This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
How much money do they have left? It is hard for me to see how OpenAI doesn't fail at this point. There is no business, no moat. Honestly, the best outcome seems like failing up into a Microsoft acquisition at this point.
There is a moat: government contracts. Everything from NSF grant reviews, drone warfare, DHS visa processing and Medicare/Medicaid claims processing are up for grabs under the right administration.
it will fail the day there is a downturn of the economy. That day will be at a 2001 or a 2008 like event - anytime within the next few years (I've no crystal ball, but strong convictions haha).
And yes, they will be acquired by a company which will have survived the next crash at a fraction of their currently estimated valuation and we will truly have the next ride of the economy .. many years ahead if 2001 is an example.
Why does it have to be such a crash? Could it be just flatlining for a long time? Or perhaps slowly going down? What makes you so sure that it will be a big booom like dotcom or 2008?
- economy has been slowing down (the real one, the people) while stocks are at record high
- a long overdue business cycle which has been pushed back and back and back ...
- rates hiking (in a slowing down economy)
- bubbles, and that AI bubble is huge. Loving AI on an every day basis but revenue wise, it's not mainstream, far from it. Average people want free stuff, they're good with Google or Facebook throwing them ads, they don't want to pay $200 for a subscription and fact is, 2026 revenues are about $100b totall. Meanwhile hyperscalers are spending about $1 to $2 trillion alone in 2026, and meant to increase within the next few years. You need a lot of imagination to see how this can "flatten" nicely.
Like internet didn't disappear after 2001, AI is here to stay, too. But...
The entire US economy is propped up by this bubble, so they will be propped up as much and as long as possible. Basically all money these days is going into this charade, to stop or even slow it down would cause a disastrous collapse
>The entire US economy is propped up by this bubble,
Not really. It'd be a dotcom bust, not a 2008 bust. The average American isn't substantially exposed to these companies and the banking system doesn't hinge on them, there's no systemic risk.
What it would do is wipe out the wealth of a lot of very affluent folks and private investors, which most of us could live with.
The only 'systemic' risk is to venture capital, which the US govt cares a lot about. VC money is why the US has been able to win the past 20 yrs, you realise that? Who funded Google, MSFT, Meta and so on..
Any company that would hypothetically acquire them would need to be able to fully - and indefinitely - subsidize their unsustainable operational costs. I don't see how that's realistic even for a company like Microsoft.
I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
All of this continued stalling and obfuscation can only mean one thing, IMO: OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
I think we're going to suddenly see them greatly scale back training and try to sell inference-only, but they all know when they do that someone can jump up and outstrip them.
In this version of conspiracy theory, all the labs secretly understood that training wasn't economically feasible anymore so they all jointly made it look like they were stopping for safety reasons.
Is there no end to this kind of lazy conspiracy theory
You don't need to communicate to coordinate. All these companies have the same business model, if it was financially advantageous for one of them to push that narrative, then it's financially advantageous for all of them.
But only as long as training actually improves models significantly. As soon as those improvements stay below a certain threshold, the better move is to invest your R&D money into other things like harnesses or new tricks one can play with existing models and the immense cost of training is just not worth it to be 0.5% ahead.
I'm absolutely certain that we will reach that point, just not when. Could come sooner than we think though.
Don't get me wrong I still want the models intelligence to improve, but for all practical purposes we are already there this is why many people are already moving to cheaper/open source. There is still a case though for the 1% of queries that demand SOTA
> Well there certainly is at least some kind of viable business running large AI models for a fee.
ok, where are:
- The economies of scale?
- The network effects?
- The switching costs?
- The intangible assets (e.g. brand?)
Running AI models for a fee has none of these. At best, there are some economies of scale for running a datacenter, but OpenAI and Anthropic have none.
Amazon will be able to run large models for a fee, and make money on it. It's not a trillion dollar business, it may not even be a good business, but they'll be able to do it.
