are behind the curve, the impact it has on their lives is becoming bigger and bigger by the day.
Maybe I downplayed it too much but I really think this is still "in distribution" (we always have to remember that we are tech savy people and we influence the people that surround us). I see the value, but in my opinion it's not a generational opportunity, but a great acceleration. We are treating it like generational opportunity. That's why I say "everyone know there will be a crash, but noone knows how big that will be". The AI industry is not (in my opinion obviously) worth $ 391B [1] of added value.
It is still "in distribution", that is why when its "distributed" properly, it will surely add much, much more value to the economy.
But it is a generational opportunity - we can remove a lot of barriers that come with knowledge, lack of it, access to it and more. Someone can easily get pretty on point medical advice without access to doctors. Get specific engineering advice without engaging with those engineers. We can apply common sense or specific knowledge on scale - in a world where about 50% of people have IQ under 100 and access to knowledge is gated behind lines and payments, this has a huge chance ot improve their lives.
And there is the whole shadow inference economy - just for example, a few corporations I have worked with in insurance and telecommunications have been slowly introducing it inside their workflows and their data tooling, being able to clean data, tag it, analyse it in a way that before would probably cost them billons in human costs.
One of them has a database going back to the 80's, with data being formatted and reformatted in all shapes and sizes, coming back all the way from paper records for some of their oldest clients. Cleaning this up was unimaginable before as a "something we can do in a day" project, but was more of a "possible with insane costs". This lead to all further activity being shaped by decisions someone made 40+ years ago, details being lost, data being thrown away or saved in random notes.
And there's millions of companies like that all around the world, which can now do "impossible" and become much more efficient and productive for a much cheaper price and in way less time than ever.
Sorry, my bad, might be 97 running on windows 98 - but yes, this is a giant corporation serving hundreds of corporate customers and a few hundred thousand private ones, using nearly 30 years old software because the management does not see reasons to upgrade and spend the extra cost associated with it. New machines and Windows XP are only used by upper management.
Worst part?
Their whole software stack is running on some version of Visual Basic, written by a dude that did not trust "others code" so he wrote everything from scratch, and retired about 5 years ago.
Nobody knows how any of it works, or has any clue. The company will continue to run it and pay him for consultations as long as he is able to do it.
There is ton of utility. I use it all the time to study, to look up what's happening in the world, to understand the context behind what others are saying, cooking recipes, and much more. Considering LLMs have access to tools for searching the internet they have a superset of the capabilities of Google and consumers got a lot of value from Google. In fact from putting ads on the search results Google has made billions of dollars from such consumers getting value from their service.
When you ask it to give you a digest of current events or as a study aid how are you ensuring that what your reading is a valid representation of the source material? Has it never given you false information?
Not OP but, anyway, AI output should be treated like any other source material.
I study from reputable sources every day and never cease to be amazed by how many errors or misconceptions they have. Peer-reviewed articles, books from renowned scholars, news from major publications… regardless of the source, false information and contradictions accumulate. I’d wager that AI, besides helping me uncover these issues in the literature, has had a lower error rate than most of the materials that I read on a daily basis.
> I think that the situations are really different
Keep in mind that people said this before both of those crashes.That's the problem with bubbles. It's impossible to say if this time really IS different.
The point he makes is that companies go public when they think they can get the maximum our of their shares on the retail market. Which make sense I guess.
But the fact that the 3 of them are hitting the public market at the same time means they all came to the conclusion that now is the perfect time to unload those shares. Probably because they know there is a high chance of a big crash coming after.
I will not touch those IPOs with a 10 feet long pole. But unfortunately a lot of people are about to get burned.
My prediction is that this is what will be remembered as the last bit of exuberance before everything starts to unravel.
Books will be written about how insiders will be profiting millions by unloading those shares to the greatest fools and middle class america.
> point he makes is that companies go public when they think they can get the maximum our of their shares on the retail market
I think this is what's going on right now. But there are a variety of reasons that can drive IPO timing. Need for cash and owners needing liquidity being chief among them.
I'd also say that post-Covid, retail has become a commanding section of the American equity markets in a way I don't think they've been in my lifetime. As a result, every IPO from now on will have to target retail.
Both OpenAI and Anthropic were able to raise astronomical amount of cash on the private markets just weeks ago. I don't think that's what's driving them.
I really think what is driving this is the need for insiders, employees, early investors to be able to sell their stock at scale before the music stops.
And You can only do that through a full IPO. All those companies had private secondary transaction but none of them were big enough to transfer the Trillions of $ required for the insiders to unload their bags.
> what is driving this is the need for insiders, employees, early investors to be able to sell their stock at scale before the music stops
How would you differentiate insiders needing to sell versus insiders needing to dump before a crash?
I remember when Uber and Airbnb and WeWork went public in quick succession. There were similar claims. WeWork never made it public. And Uber and Airbnb's IPO investors made of fantastically.
> How would you differentiate insiders needing to sell versus insiders needing to dump before a crash?
To answer this, just ask yourself how many of the insiders would have bought the stock at current IPO's price? Most insiders would probably never touch those stocks at this price. I know a couple people at OpenAI and Anthropic that are very clearly selling everything they can as soon as they can.
This is all a carefully orchestrated PR game that is relying on retail to be the ultimate fool.
I guess to some level every IPO is like that (A PR game to hype the company).
But never before had we 3 mega IPOs happening at almost the exact same time with so much money to unload on retails with dubious ways to force funds to gobble them.
Most IPOs end up negative after the first few quarters (at least compared to the SP500). When we are talking about a 20B$ company it matters less than 5T$ being suddenly fully unloaded on the public.
> And Uber and Airbnb's IPO investors made of fantastically.
Is it bad for insiders to want out? Is it bad for owners to sell when they think it is overpriced?
I think this is extremely common, if not necessary, part of a functioning market and price discovery. It happens with not just IPOs but also secondary offerings.
Some of this seems like dumb retail wanting to toughtlessly buy without consideration of risk.
> couple people at OpenAI and Anthropic that are very clearly selling everything they can as soon as they can
If you are serious about this for Anthropic please drop me a line. (Not OpenAI.)
> never before had we 3 mega IPOs happening at almost the exact same time
Uber (May 2019), Airbnb (December 2020) and WeWork (scheduled 2019, SPAC 2021) were pretty closely bunched. And they were big for their time. Keep in mind that the money supply has expanded since then.
> Most IPOs end up negative after the first few quarters
Renaissance's IPO index seeks to "capture the essence of IPO activity and performance of newly public companies" [1]. It does not replicate an actual IPO investor's returns.
For example, it adds new issues approximately quarterly and never earlier than 5 days from IPO. This is important since it misses the pop. Mean (median) first-day returns on IPOs are 20% (7%) [2]. The average 3-year buy-and-hold return for all IPO investors 1980 to 2025 was 19.1%. Less than broad-market indices (though that margin shrinks for $1bn+ sales IPOs). But certainly not negative.
(Uber and Airbnb reflect this trend. Up since IPO. But, as you observe, below the S&P 500's returns even before taking into account total returns.)
One of the stranger theories I have seen is that it is based on Astrology as there is a confluence of Uranus squaring the lunar nodes... whatever that means. There is a saying supposedly attributed to JP Morgan (but not likely) "Millionaires don't use astrology but Billionaires do."
One of the more rational ideas I have seen of any kind of divination is that it provides a means of passing judgement over to a near seemingly random system. If you are reading tea leaves, doing an 'I Ching' divination, biobliomancy etc. that essentially provides a coin flip to make you go 'yes' or 'no' to an opportunity.
Indeed, there are several anthropological works speculating that the purpose of divination is to break analysis paralysis or unconscious biases.
And if you are already sure of the correct solution, then you can just keep doing the divination over and over again until the gods give the answers that you want!
"We want to be ready to grift public money at a moment's notice, but there are still opportunities to grift private money right now, so we are holding off."
The cheap money for subsidizing tokens has begun to run out. Not all gone, yet, but it's getting harder to pretend the chatbots are cost-effective to run. Soon, they're going to need to tap a larger pool for money: Everyone's retirement accounts.
If SpaceX, OpenAI, and Anthropic get fast tracked to be on NASDAQ or S&P 500 then they are required to be included in index funds which will be automatically included in retirement accounts and that will give investors an exit.
> If SpaceX, OpenAI, and Anthropic get fast tracked to be on NASDAQ or S&P 500
S&P 500 said no. NASDAQ 100 is a tiny tech index. The retirement conspiracy could have been a thing, and its effect isn't zero, but oh my god was it overblown by the influencer crowd.
The notion that S&P's committee took online chatter into account is silly beyond explanation. If anything, S&P management would have put their fingers on the scale to include these new issues.
yes it will keep the grift going for a couple months due to the index artificial demand. Actually, SpaceX timed the unlocking of their shares to the timeline index funds will have to buy.
Guess who will hold the bag when it's all going downhill?
They wait until the market is about to reject the AI hype. They are trying to steal the retail money at the last second. That's why I feel this way. Also, I really REALLY dislike their censorship in the chats and coding. I cannot discuss anything, and they always hide the truth until I show the evidence and still reject.
Checks and balances concern constraints on government power. Whether OpenAI's structure complies with the law is a question of regulation, not checks and balances.
It's not a question of regulation, but a question of enforcing said regulation and a question of enforcing a lawful process which follows a breach of a regulation. Which is exactly a spirit of the phrase "checks and balances". It means that if one branch breaks law, then the other branch enforces a compliance with laws/regulations. Of even inside the same branch, if a temporary elected doofus in charge is breaking the law, then people even lower in hierarchy will enforce normal branch functioning. Which in practice was super easy to break, sabotage and blackmail, so neither checking nor balancing happened, everyone went corrupt or impotent simultaneously.
Every step taken by the nonprofit leadership has to be, (or at least seem to be at the time), net positive for the stated goal of the nonprofit. To be legal, the IPO needs to be a net gain for the nonprofit.
It can easily be that, if they believe that the capital it raises increases the long-term value of the company by a greater multiple than the proportion of the company that is lost from the nonprofit to outside investors.
