[chollida1]

I'd start to worry about OpenAI, from a valuation standpoint. The company has some serious competition now and is arguably no longer the leader.

its going to be interesting to see how easily they can raise more money. Their valuation is already in the $300B range. How much larger can it get given their relatively paltry revenue at the moment and increasingly rising costs for hardware and electricity.

If the next generation of llms needs new data sources, then Facebook and Google seem well positioned there, OpenAI on the other hand seems like its going to lose such race for proprietary data sets as unlike those other two, they don't have another business that generates such data.

When they were the leader in both research and in user facing applications they certainly deserved their lofty valuation.

What is new money coming into OpenAI getting now?

At even a $300B valuation a typical wall street analysts would want to value them at 2x sales which would mean they'd expect OpenAI to have $600B in annual sales to account for this valuation when they go public.

Or at an extremely lofty P/E ratio of say 100 that would be $3B in annual earnings, that analysts would have to expect you to double each year for the next 10ish years looking out, ala AMZN in the 2000s, to justify this valuation.

They seem to have boxed themselves into a corner where it will be painful to go public, assuming they can ever figure out the nonprofit/profit issue their company has.

Congrats to Google here, they have done great work and look like they'll be one of the biggest winners of the AI race.

[jstummbillig]

There is some serious confusion about the strength of OpenAIs position.

"chatgpt" is a verb. People have no idea what claude or gemini are, and they will not be interested in it, unless something absolutely fantastic happens. Being a little better will do absolutely nothing to convince normal people to change product (the little moat that ChatGPT has simply by virtue of chat history is probably enough from a convenience standpoint, add memories and no super obvious path to export/import either and you are done here).

All that OpenAI would have to do, to easily be worth their evaluation eventually, is to optimize and not become offensively bad to their, what, 500 million active users. And, if we assume the current paradigm that everyone is working with is here to stay, why would they? Instead of leading (as they have done so far, for the most part) they can at any point simply do what others have resorted to successfully and copy with a slight delay. People won't care.

[aeyes]

Google has a text input box on google.com, as soon as this gives similar responses there is no need for the average user to use ChatGPT anymore.

I already see lots of normal people share screenshots of the AI Overview responses.

[jstummbillig]

You are skipping over the part where you need to bring normal people, specially young normal people, back to google.com for them to see anything at all on google.com. Hundreds of millions of them don't go there anymore.

[HDThoreaun]

Is there evidence of this? Googles earnings are as strong as ever.

[wahnfrieden]

that's adsense

[paxys]

> as soon as this gives similar responses

And when is that going to be? Google clearly has the ability to convert google.com into a ChatGPT clone today if they wanted to. They already have a state of the art model. They have a dozen different AI assistants that no one uses. They have a pointless AI summary on top of search results that returns garbage data 99% of the time. It's been 3+ years and it is clear now that the company is simply too scared to rock the boat and disrupt its search revenue. There is zero appetite for risk, and soon it'll be too late to act.

[askafriend]

As the other poster mentioned, young people are not going there. What happens when they grow up?

[candiddevmike]

ChatGPT is going to be Kleenex'd. They wasted their first mover advantage. Replace ChatGPT's interface with any other LLM and most users won't be able to tell the difference.

[ComplexSystems]

"People have no idea what claude or gemini are"

One well-placed ad campaign could easily change all that. Doesn't hurt that Google can bundle Gemini into Android.

[jstummbillig]

If it were that simple to sway markets through marketing, we would see Pepsi/Coca-Cola or McDonalds/BurgerKing swing like crazy all the time from "one well-placed ad campaign" to the next. We do not.

[ComplexSystems]

Thanks to well-placed ad campaigns, people have a very good idea what Pepsi, Coca-Cola, McDonald's and Burger King are. They also know what Siri is. And it would be similarly easy to establish Gemini as a household name.

[chollida1]

Chatgpt has no moat of any kind though.

I can switch tomorrow to use gemini or grok or any other llm, and I have, with zero switching cost.

That means one stumble on the next foundational model and their market share drops in half in like 2 months.

Now the same is true for the other llms as well.

[potatolicious]

I think this pretty substantially overstates ChatGPT's stickiness. Just because something is widely (if not universally) known doesn't mean it's universally used, or that such usage is sticky.

For example, I had occasion to chat with a relative who's still in high school recently, and was curious what the situation was in their classrooms re: AI.

tl;dr: LLM use is basically universal, but ChatGPT is not the favored tool. The favored tools are LLMs/apps specifically marketed as study/homework aids.

It seems like the market is fine with seeking specific LLMs for specific kinds of tasks, as opposed to some omni-LLM one-stop-shop that does everything. The market has already and rapidly moved beyond from ChatGPT.

Not to mention I am willing to bet that Gemini has radically more usage than OpenAI's models simply by virtue of being plugged into Google Search. There are distribution effects, I just don't think OpenAI has the strongest position!

I think OpenAI has some first-mover advantage, I just don't think it's anywhere near as durable (nor as large) as you're making it out to be.

[lizardking]

Xerox was a verb too

[PantaloonFlames]

> At even a $300B valuation a typical wall street analysts would want to value them at 2x sales which would mean they'd expect OpenAI to have $600B in annual sales to account for this valuation when they go public.

Oops I think you may have flipped the numerator and the denominator there, if I’m understanding you. Valuation of 300B , if 2x sales, would imply 150B sales.

Probably your point still stands.

[jadbox]

Currently I only find OpenAI to be clearly better for image generation: like illustrations, comics, or photo editing for home project ideation.

[bufferoverflow]

And open-source Flux.1 Kontext is already better than it.

