Hacker News new | ask | show | jobs
by SilverBirch 37 days ago
I think it's unquestionably right that these companies can't all win, and those that don't win are going to burn a lot of money for nothing. However there's kind of two directions this can go: Compute gets cheaper, in which case there's no monopoly it'll be easy for many companies to make good models and there won't be pricing power on serving a good model. The other case is compute gets cheaper but we keep using more and more of it, so it does likely become winner take all. The first scenario is good for the economy but likely bad for the returns on these AI stocks. The second is maybe bad for the economy and maybe not even good for the winner.

Take Google or Meta: Today Google makes a shit-tonne of money and to make that money they need to run some servers. The servers are extremely cheap relatively to the revenue they make running the business. This makes them a very attractive stock - the core of why SAAS looks great. Now let's assume the monopoly path. Google can win. I think they likely will win. But now they're going to spending... how many hundreds of billions constantly training new models? The cost of providing the service suddenly isn't small relative revenue they're getting. So even for them it looks awful for their valuation.
1 comments
JumpCrisscross 37 days ago
> these companies

I think the conclusion the market is rapidly and correctly reaching is we aren’t in an AI bubble, we’re in an OpenAI bubble.

Google, Amazon and Anthropic look likely to see ROI on their capital investments because they’ve made them halfway reluctantly. Microsoft is up in the air. Not sure what Meta is doing. And with the benefit of hindsight, OpenAI used capex as a marketing strategy with investors (while Sam Altman materially lied about his compensation and somehow looped Paul Graham and Jessica Livingston, founder of The Information, into his racket).

link
aurareturn 37 days ago
Why would you say we're in an OpenAI bubble if Anthropic is valued more than OpenAI now?
link
JumpCrisscross 37 days ago
> Why would you say we're in an OpenAI bubble if Anthropic is valued more than OpenAI now?

One, it’s not. They’re roughly even. The folks quoting crypto tokens don’t know what they’re talking about.

Two, Anthropic has more revenue and higher-quality growth.

Three, OpenAI is levered in a way Anthropic and the tech giants are not.

Nobody is immune from being overvalued. But what separates a bubble from normal overvaluation is leverage—the consequence of the valuation deflating isn’t just losses, it’s total loss because of debt or debt-like obligations.

OpenAI has racked those up in its datacenter drive. Anthropic and the tech giants have been more disciplined. If OpenAI’s revenues dip, its valuation not only crashes, its commitments to various datacenter projects start strangling it.

link
aurareturn 37 days ago
Ok, let's say they are even. It doesn't make sense to me that you think OpenAI is in a bubble but Anthropic isn't.

OpenAI, just a few weeks ago, claimed they actually have more revenue than Anthropic based the same accounting rules. Since then, Codex seems to be roaring because OpenAI has more compute capacity. OpenAI also has the majority market on consumers, which they're just beginning to monetize.

How is OpenAI levered? They bought more compute earlier and are now reaping the benefits while Anthropic's growth is slowed by the lack of compute.

You call Anthropic disciplined - I call it a mistake to not have bet on more compute.

link
JumpCrisscross 37 days ago
> How is OpenAI levered? They bought more compute earlier and are now reaping the benefits while Anthropic's growth is slowed by the lack of compute

These are orthogonal points.

OpenAI is levered because it has signed commitments to compute. Those are obligations it has to pay regardless of whether it hits revenue targets. A revenue slowdown hurts Anthropic. It could kill OpenAI.

Leverage makes good deals into great deals. If OpenAI hits its revenue targets, levering will have been smart. There is a genuine debate around whether OpenAI’s leverage was a good bet. I think it isn’t. You think it is. That doesn’t change that OpenAI is levered, and that this makes it existentially sensitive to demand variation on the downside (and better exposed on the upside).

To conclude, Anthropic and OpenAI could both be over or undervalued. But only OpenAI can truly be in a bubble.

link
kasey_junk 37 days ago
Leverage might also be a requirement for the product if you don’t already have compute. Anthropics lack of compute is strangling it before our eyes.

I agree that OpenAI is more levered but a bubble can be caused by over exuberance in equity as well. And Anthropic has that in spades.

link
aurareturn 37 days ago
So your whole argument is that OpenAI is in a bubble because their bet on more compute won't payoff, but it's paying off now.

But Anthropic is not in a bubble, despite being valued the same as OpenAI, because they were more careful with compute, which they're paying a heavy price for now having to dumb down Claude Code.

So what do you think OpenAI should be valued at if they're in a bubble now?

link