The primary example of this is Novo Nordisk (the Ozempic company). Their largest shareholder is, through an intermediary, the Novo Nordisk Foundation, which is one of the largest charities in the world. Nordisk used to be a charity that owned 100% of it's own labs and facilities, but in 1989 they realized that they were just too small, and would get trampled by larger international players without greatly increasing their scope. So they made their subsidiary go public (through a complex merger, not an IPO), and now only own 28% of it, instead of 100%. But, in large part because of the capital that going public brought them, despite constantly distributing money for research and charity, that's 28% of a company that's more than 100x bigger that what they used to be. And they retained 77% voting control.
A few things, but they work very well for our industry.
The rule is that the nonprofit and disqualified persons (mostly board members), cant own businesses together, well they can but not more than 35% of it together, and a max of 20% can have voting capability
The consequences arent immediate, non profits have 3 years to correct this
Now in the tech industry, getting VCs involved is already the plan from day one and founders get diluted, so getting below 35% is either easy, or easy within 3 years
so they’re fine
there’s a lot of things they can all do to deal with the share consolidation
If the private subsidiary was doing semi-unrelated stuff to the goals of the non-profit, and using it to fund the non-profit, then your logic could make sense - for example if a cancer research charity owned a profitable business and funnelled the profits up to spend on research, great.
But in OpenAI's case, the claimed goals of the non-profit were essentially "do AI in a way that puts safety above profits". And whether or not one agrees with their previous approach to safety, or even whether safety needs to be cared about, it's undeniable that the for-profit business isn't acting as useful fundraising for the non-profit's goals, it's literally acting in the opposite direction.
> it's undeniable that the for-profit business isn't acting as useful fundraising for the non-profit's goals, it's literally acting in the opposite direction
It's generally not up to your or to me, it's up to the donors to the non-profit. If what you find to be undeniable is very much deniable to them, then that is their right.
The only question of public concern is whether OpenAI, Inc., a charity, meets the exemption requirements [1].
1) In order to fund research - this stuff costs 10s of billions of dollars - everyone, from Ilya, to Elon, to Sam - all agreed that they would require a profit-arm to raise money. Nobody was going to sponsor that 10s of billions of dollars to a non-profit.
2) The non profit is still there - and controls the commercial element.
If they truly wanted it to be in the benefit of the not-for-profit and safe from interference, the ownership by the foundation would be much closer to or just over 50%.... just thinking out loud...
The magic 50% ownership isn't relevant for that purpose. There are special provisions which means that the Foundation effectively exerts full control over the company because it appoints the entire board.
The corporation selling shares is just primarily owned by the non profit
The corporation selling shares is subject to normal corporate tax regime
The real answer to your question is that non profits can own shares, and there is no legal difference between passive investment of other publicly traded companies and highly consolidated shares of a private company. In the US it is seen as merely happenstance that we have such a liquid market where the shares themselves can rapidly change in value and create profits, but there is nothing controversial about that.
“Under the JOBS Act, it has been possible since April 2012 for ‘emerging growth companies’ to file a Form S-1 on a confidential basis, only making the contents public 21 days prior to the road show for the IPO” [1]. Since 2017 and 2025 it’s been available to basically all companies [2].
Withdrawing an IPO looks bad. Confidential filing lets issuers start and have the option to abort the process without taking reputational damage. (The specifics of OpenAI’s filing, and any back and forth with the SEC, remains confidential.)
Once it no longer is being drafted—and agreed upon by all parties to meet the needed regulatory standards—it will become final and be publicly published.
The SEC needs to review it before approving a company to go public at all. It’s targeted at investors but they need to clear it, ask questions, demand changes, etc.
I find the irony delicious that this S1 will be fed into ChatGPT so often looking for flaws and edge cases that the LLM will develop sentience just to tell people to stop…
Companies IPOing should be forced to put up their estimated market cap as collateral in cash. Oh what is that? You don't have $1 trillion in cash to put up? Cool, you're not a $1 trillion dollar company then.
This makes no sense. Market cap and cash reserves are two different stats for a reason. Why would they need to be the same? Just to make things simpler for people who don't actually know what market cap means? (Which, granted, is the vast majority of people.)
This makes no sense: the whole point is to raise capital. The valuation is never just the current value of the assets; it’s based on the expected future cash flows. A good example is in biotech, some researcher developed a treatment and wants to develop a product. They have valuable IP but zero money. So they IPO to raise capital to bring the treatment to market. The investors expect that in the future, they will get dividends or a buyout.
If a company that wanted to IPO had 1 trillion dollars, their market cap would have to be larger than their cash holding. Their cash on hand is considered or at least should be considered in any normal valuation of the company. Because shares are ownership of the company.
So a simple valuation would be something like
Current Cash + Assets + Expected Future cash - (Expenses + Risk)
Where would a company ever get their market cap in cash? If they had that, wouldn’t they by definition have a higher market cap, since the value of the company is cash + the rest of the company?
> since the value of the company is cash + the rest of the company?
Failing companies sometimes trade below cash value. OP's basically creating a rule by which only failing companies are allowed to go public. (Or those who have paid a king's ransom to a megabank.)
Last year Chegg was trading below net cash (meaning their market cap was smaller than cash in the bank minus debt). Might still be, I haven't checked in a while. There were maybe a hundred on the Tokyo stock exchange trading below net cash.
In the last week Alphabet has positioned itself to go on the offense, going after exccess liquidity and excess compute.
I fear that OpenAi and Anthropic would not be able to compete against an adveserial Alphabet which owns it's own models, hardware, large corpus of data, talent and network effects. My prediction is that OpenAI and Anthropic will eventually be crushed by Alphabet as they run out of investment and compute, leaving Alphabet to have a monopoly on AI, at least in the west.
This is why I think OpenAI and Anthropic should really be one company, if they join forces and pool together investments and compute they'll stand a chance.
> This is why I think OpenAI and Anthropic should really be one company
I think the more companies there are, the better. Having 3 top labs competing, with 2 more trailing is better for consumers than having a monopoly/duopoly in goog or goog vs. the world. There'll be pressure on innovation, cost, availability and so on.
I agree, generally competition is a good thing, but in this case I think we're having a divide and conquer scenario that works in Google's advantage.
We're seeing that compute and investment liquidity is effectively a zero-sum game and by having Google go after the excess compute and liquidity (which they don't really need) will most likely weaken the competitors to the point where they aren't competitive. But if OpenAI and Anthropic merge they can pool resources and be more competitive.
This is a very persuasive argument that Google should have been broken up years ago.
Google selling ads on their search to people using their browser and phone was way more anti-trustful than anything Microsoft ever did, tbh.
Especially when you consider that they bribe Apple and Firefox to funnel users to them, too.
To be fair the fact that Google overcame not being the default browser is incredibly impressive. It's easy to forget now just how dark the days of IE6 were.
In some alternative timeline, the Anthropic team would still be at OpenAI...but alas, not this timeline.
2 top labs...
Huh? I don't think there's much doubt out there that there are 3 top labs that are mostly at the same level - oAI, Anthropic & Goog (not necessarily in this order, depending on the month, but they've been trading SotA status on various verticals for a while now).
There's also 2-3 other trailing labs in MS, xAI and Meta. All of them are blundering behind, but at one point or the other they've been up there for some verticals as well.
I think this is good. Having one clear winner would be worse than this SotA of the week rotating thing they've got going on. For us as consumers anyway.
> Huh? I don't think there's much doubt ...
I am doubting. I will be very surprised if Google ends up top or second place (again?) at any point in the next few years.
> I think this is good. Having one clear winner would be worse than this ...
I agree that it would be better to have 3+ top labs as well.
> I fear that OpenAi and Anthropic would not be able to compete against an adveserial Alphabet which owns it's own models, hardware, large corpus of data, talent and network effects.
Many people thought Google+ would stomp all over Facebook, and that GCP would kill Azure and AWS for most of the same reasons.
Has Google stomped on anyone since their Search squished hotbot and their email blew up hotmail?
My point is that Google’s enormous talent and resources often fails to translate into an ability to execute.
In fact, they probably see major success with new products less often than not.
not many people talk about mapquest anymore.
That's a fair argument.
I think the ideal, but politically infeasible outcome would be passing regulation to prevent hyperscalars from hosting their own models (or requiring wholesale leasing of infra), akin to other country’s telecom line-sharing regulations. Essentially convert machine intelligence to a regulated-utility industry rather than a competitive enterprise.
Consolidation is inevitable, so let’s lean in and ensure society, not shareholders, reap those benefits.
> My prediction is that OpenAI and Anthropic will eventually be crushed by Alphabet as they run out of investment and compute, leaving Alphabet to have a monopoly on AI, at least in the west.
It's the other way around (but the result would be the same): Alphabet has no need to make a 100x exit for the investors, and so can offer the service at cost + %markup, while Anthropic and OpenAI are VC funded, meaning that they need to show 10x - 100x exit for the investors.
IOW, there is no moat, Alphabet would have market-related pricing while VC-backed corps cannot offer market-related pricing.
While you're probably right, reading your comment from a consumer perspective it makes me think how much we've normalized bait & switch.
>It's the other way around (but the result would be the same): Alphabet has no need to make a 100x exit for the investors, and so can offer the service at cost + %markup, while Anthropic and OpenAI are VC funded, meaning that they need to show 10x - 100x exit for the investors.
If this was true, Alphabet wouldn't currently be charging more for a worse product than OpenAI and Anthropic.
>I fear that OpenAi and Anthropic would not be able to compete against an adveserial Alphabet which owns it's own models, hardware, large corpus of data, talent and network effects.
You might as well say the same about GCP vs AWS. At the end of the day, in spite of how much superior engineering prowess it has, Google still treats its customers like it views them as a steaming, fly-covered pile of crap. This reflects just as much in Gemini as in their other products; after their initial competitive Gemini 2.5 Pro release, they just kept dumbing it down and reducing quality of service while charging the the same amount, trying to pull a bait-and-switch, and with their latest Gemini Flash release they're charging customers even more for a worse product. No amount of engineering or hardware can overcome such a customer-hostile corporate culture.
Fun idea, but they may be better competition coming Competing with Google with different teams, models, and business strategies. Im sure google will also be happy selling the adds they put in their models for 1/3 of the revenue.
The scary thing for google is if the AI companies start moving into ad targeting and open sales portals.
> owns it's own models, hardware, large corpus of data, talent and network effects
How's that talent been working out for them the last few years?