[energy123]

Even if they're winning the AI race, their search business is still going to be cannibalized, and it's unclear if they'll be able to extract any economic rents from AI thanks to market competition. Of course they have no choice but to compete, but they probably would have preferred the pre-AI status quo of unquestioned monopoly and eyeballs on ads.

[xmprt]

Historically, every company has failed by not adapting to new technologies and trying to protect their core business (eg. Kodak, Blockbuster, Blackberry, Intel, etc). I applaud Google for going against their instincts and actively trying to disrupt their cash cow in order to gain an advantage in the AI race.

[orionsbelt]

I think it’s too early to say they are not the leader given they have o3 pro and GPT 5 coming out within the next month or two. Only if those are not impressive would I start to consider that they have lost their edge.

Although it does feel likely that at minimum, they are neck and neck with Google and others.

[ed_mercer]

Source for gpt 5 coming out soon?

[orionsbelt]

https://www.reddit.com/r/singularity/comments/1l1fi7a/gpt5_i...

There’s been other stuff from Sam Altman that puts it around this summer, so even if it gets delayed past July, it seems pretty clear it’s coming within the next few months.

[sebzim4500]

>At even a $300B valuation a typical wall street analysts would want to value them at 2x sales which would mean they'd expect OpenAI to have $600B in annual sales to account for this valuation when they go public.

What? Apple has a revenue of 400B and a market cap of 3T

[Rudybega]

I think OpenAI has projected 12.7B in revenue this year and 29.4B in 2026.

Edit: I am dumb, ignore the second half of my post.

[eamag]

isn't P/E about earnings, not revenue?

[Rudybega]

You are correct. I need some coffee.

[ketzo]

OpenAI has already forecast $12B in revenue by the end of this year.

I agree that Google is well-positioned, but the mindshare/product advantage OpenAI has gives them a stupendous amount of leeway

[Workaccount2]

The hurdle for OpenAI is going to be on the profit side. Google has their own hardware acceleration and their own data centers. OpenAI has to pay a monopolist for hardware acceleration and beholden to another tech giant for data centers. Never mind that Google can customize it's hardware specifically for it's models.

The only way for OpenAI to really get ahead on solid ground is to discover some sort of absolute game changer (new architecture, new algorithm) and manage to keep it bottled away.

[geodel]

OpenAI has now partnered with Jony Ive now and they are going to have thinnest data centers with thinnest servers mounted on thinnest racks. And since everything is so thin, servers can just whisper to each other instead of communicating via fat cables.

I think that will be the game changer OpenAI will show us soon.

[falloon]

All servers will have a single thunderbolt port.

[gotoeleven]

Yep and I heard the servers will only have two USB-C ports for all I/O, but of course dongles will be available.

[diggan]

> OpenAI has to pay a monopolist for hardware acceleration and beholden to another tech giant for data centers.

Don't they have a data center in progress as we speak? Seems by now they're planning on building not just one huge data center in Texas, but more in other countries too.

[geodel]

Well that data center is just going to be full of Nvidia GPUs hence "pay to monopolist" part.

[diggan]

Guess the part I put in quotes should have had a "or" instead of "and" there.

[chollida1]

Agreed, its the doubling of that each year for the next 4-5 years that I see as being difficult.

[VeejayRampay]

the leeway comes from the grotesque fanboyism the company benefits from

they haven't been number one for quite some time and still people can't stop presenting them as the leaders

[ketzo]

People said much the same thing about Apple for decades, and they’re a $3T company; not a bad thing to have fans.

Plus, it’s a consumer product; it doesn’t matter if people are “presenting them as leaders”, it matters if hundreds of millions of totally average people will open their computers and use the product. OpenAI has that.

[aryehof]

Actually, their speculative value is about 3 trillion. Their book value is around 68 billion. Their speculative value might be halved (or more) overnight based on the whim of the economy, markets and opinion. A company isn't actually worth its speculative value.

[raincole]

> At even a $300B valuation a typical wall street analysts would want to value them at 2x sales which would mean they'd expect OpenAI to have $600B in annual sales to account for this valuation when they go public.

Even Google doesn't have $600B revenue. Sorry, it sounds like numbers pulled from someone's rear.

[qeternity]

> At even a $300B valuation a typical wall street analysts would want to value them at 2x sales which would mean they'd expect OpenAI to have $600B in annual sales to account for this valuation when they go public.

Lmfao where did you get this from? Microsoft has less than half of that revenue, and is valued > 10x than OpenAI.

Revenue is not the metric by which these companies are valued...

[Yizahi]

The difference between Microsoft and OAI is that Microsoft can spend a lump sum of money on Excel and a fraction of that on its support and then sell it infinitely with almost no additional costs. MS can add a million of new Excel users tomorrow and that would be almost pure profit. (I'm very simplifying)

OAI on the other hand must spend a lot of additional money for every single new user, both free and paid. Adding million new OAI users tomorrow would mean gigantic negative red hole in the profits (adding to the existing negative). OAI has no or almost no benefits of scale, unlike other industries.

I have no knowledge about corporate valuations, but I strongly suspect that OAI valuation need to include this issue.

[Oleksa_dr]

I was tempted by the ratings and immediately paid for a subscription to Gemini 2.5. Half an hour later, I canceled the subscription and got a refund. This is the laziest and stupidest LLM. What he had to do, he told me to do on my own. And also when analyzing simple short documents, he pulled up some completely strange documents from the Internet not related to the topic. Even local LLMs (3B) were not so stupid and lazy.

[sigmoid10]

Exactly my experience as well. I don't get why people here now seem to blindly take every new gamed benchmark as some harbinger of OpenAI's imminent downfall. Google is still way behind in day-to day personal and professional use for me.