Sure, a supermarket will sell avocados if they make a profit, and won't sell them if they don't. That's a very different business model; the product is the infrastructure, not the AI.
There are not as many network effects, intangible assets, or switching costs as other businesses. I believe there are economies of scale in terms of power and cooling and network bandwidth and the people who plug in cables and other such things.
The business logic is similar to the general transition to cloud. Corporations and individuals are better off paying someone else to manage physical hardware that they just access over the network. That is even more true of large, expensive, fancy AI GPUs than regular web servers.
OpenAI and Anthropic may both fail, or may not, I don't know. But I'm sure there is some kind of viable business running some kind of AI in the cloud.
> OpenAI and Anthropic may both fail, or may not, I don't know. But I'm sure there is some kind of viable business running some kind of AI in the cloud.
The problem is that the investment does not expect "some kind of viable business" ROI needs to be in the order of several trillion for this to make any sense.
Well sometimes when people invest money that does not work out.
That money may not be made back in the way people hope.
But there is a whole ecosystem of companies on OpenRouter etc. who have a viable commodity business serving Chinese open source models on GPUs. I'm sure at least some kind of business like that will survive even if OpenAI and Anthropic completely fail. And I'm sure AWS, GCP and Azure will end up having something like that too.
I believe the entire basis of their profitable quarter was getting a discount on compute from Musk.
All these figures are so utterly weaselly. AAR is a made up measure to make them look good. If they cannot show GAAP numbers, they are hiding something. Full stop. While as private companies they are under no legal obligation to show us their books, their PR and intent to go public requires it.
Those numbers intentionally exclude the single largest operating expense that Anthropic has: model training. [1]
So yeah, if they stop training models forever, Anthropic will probably start making a profit... until someone else with better models comes along to eat their lunch.
Or if model training is more of a rollercoaster, where spending gets you to the top of the hill where you create a massive internal model which can then build the next version of itself for cheaper and cheaper amounts relative to human R&D costs. If Anthropic is first over that hill, they can race far ahead.
I am not even sure that is true. We don’t know everything that is included or excluded from their calculation. I suspect there is a lot of funny math going on to get to profitability. Remember there was a lot of similar talks and reports about SpaceX and how profitable they were. The reality was much worse. I just don’t believe it until I see it in the S1. Even then they can hide quite a bit.
They have found a path to “profitability” iif you define “profitable” in a way that makes every early stage start-up that has at least one paying customer as “profitable”. Literally any start-up has a COGS lower than their income, but that doesn't mean anything at actual profitability given that the rest of their expenses dwarfs it.
If an AI company can exclude the cost of training the new models they release every three months from the business of whether they are profitable, it would be shocking if they weren't profitable. And the figure is tiny compared to the valuation they appear to be seeking, and may only be positive because of a short term boost.
Steve Eisman said the other day that he suspects part of Anthropic's rush to get to IPO is that their third quarter figures are terrible.
I loved how Dario used to AIsplain to credulous interviewers that AI labs had invented an entirely new business model where they were always highly profitable for their current commercially available model, but training the next bigger model made it look like they were losing money.
And suggesting that maybe accounting norms should be changed so they could pretend that they were actually profitable despite the minor detail that they were consistently spending way more than they earned at any given point in time.
This was back in 2024 or so and the zeitgeist was still focused on the idea of the labs racing to AGI instead of building and selling products, with Sam Altman opining about whether money would even exist under AGI and his laughable suggestion that OpenAI might decide to give every American citizen shares in OpenAI for some reason.
If nothing else at least now they seem to be scrutinized more like regular tech megacorps instead of a sort of private yet benevolent Manhattan project of ascetic technopriests building a utopia machine.
And now they spend more time talking about building a doomsday machine that will kill you all and also show you ads.
I'm insanely profitable each month if you exclude my mortgage and bills and shopping too.