As it happens in large orgs, with mixed results. The biggest irony being the whole Transformer architecture being actually conceived at Google, only to be implemented as a product/service by another company.
This is relatively common historically. Two examples I can recall to mind without doing any research are Xerox/Apple and IBM/Oracle. I can only imagine there must be millions of other instances.
No, this is why anti trust regulation should be created and/or enforced. It’s insane to me that the “free market” simps don’t understand that you cannot have a free market without regulation. If you get rid of these regulations, you end up with corporate socialism, which is the absolute worst form of economy.
I'm just anticipating the next version of “Community-based EBITDA" that sama rolls out in the latest attempt to convince everyone that spending >$1 to earn $1 is a good idea.
"AGI-enabled EBITDA"
Let me guess... wall street bets is going to pump $OPEN stock?
Yeah that started a week ago....
That would make my portfolio’s day!
showoff
It is increasingly look like OpenAI, Anthropic, and SpaceX (xAI) are going to burst their own AI bubble by going public. Their businesses aren't ready for that kind of quarter-by-quarter grinding scrutiny. It is going to be bad when their lockup periods end.
The SEC has a proposed rule in public comment period right now that will change quarterly reporting to semiannual reporting.
[1] https://www.sec.gov/newsroom/press-releases/2026-42-sec-prop...
[2] https://www.sec.gov/rules-regulations/2026/05/s7-2026-15
[3] https://www.sec.gov/files/rules/proposed/2026/33-11414.pdf
Bubble has to burst at some point, so IPO now and at least get some exit liquidity. If you wait too long you’ll never be able to exit at all.
I think that’s the thought process and why they’re in such a rush. In fact all three are in a sort of race, you probably don’t want to be the last one to IPO
The bubble burst when they bought all the ram wafers to stifle global and local competition. They can't compete and the real costs are insane. Scale won't solve it even if they pave the continent.
> It is increasingly look like OpenAI, Anthropic, and SpaceX (xAI) are going to burst their own AI bubble by going public.
They don't really have a choice - there is a finite amount of money in the open market, and the first one to IPO is going to get the lion's share of that money.
Reality left the building a long time ago. I think a lot of world models of how things "should" go are severely outdated.
Like the TSLA bubble has burst?
What a weird tone this is written in.
I think it is intended to sound like Sam Altman. Would look exactly like a tweet of his if it didn't have capitalized characters.
> We have not decided on timing yet; it may be a while because there are things we want to do that are likely easier as a private company.
Presumably those things were harder as a charity/non-profit.
They need to financially engineer a good looking quarter beforehand.
Perhaps Larry Ellison can cut them a nice quid pro quo for a few months to make OpenAI look profitable (like the SpaceX/Anthropic deal), although that's probably unlikely given the debt Oracle is taking on to build it's infra.
> like the SpaceX/Anthropic deal
I understand the scepticism around Google's deal with SpaceX, given the former holds a stake in the latter. But Anthropic buying SpaceX's compute doesn't have any related-party smell to it. That genuinely looks like SpaceX having cornered some valuable compute.
I'm actually talking about both. WSJ publishes Anthropic artificial profitability. Days later the reason for the profitability appears in SpaceX S-1; it's compute costs were artificially suppressed. Both are going public. It's a quid pro quo.
> It's a quid pro quo
This is a reasonable accusation! It doesn't make a lot of sense–the Journal article is worth a hell of lot more than SpaceX referencing Anthropic's profitability. And we have zero evidence for it–one could raise this accusation against any compute partner Anthropic were to buy from.
Reasonable or *un*reasonable?
> Reasonable or unreasonable?
Reasonable. The influencers who just learned the term circular financing are mostly idiots. The ones pointing out the conflict of interest with Google are technically correct, but the conspiracy takes so many moving parts to yield such little gain that it would have to be particularly stupid in vision yet competent in execution to pull off.
But asking if there is a quid pro quo between Anthropic and SpaceX? Like, there could be. We have no evidence of it. The S-1 mention doesn't make any sense. But they're both going public and if I were a journalist I'd look into it.
The base case, that there is commercial value to xAI's datacenters that folks in the frontier-model space are competing to get access to, does seem to be one folks here are actively rejecting.
> That genuinely looks like SpaceX having cornered some valuable compute.
That's nice way to say "invested in AI that turned out to be flop nobody wants to pay for so they are selling spare capacity"
> That's nice way to say "invested in AI that turned out to be flop nobody wants to pay for so they are selling spare capacity"
Both takes are true. xAI invested in capacity that was supposed to yield frontier-model-maker margins. Grok failed to generate enough interest. So now they're selling it.
That's absolutely a good business, in a way that's more certain than the frontier-model one. But it's also lower margin, which doesn't support the sort of valuation SpaceX is going for.
What I don't understand is how it's even a good low-margin business. Maybe I'm missing something but:
Data centers (before recently) are low margin businesses because all the inputs are commodities: you buy power (joules), power (PDU), cooling hardware, physical racks, etc.. from the same vendors as everyone else. Worse, your biggest potential clients have the scale to just build it on their own and cut you out because of their scale and because you don't bring anything unique (outside of maybe physical proximity to an interesting market)
xAI has all the same commodity inputs plus another huge upfront capital expense (GPU/storage/networking), and their customer base is exclusively the well-funded companies who would normally just build it on their own.
I assume that they can't get better deals from nvidia than (e.g.) Microsoft because of their scale, so the unit cost of their inputs is the same or worse than their clients.
So the whole game is hoping that they hope to charge more now because people can't build fast enough and try to recoup their upfront costs before either a) other capacity comes online and b) the installed hardware becomes obsolete.
I'm being earnest -- it seems like they're trading one tiny margin service (datacenter) for another tiny margin service, with the added difficulty that there's an additional 10 figures of upfront expenditures and their viability depends solely on paying everything off before the price floor drops. Maybe it's staunching the bleeding, but it seems like not a great move
It's like buying a ticket for a concert, realizing you can't go and that you can resell it for more than what you paid.
You're right that long term it should stabilize into a low margin business.
Elon is also much less risk averse than others, which helps to build stuff fast, possibly cheaper, pushing legality to the limit. Colossus was definitely built much faster than anything else. I think building datacenters suits him better than a pure software play, where "move fast break things" is already the norm.
The concert analogy makes sense (I analogized it as "staunching the bleeding").
WRT SpaceX building data centers: I think there's a natural tension between a "low margin business" and "being risk adverse". SpaceX (the rocket business) did well because it was high risk and high reward. Building a 10b datacenter to hope to get a slice of a low-margin industry is high risk and low reward and just seems fundamentally like a losing strategy.
It's not like Elon is a stranger to low margin. Making cars is low margin, and it's not like SpaceX has crazy margins now that we know the financials.
Also I think stuff like Hetzner is a commodity. But are gigawatt scale data centers a commodity? You need those for AI training.
Anyways their goal is datacenters in space, not traditional data centers. Although I think that's only viable for inference.
> because all the inputs are commodities
AI compute hardware is not a commodity. And in a shortage, commodities can command high margins.
xAI has lots of NVIDIA GPUs and HBM. It also has permits and power hook-ups, both things that are getting harder to come by day by day in the U.S. Natural gas is a commodity. Doesn't make having lots of right now bad business.
> the whole game is hoping that they hope to charge more now because people can't build fast enough and try to recoup their upfront costs before either a) other capacity comes online and b) the installed hardware becomes obsolete
Correct. But charging people now generates incumbency advantages that make beating (a) and (b) easier. (From what I can tell, (b) isn't an existential issue, at least for xAI, because they've basically already recouped their investment with commited contracts they'd have to fuck up on to lose.)
> AI compute hardware is not a commodity. And in a shortage, commodities can command high margins.
I don't see the distinction you're drawing about "commodity", but I'm happy to be wrong on that. My point was that spaceX's ai division is buying all their inputs from external vendors and can't meaningfully differentiate themselves from person Y who buys all the same hardware except for the fact they bought them first. Which...
> Correct. But charging people now generates incumbency advantages
I don't see now this is an "incumbency advantage". There's nothing that sticks their clients to stay there and sign up for the next data center.
> don't see the distinction you're drawing about "commodity"
People pay markedly more for NVIDIA GPUs than they do for others. That opposes the fungibility requirement of a commodity.
In the west, there's no actual competitor to NVIDIA hardware. Yes, people make other chips, but nothing is a serious drop-in replacement for the nv stack. Between the networking and software, they're truly a different "thing" of accelerator, and I don't consider them fungible at all. The US government tried to build 3 supercomputers with each of nvidia/amd/intel accelerators and you can see how it went
Well, in a largely token-based AI market it doesn't matter what hardware you use to generate those tokens - Google use TPUs, Amazon/Anthropic use Trainium, Musk is apparently contracting with Samsung to have his own chips built...
I expect that Google are renting SpaceX NVIDIA GPUs so they can resell to corporate GCP customers at higher rates, but if the AI growth story remains intact then I would expect the GPU-agnostic token demand to be much higher than the NVIDIA-specific rental demand.
> there's no actual competitor to NVIDIA hardware...I don't consider them fungible at all
Which is why nobody should claim NVIDIA makes a commodity.
You're not wrong in the long term, either in general or for SpaceX.
In the long term, hopefully the market stabilizes, new entrants can challenge Nvidia etc. But of course maybe not!
However for SpaceX, this is a dead end move. They made a good decision on buying this compute when they did but they failed to use it to create a compelling model.
So they're selling access to recoup some of their investment (maybe a profit?). But what's the plan as these chips age out over the next three to five years? Become a compute company? They claim they want to... in space!
Regardless, they bought some valuable chips, failed to use them, but can now sell access and recoup over the next few years before they become outdated.
I wonder if they do have non-commodity AI capabilities, just, ones that don’t translate into a world-class frontier model.
Like they might have hired really good AI infra folks, gotten really good uptimes on their nodes, gotten folks who really know how to configure Infiniband (or whatever). But then, didn’t find the folks who knew what to run on that infrastructure. Or maybe Grok just had too much political drama around it.
Maybe they have something else im the books, I truly have no idea. But once you get down from the top rung of full-bandwidth cross section networking at the 100k node networking scale "AI" infra, theres no shortage of people who can do that. Most importantly, labor isn't the big chunk of the outlay. Even if they have 50 engineers clearing $1m/yr, that's pocket change for everything else
EDIT: said 50 engineers at $50m/yr originally and meant 50 @ $1m/yr
Datacenter is an ok business, but as you say it shouldn't be getting the same growth multiple (P/E) as a high margin rapidly growing software business.
There is also a question of how sustainable this datacenter rental demand is. It would seem unexpected if Anthropic and Google continue renting from SpaceX for more than a few years, and both contracts can be cancelled with 90 days notice.
Why do we think frontier model vendors are high margin?
I think the reference was to Elon giving Dario a two-month discount on compute as part of the deal and Dario immediately announcing a profitable quarter based entirely on that discount.
Google owns 14% of Anthropic.
Google owns 14% Anthropic and 6% xAI.
When Anthropic spends on xAI, it benefits Google. When google spends on xAI, it benefits Google. When xAI spends on Google, believe it or not, that benefits Google.
This is how a Ponzi -style circular financing scheme typically works.
> When Anthropic spends on xAI, it benefits Google
Unless Google is directing these transactions, this is not a novel issue. (We see a similar effect with mutual funds owning most companies [1]. It's a weak effect.)
> This is how a Ponzi -style circular financing scheme typically works
No. It's potential conflicts of interest. It's not circular financing. Circular financing follows the cash. When NVIDIA invests in OpenAI so OpenAI can buy NVIDIA chips, that is circular financing.
[1] https://insights.som.yale.edu/insights/the-rise-of-the-mutua...
I think it depends on how you view the payout google will get when these companies IPO and give Google exist liquidity and a nicer looking balance sheet, if needed, either or.
> it depends on how you view the payout google will get when these companies IPO and give Google exist liquidity and a nicer looking balance sheet
Google has a fantastic balance sheet with or without these investments. None of the recent deals have uniquely enabled an IPO. So they'd be playing to increase their stakes' value by a few points ahead of a dump, a dump that would almost certainly wipe out much more than they'd stand to gain by trying to make someone else a dollar so they get nickels and dimes out of it.
No a Ponzi scheme involves not output, but here there is very much output in the inference being sold by Anthropic. Pretty big difference.
If you were to treat all the hyperscalars as one company with one 10-K then Anthropic buying compute from SpaceX/xAI is an internal bookkeeping transfer between two departments. It isn't the same as top-line revenue into the AI companies. It is still mostly just financing money that Anthropic raised being transferred to SpaceX.
> If you were to treat all the hyperscalars as one company with one 10-K then Anthropic buying compute from SpaceX/xAI is an internal bookkeeping transfer between two departments
This is literally true for any revenue. Treat the buyer and seller as a single company and their transaction is internal.
Because it is hiding the fact that there's very little external revenue coming into the AI sector compared to the costs. AI companies doing business with each other isn't net revenue into the sector. Treating the whole sector as a single entity isn't arbitrary.
> it is hiding the fact that there's very little external revenue coming into the AI sector compared to the costs
There is a lot of revenue dumping into this sector. If there weren’t, you’d have a point about manufactured numbers. But I don’t think anyone seriously doubts Anthropic and Google are hauling in serious dough.
The question, as you point out, is how much they are keeping. But xAI selling compute doesn’t really hide any of that. If anything, given the prices Musk is getting, it adds to the cost line. (And xAI isn’t masking compute revenue as Grok’s.)
Hyperscalar capital spending for 2026 is going to be in the close neighborhood of $700B, which is over 2% of US GDP. That is about 3x the GDP spend of peak Apollo program in the 1960s, and about the same as the telecom/fiber buildout of the late 90s and the railroad buildout of the 19th century (both followed by a collapse). And there just isn't that much revenue coming into the system, and there aren't the productivity gains coming out of it. When 95% of corporate AI initiatives are still failing, the value proposition isn't there. And if you try to look at something like Microsoft's reported $37B in AI revenue a lot of that is really internal spend from leasing compute to OpenAI, which it partially owns. The real revenue coming into the AI industry is likely well under $100B this year, and the productivity gains to end consumers is likely much less. So if you think a few $10B/yr here or there is "serious dough", it just isn't enough to fill the gap. And OpenAI should burn through $14B this year, up by a factor of 3x over last year. Anthropic has a projected revenue for 2026 of $26B and is running around cash flow neutral, but that doesn't approach the $700B spending gap. And that is with accounting that depreciates GPUs on 5-6 year schedule instead of the more realistic 2-3 year schedule--so Anthropic may kick the can down the road a bit, but in 2-3 years they'll still be depreciating GPUs that they're throwing away and having to replace (of course this may be WHY Anthropic is leasing compute from xAI since then that accounting hit falls on xAI instead of Anthropic).
In 10 years, we probably will have $700B/yr in productivity gains and revenue from LLMs, but we're not going to be able to sustain $700B/yr in capital spending until we get there. And the problem is much worse than the fiber buildout of the late 90s. Fiber built out in 1998 was still usable 10 years later. The GPUs that are being built out today are going to be obsolete trash in 3 years.
You are forgetting the google space x deal too
Anthropic basically did that by getting two months of free compute from SpaceX. As I recall, this is how they were able to claim that they were profitable. But in reality, they are only profitable for those two months.
Just depreciate their server farms less this year to reduce losses. ;)
You mean Oracle’s customers will face when their renewal bill includes infrastructure fees.
you mean the 50% of its company that was leveraged to purchase Paramount?
> They need to financially engineer a good looking quarter beforehand.
Eh given the quality of recent IPO proposals I think they can just say there's a couple zillion air molecules to turn into gold and be done with it.
Like financial reporting and "transparency" that's required for public companies.
Capital is going to dry up. All the AI companies are racing to get to market before the dumb money disappears
Elon is not going to be happy about this. He's been vocal about his dislike towards the business model OpenAI chose to run with.
I personally think Elon is willing to take a hit on SpaceX's IPO Friday because he knows it will suck the air out of Sam's attempt at exiting.
Here is my low key prediction about the purchase of Cursor by Elon.
Cursor is purportedly a huge customer of OAI, maybe a top five? I think Elon bought it to have leverage on sama.
If timed correctly, Elon could pull the plug on a huge customer (Cursor) the quarter before OAI try to IPO.
Elon wanted precisely the same model.
that's not the issue, Elon is just a petulant child that is losing the ai game ever since he left OAI. Elon wanted full control, and that dispute over control is the central issue.
Elon is 100% a for profit person, it's just a 10 year rivalry between Sam and Elon.
And to top that, he lost the battle in the court recently.
Starting the first three sentences with "We" does not pass the Voigh-Kampff / "I am not a robot" test.
"Hey, don't invest too much in Spacex or Anthropic. We're planning an IPO too."
This is the real reason. I don't think equity market has enough capital to support three companies of this size.
SpaceX IPO is slated to be $75-80bn — the market has size for that. We also have seen robust options and finance markets for AAPL and NVDA over the last years that make the broader ecosystem not overly worrying in my armchair opinion.
I’m not clear how much crossover demand there is between SX and Anthropic/oAI — that seems like the more interesting question. I’m guessing if we had Anthropic/oAI launching at the same time we’d see some pretty interesting capital dynamics.
None of these companies are worth the numbers being tossed around, but SpaceX especially so.
Its Schrodinger's IPO: the space business is so successful how could you question the company's worth? You can't afford to miss out on the next biggest AI business to invest in!
What's going to happen is the music will stop and it's just a question of who cashed in when it does. OpenAI are easily the most vulnerable here.
> if we had Anthropic/oAI launching at the same time
Don't we have exactly that? There are S-1 announcements for SpaceX, Anthropic, and OpenAI. Google is selling to raise money for infra (IIRC). There's an absurd amount of money flowing in at present (prospectively at least).
The reality is that the large banks running these IPOs will know, to an extreme level of granularity, how much demand for the IPO there is at the chosen price point, and will advise accordingly.
None of the companies needs an IPO right now, with the possible exception of oAI — I haven’t looked at their financials recently. But SX is cashflow positive as of today, and Anthropic is able to become so without giving up much on their R&D program. So for those two, it’s a matter of timing.
Like a video game release schedule or a film release, SX has carved out a window and is going first, and regardless of messaging, all the teams are going to be watching it VERY VERY carefully. If it goes well, I’d expect Anthropic to jump next.
If that goes well, oAI would likely go right after. If it goes mid, oAI may wait to improve their financial story or fundraise private at worse valuations for a while, or, or, or.
Agreed that the dream for the next guys down the road is to pick up some recycled capital gains from sx and of course some new capital. If SX is a flop, then these IPO dreams will slow down for a minute.
I was under the impression SpaceX was going to be a trillion dollar company.
The media and market is hyping these three companies up to be all trillion dollar companies.
Afaik SpaceX is only putting 5% of its shares up on the public market when it IPOs (newly minted shares, diluting the existing private shareholders).
So the markets only "need to absorb" $75B when SpaceX IPOs, not its whole $1.7T valuation. At least until the lockup period expires.
Gotcha, that seems a bit more manageable for the market to absorb.
I think it will still be a bit tight with Anthropic and OpenAI IPO'ing at similar times however.
This is like a slack message
I wish all announcements were this terse and candid
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A very unserious tone from probably the most consequential company of our lifetimes. It's vibing all the way to the top I guess.
I prefer this tone to fake marketing speak. If they’d done a proper job here they’d be accused of having GPT write it. At least this is organic laziness!
Their tone is just as fake as typical fake marketing speak - they are trying to come off as nonchalant. I bet this announcement was wordsmithed to hell.
Only thing missing from this comms masterpiece was all lowercase.
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How much did Apple (via Google (via xAI (via SpaceX))) just crush their product?
Seems an awful lot like Apple will commoditize the models that power Siri, and just “sherlocked” a trillion dollar private company.
I have absolutely no idea how someone could honestly believe this.
What is your disposition to OpenAI?
Apple has completely dropped the ball on every single detail of AI rollout for the last 5 years - why do you think they will suddenly stop now? My prior is that the new siri stuff is just as vaporware as the previous "apple intelligence" rollout
> Apple has completely dropped the ball
Apple has sat out a capital-allocation shitshow. Its investors and likely customers are better off for their patience.
Jury is out on that one -- will have to see what happens in the next couple of years. I don't think you can say better off with full confidence right now. Very possible you could say that in the future..
> will have to see what happens in the next couple of years. I don't think you can say better off with full confidence right now
We can't say for confidence they'll find a niche in the AI world. But we can say they probably sat out some value-destroying capital investment. Like, I don't think Apple is going to wind up strategically worse off than Meta. But it won't have blown a metaverse on this.
Well I think those are different.
Most everyone outside of a core believer knew metaverse was a bad investment and total value destruction.
Im not sure that Apple's strategy will pay out -- they may avoid the heavy capex lift but if that strategy is successful they ill have missed the strategic upside. Thats the part the jury is out on.
They've taken a more deliberate approach which might be the winning one ... tbd. We should re-check this in 3-5 years to re-assess.
> I don't think you can say better off with full confidence right now.
Of course we can - they managed to avoid spending 100s of billions while still giving their users AI...
There is no future in which the entire world is beholden to the current VC-backed companies for AI. IOW, there is no moat.
That would be a valid explanation if they hadn't totally oversold and underdelivered on "apple intelligence". In reality, this explanation is just cope
Ehhh if you squint, everything they announced today was announced in 2024.
Doesn’t seem like they changed their ideas much (I’m sure some iteration occurred but still) and the issue was the tech didn’t took 2 years to become workable
Feature set is borderline identical
> this explanation is just cope
I'm not saying they played 5D chess. Maybe they got lucky. But they're coming out of this infrastructure boom with the second-highes P/E ratio in the Magnificent 7 [1], dividend intact, and tens of billions of cash on balance sheet unburned (and their stock and balance sheet unincumbered by new debt or stock sales).
[1] https://dividend.watch/lists/magnificent-7-stocks
But it seems likely that in the coming years, people will expect Apple's products to include the latest cutting edge AI (I don't mean useless AI shoved into every possible thing, I mean something closer to a useful Siri). Giving everyone else a 10+ year head start on you is not a good position to be in.
If you choose to outsource your AI to OpenAI/Anthropic/whomever, now you're beholden to another (risky), and for a critical feature of your ecosystem that your customers have grown accustomed to and to expect. And it's not just that they might jack up prices on you, but they can just... get acquired, or go bankrupt, or fall behind on model development...
Why would Apple even want to be a big player? They aren't major players in search or advertising, so it seems less likely to disrupt them if they sit it out. There are reasons why shareholders might want companies to stay out radically different Technologies unless they are at risk of losing their business model.
It's not an existential risk to them unless they make it one by going all in.
Apple is pretty famous for dropping the ball for years on various things, and then coming out with a "slick version" so good that everyone forgets how late they were to the party.
The most famous would be the iPod, but there are others.
If you think Apple just sherlocked OpenAI, you havn't been paying attention to the pivot OpenAI has been doing for the last 7 months
whats the pivot? codex superapp?
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What was that Warren Buffett's quote about everyone trying to leave the party seconds before midnight in a room where there are no clocks? I think it was at peak of the dot com bubble
I looked it up:
Letter dated Feb 28th 2000, NASDAQ would hit the peak of the bubble March 10th.
We all want to sell the top and buy the bottom.
[meta, off-topic but relevant]
Maybe the solution to s..tposters is to do what Wikipedia does.
Some articles/topics are "protected" and new/unverified accounts cannot touch them.
I wonder how much of it is photos?
This is the true definition of AGI and will be achieved this year.
The I in AGI has always stood for IPO.
Altman Gets his IPO
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Well if you reverse OpenAI ... the first letter is I and the last two are P O...
Artificially Generated Internal-rate-of-Return
I have a feeling that as soon as OpenAI and Anthropic stocks are up for grabs, the market will implode.
Maybe lay down some concrete numbers and timelines, hold yourself accountable, otherwise you risk confirmation bias with your predictions like millions before you.
"Markets can stay irrational longer than you can stay solvent."
He said "as soon as", so it's a pretty testable prediction.
"implode" is not testable. A good prediction is specific, time bound, measurable, etc. Otherwise you can flatter yourself however you like with confirmation bias. This is basic stuff.
> the market
Which market? The stock market? Or the tech stocks? Or something else?
> Which market? The stock market? Or the tech stocks?
Both.
Across the entire stock market, not a ton of bright spots _except_ for Tech.
Take a look here: https://finviz.com/map?t=sec_all&st=w52
Then someone says the market; they definitely mean the stock market. I don't know what else you can understand from it.
Why would the entire market implode?
Because in 2008, the housing bubble popped and it dragged with it the entire stock market. Stocks are more interdependent than most people realize.
Because tech is 1/3 of the US stock market?
Same. Glad I'm not alone.
So are you short the market?
crashes aren't shortable unless you know exactly when they are going to happen
Which is great because the parent comment provides a precise timeline.
The root comment of this thread does purport to know when that will happen (well, pending public announcement of those two IPO dates).
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I think that might not even happen depending on how SpaceX IPO goes.
implode as in? to the moon or crash into bits and pieces?
Implode generally implies shrinking/collapsing, so while explode is kinda ambiguous, I think this is fairly clearly saying "bubble will pop".
yep, same here.
Here we go… Let’s see if retail investors are indeed exit liquidity or not
When you consider that all of this capital could have been deployed to productive enterprise, it's like we already are.
Or just… Americans:
https://www.notus.org/technology/trump-blindsided-ai-compani...
OpenAI CEO Sam Altman pitched the idea of turning over shares in his company to Trump in early 2025 and discussed the matter again with senior officials in recent weeks
Pretty much is, at this point. Spcx is oversubscribed.
Source
there are plenty of sources reporting this: https://www.bloomberg.com/news/articles/2026-06-08/spacex-ip... https://www.reuters.com/business/finance/spacex-ipo-running-...
You’re always someone’s exit liquidity.
I thought this was about the college football conference for a second.
so who is buying at the open? anthropic, spacex, openai
i think that we are going to see another leg up but this is gonna be it for a while
From what I understand, SpaceX has been engineered such that all kinds of passive investment funds (pension funds, ETFs) will buy into it at their first rebalancing, and as such it should get a decent amount of volume after open.
Having said that, it’s the company I have least faith in due to the recent acquisition of xAI / Twitter.
> SpaceX has been engineered such that all kinds of passive investment funds (pension funds, ETFs) will buy into it
Pension funds are rarely passively run. They tend to be sophisticated investors. For example, several pension funds are already investors in SpaceX.
NASDAQ 100 will include SpaceX after a couple weeks. But it's a tech fund. It's strange to complain about buying the largest tech company in a tech fund. Similarly, S&P total market and Russell total market will buy early. But again, those are total-market funds. If you want to actively manage your portfolio, don't buy total-market funds.
I heard that the rule changes which would allow SpaceX to be auto bought by those funds has been blocked, previous stock seasoning rules will apply
> the rule changes which would allow SpaceX to be auto bought by those funds has been blocked
Nothing was blocked. S&P 500 never adopted them. Influencers misunderstood what a consultation document is and presented a question as a fait accompli.
NASDAQ 100 changed its rules, as did S&P and Russell's total-market funds. But for NASDAQ 100 I'm going to go ahead and say this was a brilliant market move, since nobody ever talked about that index before this.
> But for NASDAQ 100 I'm going to go ahead and say this was a brilliant market move, since nobody ever talked about that index before this.
Most people know the NASDAQ100 as its ticker QQQ. Also known as the high risk - high reward investment.
After reading how Nasdaq changed the rules in order to court all the mega IPOs to list with them, I will never ever consider a Nasdaq fund again. The rule change about the available float is especially shocking.
> After reading how Nasdaq changed the rules in order to court all the mega IPOs to list with them, I will never ever consider a Nasdaq fund again
We have zero evidence for that chain of causation. And we have zero evidence of significant outflows for NASDAQ 100 since this rule change. (There is early evidence of inflows, but I suspect that's just because nobody talked about the NASDAQ 100 before and this turned out to be a brilliant marketing move.)
I agree with you that this might be a good marketing move overall.
And I don't really care about the chain of causation. The change of rules for the available float and the fact those funds will buy based on the market cap and not the float makes it a completely irresponsible investment at this point.
> fact those funds will buy based on the market cap and not the float makes it a completely irresponsible investment at this point
It's an index. The conventional way to market weight is to use market cap. The float rules are mostly for technical reasons around transaction costs for very large indices. There is a theoretical argument for float weighting, inasmuch as if you bought the stock market you'd be buying the float, not all of all of the companies. But I haven't seen research to say one way is definitively better than the other.
I agree they should have probably paired the float-rule change with a gradual onramp. But again, NASDAQ 100 isn't big enough to really need to care about this. (Half a trillion is obviously a lot of money. But not relative to the equity markets, and not when spread across a hundred of the largest names.)
> It's an index. The conventional way to market weight is to use market cap. The float rules are mostly for technical reasons around transaction costs for very large indices.
No the float rule is to avoid having to buy so much stock compared to the available stock that it would create irrational prices. This is probably going to happen with those IPOs. It's pure offer and demand!
To put it differently: Imagine a company is valued at 100B$ but only released 1% of its stock for sale (1B$). The NASDAQ100 includes it in its index based on the market cap only and because of that now needs to own about 100m$ of that stock. You are now trying to buy 100m$ out of only 1B$ available stocks. Prices are going to skyrocket artificially. If it was weighted on the float, it would only have been required to buy 1m$, which would make way more sense.
And an index can be whatever the company behind it wants it to be. The SP500 can decide absolutely whatever they want and every index fund will just have to agree and comply and buy based on those decisions.
But as everything if they do something stupid they lose credibility and customers. This is one of those instances in which they changed the rules in a way that made no clear sense and they will be remembered for that.
> No the float rule is to avoid having to buy so much stock compared to the available stock that it would create irrational prices
Correct.
> this is probably going to happen with those IPOs
Not due to any index-following investor.
> SP500 can decide absolutely whatever they want
Yup, S&P 500 is a committee-based index.
> one of those instances in which they changed the rules in a way that made no clear sense and they will be remembered for that
S&P never changed the S&P 500's rules.
NASDAQ 100 did. But from what I can tell, that was a brilliant piece of marketing. Nobody talked about them before. (QQQQ doesn't appear to have gained or lost net assets in that time, which isn't unexpected, it's a volatile fund.)
Crsp changed as well.
> Crsp changed as well
Yes. For their total-market fund. That makes sense. (CRSP is probably the most-significant index to make the change. But even then, it won't be a significant source of demand. Total market means lots of components.)
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> There was too much backlash
There wasn't. A consultation was rejected. It happens all the time. If S&P management had a say, they would have wanted SpaceX included.
so whats the alternative?
Was this meant as an internal team post?
When/how are IPO dates released?
> When/how are IPO dates released?
Once the SEC declares a registration statement "effective," the company is subject to the Exchange Act's reporting requirements. Theoretically one can do this and not list one's shares. That's dumb, so nobody does it.
In practice, we'll get a couple weeks to possibly days ahead of the listing. That process is partly governed by the SEC accepting the company's S-1. It's mostly down to negotiations between the company, its underwriters and IPO investors.
Good thing they bought that podcast…
Unless the picture and trajectory changes dramatically I don’t see OpenAI managing to pull off a successful IPO. If they do manage to go public it will likely only be at a fraction of what they’re worth now, with existing investors rushing for the exits to avoid completely losing their shirts.
The revenue trajectory is now anemic, no clear sign of stopping the cash burn anytime soon, and all the liability associated with all things Sam Altman at this point. Frankly it’s a mess.
In Warren Buffet’s Cinderella party scenario it’s 11:59 at the party and someone just found an accurate clock.
Growing worry I have are the dozens of newly minted corporate elites that will continue to wreck havoc on the tech industry mandating their golden paths while America still lacks medicare for all, college for all, and universal childcare.
If you think Sam Altman is bad for the industry, imagine what 200 of him will be like!
I was wondering about this the other week.
Is there a chart, somewhere, like a family tree, of what the Apple and Microsoft stock "ordinary millionaires" went on to do?
https://imgur.com/HMCnQ86
Gabe Newell and Mike Harrington of early-ish Microsoft went on to found and fund Valve.
Yeah — actually if you google there are a few "where are they now?" things. A few VCs etc.
we need more non tech women to marry and divorce craven tech men so that at least half of these scrooge like fortunes can get donated
edit: id love to tally all the donations done by techies and compare them to how much of bezos fortune has ended up routed to charity via his ex
If you're a tech billionaire, you don't marry unless you are incredibly stupid.
Altman and Thiel are also gay, so theres that too.
No idea where this comes from; I wasn't talking about a literal family tree but a figurative one (I grew up with Rock Family Trees)
Also: Altman is married.
i think i was trying to make the point that the type of person to make a shitload of money tends to be the type of person to hold onto a shitload of money
... Being gay does not limit altman or theil from getting married...
And last I checked, plenty of tech billionaires are married and by no stretch of the imagination stupid.
We had universal childcare until we converted single-income families into dual-income families in order to make the boomers who they bought houses from rich.
Women want their own income stream because of the innumerable ways men get into trouble. If her man gets into trouble, she wants a plan B, for her and her children. I don't think anyone was thinking about how that would prop up the housing market 30 years later.
That's a nice story, but the truth is when women first entered the workforce in meaningful numbers, it was primarily unmarried women. Society strongly expected women to leave the labor force once married, and businesses actively banned married women from working
And to give women full agency over their own lives
No one has full agency over their life. The men who generally work harder, longer, and for more of their lives, that are shorter as a result, don't have fully agency. Having a boss isn't agency.
Women couldn't have bank accounts, in my lifetime.
Ah, money. What life is all about.
Ok, then, to give women as much agency as men have.
Having to work is less agency than not having to work. Being able to choose to work, and choose a nice lifestyle career while your husband has to work a hard job to afford the lifestyle is far more agency than men have.
> Having to work is less agency than not having to work.
Both are working. One is getting money that they get to decide what to do with, the other (the wife) doesn't get paid but gets room and board but very little autonomy - for example, they were expected to deliver sexual gratification on demand, mood or no.
It's honestly surprising to me how people seem to still not be aware of the amount of labor women at home do, especially in previous eras. Read any old book, you'll find wives cooking every single meal solo for every single person in the household, managing every aspect of the kids' lives, functioning as a secretary for the husband, cleaning the entire house, often doing the yardwork, managing the social calendar, all while keeping up appearances so they're an attractive wife. They worked way more hours than their husbands.
I have instructed my financial advisor to keep my exposure to the upcoming wave of AI IPOs as close to zero as possible.
So...all cash?
Given that the US govt is reportedly talking to OpenAI about taking a stake, your only choice might be Zimbabwean dollars.
One of my least favorite things about AI is that every time you suggest you don’t want anything to do with it, there’s a horde of rapist-brained twits like you waiting in the wings to cry about how inevitable it is. Shut up and go away.
I'd assume healthcare would be the answer.
> We recently submitted a confidential S-1. We expect it to leak so we’re just announcing it.
What?
They expect someone to leak that they had submitted it, so they’re just saying it themselves. I don’t think they mean that the actual contents (like financial projections and all that) will be leaked.
Narcissist marketing, Sam loves it.
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The timing of all of these IPOs has a smell similar to both the US Mortgage company trend shortly before interest rates spiked and all those companies started shedding jobs progressively since, and/or the DotCom IPO boom.
Where we land remains to be seen.
While I agree on the smell I think that the situations are really different. I am not an economist but I think that other than the situation of the huge amount of money in play we are in a really different case. The general user (and I have noticed it especially with today's WWDC) basically doesn't get any benefit from AI (neither LLMs, image generation or photo editing). They were promised living like in Wall-e in 5 years and they are basically still living the same life. White collar jobs slightly benefited from the LLMs and same with programmers (while many say that they can get huge leverage the public results of what software companies produce didn't get the same benefit). Everyone knows the market will crash, nobody knows how much.
My father in law owns a small manufacturing business and is not technical at all. His computer skills stop with some CAD and basic excel. He pays for ChatGPT as does his wife and her kids. The internet and dot com bubble didn't have millions and millions of non technical users paying cash for a product. Almost every coffee shop I go to has people talking about AI and ChatGPT even in areas with no tech populations.
I still think it could crash, but it's got real users and a mind share like nothing I've ever seen.
The internet and dot com bubble didn't have millions and millions of non technical users paying cash for a product
The dot com bubble was basically based on regular people buying computers and internet service, and then using them to buy products they used to buy in stores.
This seems to ignore the fact that millions of non-technical people did pay cash for a product: AOL. And in fact the AOL buyout of Time Warner coincided almost exactly with burst of the dot com boom.
> the AOL buyout of Time Warner
To be clear, there is a world of difference between IPOs and LBOs. In the risk they create. And in the risk they signal.
These companies are never, ever going to make their money back off of retail customers. It's not even clear if those customers would be profitable at all, let alone enough to justify hundreds of billions in capital expenditures.
The question in my mind is persistence. Everyone goes through the honeymoon phase. I'm absolutely loathing the idea that phones are arriving soon with chatbot junk built deeply into it, enough that the thought is more what if I could maybe just stop using my phone so much. I threw myself at the Llama WhatsApp integration when I first got it, now the idea of having Llama in WhatsApp just feels so dumb.
I was a huge early fan of ChatGPT voice too, but I don't think I've used voice mode anywhere in at least 6 months. The question is what is the right level people are generally going to settle on for the use of these tools in the long term. 80% of my usage isn't much more than a better Google, I could live without it and I could live with cheaper options. I'm not sure the consumer money is going to be there en masse as hoped
Of course it still leaves a huge amount of business cases open, but I suppose the same principle applies. How soon will people tire of talking to robo-voice when they call their bank? etc.
I definitely believe in the broad existence of people like your father in law. What I’m not sure about is how many of them would keep paying if their subscriptions were priced profitably.
I wouldn't argue the same.
My parents love using ChatGPT, asking it all kinds of questions. My mom discovered Claude and helps her immensely with her job - where she would have to take it home and work a few hours to be able to finish the tasks on her computer, as her company that still uses Office 98, now Claude does it in 5 minutes.
They fixed so many random issues using it, it is insane. My dad had a bike issue which would otherwise be solved by either trying to find obscure manuals from 20 years ago on random forums with me translating it from english to our language, or by taking it to a mechanic which could take months. This way, he just snapped a few photos, said what the problem is, and in a few minutes he had the fix.
I've built software that uses LLM's for a specific usecase - besides general adoption, professionals in the field contacted me and thanked me for making their lives easier, as the tasks would often take a lot of manual work. These people are earning way more from using my software, than I am from their subscriptions, which is still about 20x more than my API costs are.
While most non-dev people are behind the curve, the impact it has on their lives is becoming bigger and bigger by the day.
Maybe I downplayed it too much but I really think this is still "in distribution" (we always have to remember that we are tech savy people and we influence the people that surround us). I see the value, but in my opinion it's not a generational opportunity, but a great acceleration. We are treating it like generational opportunity. That's why I say "everyone know there will be a crash, but noone knows how big that will be". The AI industry is not (in my opinion obviously) worth $ 391B [1] of added value.
[1] https://www.grandviewresearch.com/industry-analysis/artifici...
It is still "in distribution", that is why when its "distributed" properly, it will surely add much, much more value to the economy.
But it is a generational opportunity - we can remove a lot of barriers that come with knowledge, lack of it, access to it and more. Someone can easily get pretty on point medical advice without access to doctors. Get specific engineering advice without engaging with those engineers. We can apply common sense or specific knowledge on scale - in a world where about 50% of people have IQ under 100 and access to knowledge is gated behind lines and payments, this has a huge chance ot improve their lives.
And there is the whole shadow inference economy - just for example, a few corporations I have worked with in insurance and telecommunications have been slowly introducing it inside their workflows and their data tooling, being able to clean data, tag it, analyse it in a way that before would probably cost them billons in human costs.
One of them has a database going back to the 80's, with data being formatted and reformatted in all shapes and sizes, coming back all the way from paper records for some of their oldest clients. Cleaning this up was unimaginable before as a "something we can do in a day" project, but was more of a "possible with insane costs". This lead to all further activity being shaped by decisions someone made 40+ years ago, details being lost, data being thrown away or saved in random notes.
And there's millions of companies like that all around the world, which can now do "impossible" and become much more efficient and productive for a much cheaper price and in way less time than ever.
Office 98
Sorry, my bad, might be 97 running on windows 98 - but yes, this is a giant corporation serving hundreds of corporate customers and a few hundred thousand private ones, using nearly 30 years old software because the management does not see reasons to upgrade and spend the extra cost associated with it. New machines and Windows XP are only used by upper management.
Worst part?
Their whole software stack is running on some version of Visual Basic, written by a dude that did not trust "others code" so he wrote everything from scratch, and retired about 5 years ago.
Nobody knows how any of it works, or has any clue. The company will continue to run it and pay him for consultations as long as he is able to do it.
Glad to hear that upper management are keeping up with the times, at least.
There is ton of utility. I use it all the time to study, to look up what's happening in the world, to understand the context behind what others are saying, cooking recipes, and much more. Considering LLMs have access to tools for searching the internet they have a superset of the capabilities of Google and consumers got a lot of value from Google. In fact from putting ads on the search results Google has made billions of dollars from such consumers getting value from their service.
When you ask it to give you a digest of current events or as a study aid how are you ensuring that what your reading is a valid representation of the source material? Has it never given you false information?
Not OP but, anyway, AI output should be treated like any other source material.
I study from reputable sources every day and never cease to be amazed by how many errors or misconceptions they have. Peer-reviewed articles, books from renowned scholars, news from major publications… regardless of the source, false information and contradictions accumulate. I’d wager that AI, besides helping me uncover these issues in the literature, has had a lower error rate than most of the materials that I read on a daily basis.
I can tell by my intuition. If I'm that interested in something I can dig deeper or just give up in pursing the truth.
> I think that the situations are really different
Keep in mind that people said this before both of those crashes.That's the problem with bubbles. It's impossible to say if this time really IS different.
Ben Felix got a great video on this subject: https://www.youtube.com/watch?v=iOyFja87uyw
The point he makes is that companies go public when they think they can get the maximum our of their shares on the retail market. Which make sense I guess.
But the fact that the 3 of them are hitting the public market at the same time means they all came to the conclusion that now is the perfect time to unload those shares. Probably because they know there is a high chance of a big crash coming after.
I will not touch those IPOs with a 10 feet long pole. But unfortunately a lot of people are about to get burned.
My prediction is that this is what will be remembered as the last bit of exuberance before everything starts to unravel.
Books will be written about how insiders will be profiting millions by unloading those shares to the greatest fools and middle class america.
> point he makes is that companies go public when they think they can get the maximum our of their shares on the retail market
I think this is what's going on right now. But there are a variety of reasons that can drive IPO timing. Need for cash and owners needing liquidity being chief among them.
I'd also say that post-Covid, retail has become a commanding section of the American equity markets in a way I don't think they've been in my lifetime. As a result, every IPO from now on will have to target retail.
Both OpenAI and Anthropic were able to raise astronomical amount of cash on the private markets just weeks ago. I don't think that's what's driving them.
I really think what is driving this is the need for insiders, employees, early investors to be able to sell their stock at scale before the music stops.
And You can only do that through a full IPO. All those companies had private secondary transaction but none of them were big enough to transfer the Trillions of $ required for the insiders to unload their bags.
> what is driving this is the need for insiders, employees, early investors to be able to sell their stock at scale before the music stops
How would you differentiate insiders needing to sell versus insiders needing to dump before a crash?
I remember when Uber and Airbnb and WeWork went public in quick succession. There were similar claims. WeWork never made it public. And Uber and Airbnb's IPO investors made of fantastically.
> How would you differentiate insiders needing to sell versus insiders needing to dump before a crash?
To answer this, just ask yourself how many of the insiders would have bought the stock at current IPO's price? Most insiders would probably never touch those stocks at this price. I know a couple people at OpenAI and Anthropic that are very clearly selling everything they can as soon as they can.
This is all a carefully orchestrated PR game that is relying on retail to be the ultimate fool. I guess to some level every IPO is like that (A PR game to hype the company).
But never before had we 3 mega IPOs happening at almost the exact same time with so much money to unload on retails with dubious ways to force funds to gobble them.
Most IPOs end up negative after the first few quarters (at least compared to the SP500). When we are talking about a 20B$ company it matters less than 5T$ being suddenly fully unloaded on the public.
> And Uber and Airbnb's IPO investors made of fantastically.
Did they? https://www.alphaspread.com/comparison/nasdaq/abnb/vs/indx/g...
The only way they might have is by getting the shares at the actual IPO price, and even then it's around the same as the SP500 return since then.
Is it bad for insiders to want out? Is it bad for owners to sell when they think it is overpriced?
I think this is extremely common, if not necessary, part of a functioning market and price discovery. It happens with not just IPOs but also secondary offerings.
Some of this seems like dumb retail wanting to toughtlessly buy without consideration of risk.
> couple people at OpenAI and Anthropic that are very clearly selling everything they can as soon as they can
If you are serious about this for Anthropic please drop me a line. (Not OpenAI.)
> never before had we 3 mega IPOs happening at almost the exact same time
Uber (May 2019), Airbnb (December 2020) and WeWork (scheduled 2019, SPAC 2021) were pretty closely bunched. And they were big for their time. Keep in mind that the money supply has expanded since then.
> Most IPOs end up negative after the first few quarters
Source?
> Source?
There is an actual ETF tracking IPOs: https://finance.yahoo.com/quote/IPO/
> There is an actual ETF tracking IPOs
Renaissance's IPO index seeks to "capture the essence of IPO activity and performance of newly public companies" [1]. It does not replicate an actual IPO investor's returns.
For example, it adds new issues approximately quarterly and never earlier than 5 days from IPO. This is important since it misses the pop. Mean (median) first-day returns on IPOs are 20% (7%) [2]. The average 3-year buy-and-hold return for all IPO investors 1980 to 2025 was 19.1%. Less than broad-market indices (though that margin shrinks for $1bn+ sales IPOs). But certainly not negative.
(Uber and Airbnb reflect this trend. Up since IPO. But, as you observe, below the S&P 500's returns even before taking into account total returns.)
[1] https://www.lseg.com/content/dam/ftse-russell/en_us/document...
[2] https://site.warrington.ufl.edu/ritter/files/IPO-Statistics.... 1980 to 2025; 30% (14%) for 2025
I’m also staying away. I need to not lose money more than I need to gain money.
One of the stranger theories I have seen is that it is based on Astrology as there is a confluence of Uranus squaring the lunar nodes... whatever that means. There is a saying supposedly attributed to JP Morgan (but not likely) "Millionaires don't use astrology but Billionaires do."
One of the more rational ideas I have seen of any kind of divination is that it provides a means of passing judgement over to a near seemingly random system. If you are reading tea leaves, doing an 'I Ching' divination, biobliomancy etc. that essentially provides a coin flip to make you go 'yes' or 'no' to an opportunity.
Indeed, there are several anthropological works speculating that the purpose of divination is to break analysis paralysis or unconscious biases.
And if you are already sure of the correct solution, then you can just keep doing the divination over and over again until the gods give the answers that you want!
Got to payout the investors before the burst
There was a similar wave of IPOs with Uber and AirB&B, not tied to a bubble popping.
(I mean, I think this looks incredibly like a bubble too, but for completeness sake, that's the counterexample I can think of.)
The content of all these comments has a smell similar to 2023 when NVDA had a spectacular run and HN was absolutely sure that AI is a bubble.
It's also similar to 2024 when HN was sure that AI is a bubble.
Similar to 2025 when HN commentators were sure that AI is a bubble.
1000% gains later, HN will continue to identify patterns of 2000/2008 and are absolutely convinced it is a bubble
Note: If a company gains 1000% and loses 50%, you can't claim you were right.
Both OpenAI and Anthropic have already gained 1000% since 2023 (In Anthropic's case almost 10,000%)
Yes, many companies going out of business altogether, some of them large, is what a bubble pop would look like. As opposed to a uh.... Correction.
The ARR of OpenAI + Anthropic > $85B greater than McDonalds, Netflix, Starbucks, Google Cloud, CocaCola, and 1000 other iconic firms around the world.
If I wanted blind pattern matching comments of dot-com bubble, I can just ask LLMs of 2023 like ChatGPT 3.5
Depending on how much that bubble will pop, all of those above might still be very right.
We could very well go back to the 2021 valuations.
If it doesn't, at what point will the 'bears' admit they were horribly and confidently wrong?
"We want to be ready to grift public money at a moment's notice, but there are still opportunities to grift private money right now, so we are holding off."
codex is great
The cheap money for subsidizing tokens has begun to run out. Not all gone, yet, but it's getting harder to pretend the chatbots are cost-effective to run. Soon, they're going to need to tap a larger pool for money: Everyone's retirement accounts.
Can you elaborate? Whats the connection between retirement accounts and subsidizing tokens?
The numbers are public now, this is obviously false
Which public numbers are you referring to that contradict what I said?
If SpaceX, OpenAI, and Anthropic get fast tracked to be on NASDAQ or S&P 500 then they are required to be included in index funds which will be automatically included in retirement accounts and that will give investors an exit.
https://youtu.be/yhRjvX_t4hc?si=N-a-s_5ttWKfVeJZ
> If SpaceX, OpenAI, and Anthropic get fast tracked to be on NASDAQ or S&P 500
S&P 500 said no. NASDAQ 100 is a tiny tech index. The retirement conspiracy could have been a thing, and its effect isn't zero, but oh my god was it overblown by the influencer crowd.
"Nothing happened on Y2K, everyone was overreacting"
The notion that S&P's committee took online chatter into account is silly beyond explanation. If anything, S&P management would have put their fingers on the scale to include these new issues.
yes it will keep the grift going for a couple months due to the index artificial demand. Actually, SpaceX timed the unlocking of their shares to the timeline index funds will have to buy.
Guess who will hold the bag when it's all going downhill?
> The numbers are public now,
Where?
What a shitty company, and this shitty announcement proves they are going to be shittier after the IPO.
Why do you feel that way?
They wait until the market is about to reject the AI hype. They are trying to steal the retail money at the last second. That's why I feel this way. Also, I really REALLY dislike their censorship in the chats and coding. I cannot discuss anything, and they always hide the truth until I show the evidence and still reject.
I don’t get what’s the point of non-profits if you can IPO them. How does that make any sense?
They're IPOing a commercial subsidiary of OpenAI so that it can donate even more money to the parent nonprofit.
(Actually the subsidiary is everything and the nonprofit is a do-nothing fig leaf but the IRS and Congress seem to not care enough to stop them.)
Checks and balances dear sirs and madams, checks and balances. Excepts apparently it meant cheques used to top up account balances.
Checks and balances concern constraints on government power. Whether OpenAI's structure complies with the law is a question of regulation, not checks and balances.
It's not a question of regulation, but a question of enforcing said regulation and a question of enforcing a lawful process which follows a breach of a regulation. Which is exactly a spirit of the phrase "checks and balances". It means that if one branch breaks law, then the other branch enforces a compliance with laws/regulations. Of even inside the same branch, if a temporary elected doofus in charge is breaking the law, then people even lower in hierarchy will enforce normal branch functioning. Which in practice was super easy to break, sabotage and blackmail, so neither checking nor balancing happened, everyone went corrupt or impotent simultaneously.
Just the fact that they still calling themselves OpenAI is so grotesque.
Similar to Google with "Don't be evil". At least they got the decency to eventually remove it when they realized they were actually doing evil.
But then private shareholders are able to extract shareholder value from the subsidiary, so the "nonprofit" component is utterly meaningless here.
How is this not illegal? What prevents any nonprofit from doing this to sidestep its filing status and extract profit?
Every step taken by the nonprofit leadership has to be, (or at least seem to be at the time), net positive for the stated goal of the nonprofit. To be legal, the IPO needs to be a net gain for the nonprofit.
It can easily be that, if they believe that the capital it raises increases the long-term value of the company by a greater multiple than the proportion of the company that is lost from the nonprofit to outside investors.
The primary example of this is Novo Nordisk (the Ozempic company). Their largest shareholder is, through an intermediary, the Novo Nordisk Foundation, which is one of the largest charities in the world. Nordisk used to be a charity that owned 100% of it's own labs and facilities, but in 1989 they realized that they were just too small, and would get trampled by larger international players without greatly increasing their scope. So they made their subsidiary go public (through a complex merger, not an IPO), and now only own 28% of it, instead of 100%. But, in large part because of the capital that going public brought them, despite constantly distributing money for research and charity, that's 28% of a company that's more than 100x bigger that what they used to be. And they retained 77% voting control.
A few things, but they work very well for our industry.
The rule is that the nonprofit and disqualified persons (mostly board members), cant own businesses together, well they can but not more than 35% of it together, and a max of 20% can have voting capability
The consequences arent immediate, non profits have 3 years to correct this
Now in the tech industry, getting VCs involved is already the plan from day one and founders get diluted, so getting below 35% is either easy, or easy within 3 years
so they’re fine
there’s a lot of things they can all do to deal with the share consolidation
not to be a shill, but isn't it good for the non-profit to own a big piece of a successful company?
I think it depends on context.
If the private subsidiary was doing semi-unrelated stuff to the goals of the non-profit, and using it to fund the non-profit, then your logic could make sense - for example if a cancer research charity owned a profitable business and funnelled the profits up to spend on research, great.
But in OpenAI's case, the claimed goals of the non-profit were essentially "do AI in a way that puts safety above profits". And whether or not one agrees with their previous approach to safety, or even whether safety needs to be cared about, it's undeniable that the for-profit business isn't acting as useful fundraising for the non-profit's goals, it's literally acting in the opposite direction.
> it's undeniable that the for-profit business isn't acting as useful fundraising for the non-profit's goals, it's literally acting in the opposite direction
It's generally not up to your or to me, it's up to the donors to the non-profit. If what you find to be undeniable is very much deniable to them, then that is their right.
The only question of public concern is whether OpenAI, Inc., a charity, meets the exemption requirements [1].
[1] https://www.irs.gov/charities-non-profits/charitable-organiz...
See: https://www.axios.com/2023/11/18/how-openai-board-is-structu... for the OpenAI Structure.
1) In order to fund research - this stuff costs 10s of billions of dollars - everyone, from Ilya, to Elon, to Sam - all agreed that they would require a profit-arm to raise money. Nobody was going to sponsor that 10s of billions of dollars to a non-profit.
2) The non profit is still there - and controls the commercial element.
“Controls”
That will be especially untrue after IPO when shareholders can claim there are fiduciary responsibilities that conflict with the non profit goals.
> when shareholders can claim there are fiduciary responsibilities that conflict with the non profit goals
The for-profit has fiduciary responsibility to the non-profit as well as other shareholders. The IPO doesn't really change that.
The for-profit is a PBC with the sane mission at the nonprofit [0]
[0] https://openai.com/index/built-to-benefit-everyone/
The non profit is a big shareholder of the commercial subsidiary
> non profit is still there - and controls the commercial element
The non-profit hasn't controlled squat since they tried and failed to fire Sam Altman.
> Nobody was going to sponsor that 10s of billions of dollars to a non-profit
How much has MacKenzie Scott donated to non-profits again?
Seems like such a claim is on thin ice.
The nonprofit (OpenAI Foundation) owns ~26% of the for-profit, plus some extra warrants.
The for-profit (OpenAI Group PBC) is what's filing the S-1 Draft.
The OpenAI Foundation also exclusively appoints the board of the OpenAI Group PBC and can replace directors at any time.
https://openai.com/our-structure/
(I work at OpenAI, but I am not a lawyer and am not speaking on behalf of OpenAI - just sharing my personal understanding.)
> The OpenAI Foundation also exclusively appoints the board of the OpenAI Group PBC and can replace directors at any time.
Isn't it hard to write this with a straight face?
If they truly wanted it to be in the benefit of the not-for-profit and safe from interference, the ownership by the foundation would be much closer to or just over 50%.... just thinking out loud...
The magic 50% ownership isn't relevant for that purpose. There are special provisions which means that the Foundation effectively exerts full control over the company because it appoints the entire board.
The corporation selling shares is just primarily owned by the non profit
The corporation selling shares is subject to normal corporate tax regime
The real answer to your question is that non profits can own shares, and there is no legal difference between passive investment of other publicly traded companies and highly consolidated shares of a private company. In the US it is seen as merely happenstance that we have such a liquid market where the shares themselves can rapidly change in value and create profits, but there is nothing controversial about that.
Novo Nordisk
https://en.wikipedia.org/wiki/Novo_Holdings_A/S
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There is no point, it’s just government sanctioned virtue signaling
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why not let it be public ?
you release a confidential one - if you don't wanna release info that might empower competitors or you have bad numbers that might spook investors.
if you have a 'moat' then you wouldn't worry about releasing a draft S1. I assume OpenAI has neither.
Here we go
Too late.
Interest in the SpaceX, Anthropic, and OpenAI IPO is already dropping
Why do you say this? It's OK to make such a bold statement, but you gotta share how you came to this conclusion. This helps with a good discussion.
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What's the point of a "confidential S-1"?? Isn't the S-1 supposed to inform potential investors?!? So ... shouldn't it _not_ be confidential??
> What's the point of a "confidential S-1"?
“Under the JOBS Act, it has been possible since April 2012 for ‘emerging growth companies’ to file a Form S-1 on a confidential basis, only making the contents public 21 days prior to the road show for the IPO” [1]. Since 2017 and 2025 it’s been available to basically all companies [2].
Withdrawing an IPO looks bad. Confidential filing lets issuers start and have the option to abort the process without taking reputational damage. (The specifics of OpenAI’s filing, and any back and forth with the SEC, remains confidential.)
[1] https://en.wikipedia.org/wiki/Form_S-1
[2] https://www.sec.gov/about/divisions-offices/division-corpora...
Note the word "Draft".
Once it no longer is being drafted—and agreed upon by all parties to meet the needed regulatory standards—it will become final and be publicly published.
The SEC needs to review it before approving a company to go public at all. It’s targeted at investors but they need to clear it, ask questions, demand changes, etc.
Anthropic did exactly the same thing on June 1st: https://www.anthropic.com/news/confidential-draft-s1-sec
Also according to the Financial Times that this confidential filling gives employees who are considering to sell shares transparency.
I find the irony delicious that this S1 will be fed into ChatGPT so often looking for flaws and edge cases that the LLM will develop sentience just to tell people to stop…
Would be hilarious if they used an LLM to write it and it started hallucinating revenue streams and numbers.
I’m pretty sure they’re smart enough to remember to put “make no mistakes” in their prompt.
Companies IPOing should be forced to put up their estimated market cap as collateral in cash. Oh what is that? You don't have $1 trillion in cash to put up? Cool, you're not a $1 trillion dollar company then.
This makes no sense. Market cap and cash reserves are two different stats for a reason. Why would they need to be the same? Just to make things simpler for people who don't actually know what market cap means? (Which, granted, is the vast majority of people.)
This makes no sense: the whole point is to raise capital. The valuation is never just the current value of the assets; it’s based on the expected future cash flows. A good example is in biotech, some researcher developed a treatment and wants to develop a product. They have valuable IP but zero money. So they IPO to raise capital to bring the treatment to market. The investors expect that in the future, they will get dividends or a buyout.
If a company that wanted to IPO had 1 trillion dollars, their market cap would have to be larger than their cash holding. Their cash on hand is considered or at least should be considered in any normal valuation of the company. Because shares are ownership of the company.
So a simple valuation would be something like Current Cash + Assets + Expected Future cash - (Expenses + Risk)
Where would a company ever get their market cap in cash? If they had that, wouldn’t they by definition have a higher market cap, since the value of the company is cash + the rest of the company?
> since the value of the company is cash + the rest of the company?
Failing companies sometimes trade below cash value. OP's basically creating a rule by which only failing companies are allowed to go public. (Or those who have paid a king's ransom to a megabank.)
Companies always trade at a premium to book, so how would that work?
Last year Chegg was trading below net cash (meaning their market cap was smaller than cash in the bank minus debt). Might still be, I haven't checked in a while. There were maybe a hundred on the Tokyo stock exchange trading below net cash.
Some companies trade at a discount to book value (very normal for banks, for example, especially those from e.g. Pakistan).
In theory the purpose of an IPO is to raise cash to expand a company. If the company already has the cash they don't need to do an IPO.
the marketcap represents the cashflow estimated by the market to be taken out of the business over the lifetime of the company discounted today.
your suggestion makes no sense
...what?
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