My low level conspiracy theory is AI is encouraging habits of people not to read so noone can read statements like "we excluded our costs from our profit calculation"
Anthropic likely would not be saying, in October, that they planned to go public next month, if this were also true of their business.
In the last ~month, OpenAI announced a delay to its IPO and Anthropic put a relatively near-term range on its IPO date. These are very different signals.
The reason is that companies can choose the best timing to go public - when their financial look the best - and they do.
Anthropic trying to go public very soon is a good tell their financial look pretty decent. OpenAI postponing the IPO is a very good tell theirs look bad.
They do because the other part of the equation is that they need to keep spending a lot of money to build out infrastructure faster than their two most significant competitors, one of which is public and wildly profitable (for non-AI reasons) and another has already filed for IPO. So it puts them at a disadvantage to walk away from a massive cash infusion.
Two reasons. First, there's more money in the public markets, and Altman's appetite seems insatiable (he's the one who's been calling for gigantic, government-sponsored "Manhattan Project" efforts related to AI); and second, public money comes with fewer strings attached - private investors want protections, board seats, etc.
Who knows what Altman wants? It's moot what individual motivations are as he is definitely fronting for investors who have significant power in the business.
Public money comes with legal fiduciary duties.
The reason to IPO is to get private money out, materialise the whole valuation.
I certainly wouldn’t say that public money comes with fewer strings attached. Just different strings. But the strings that come with public money tend to have sharper legal teeth behind them.
I don't know why comments pointing out this simple fact are getting downvoted.
The oversimplified view that has been drilled into startup discussions for years has been that IPO is the singular goal for every startup and they need to get there as fast as possible, but that hasn't been true for a long while. There are high profile examples like Stripe with no intent to go public any time soon. Some public companies are even gradually doing share buybacks partially to remove their public exposure.
Being a public company kind of sucks in many ways. I'll admit my sample size is small, but every post-IPO CEO I've known has expressed some regrets about going public. It was a fascinating revelation to me after being raised on the idea that IPO is the ultimate victory goal of every startup.
I'm guessing downvotes are not because people don't understand that this happens, but because based on OpenAI's words and actions it is highly unlikely that this is what they are doing. Also, Stripe has been confirmed to be profitable.
lol but they're trying to IPO, it's what sam altman has been talking about for the past 2 years? Are you saying you know something better about sam altman than his public opinions?
I am not sure why you'd, at this late date, think Sam Altman's public statements have anything to do with anything. Time and time again demonstrated compulsive bullshitter.
If they wanted to IPO they could do it at any moment and have a swarm of bankers and lawyers knocking down their door to work 16 hour days to get it done.
The only reason they’re not doing it is by choice, because they want to find an optimal time to maximize their returns.
There is no “we’re trying to IPO but can’t”. If they were actually trying, it would be in motion.
Unhinged conspiracy, if you take the implicit goals of AI research orgs at face value (I.e., replacing all knowledge work) and assume it possible; why would they drag a few thousand knowledge workers along to the promised land when they can just shed them after their usefulness has worn out?
What does adding a few more suckers to the pile of tens of millions of other suckers do to those that get the real benefits? It’s not like after they achieve their goals, the people who helped them would have the ramp or resources to recreate the process.
That then begs the question of whether there's any promised land at all after all knowledge work is replaced.
If you've made tens of millions of people unemployed over the timeline of a few years, then you no longer have nearly the market to sell goods and services - including your AI - to.
Assuming these guys answer that with "let's make UBI" - which is a huge assumption given the way SV fetishizes those who "create value" and looks down upon those who don't - you now basically have tech feudalism. The remaining upper crust "generously" pays the rest of the population enough to not starve until they die.
You'll basically have an entire society in stasis, with no hope of improving their lot, being given the bare minimum to keep humans alive, if that. Well, no hope of peacefully improving their lot.
From my read this line of thought was alluded to by GP's ironic "promised land". A promised land for whom? Not for the vast majority of humankind.
Comparisons to feudalism kind of sell the direness of the AGI vision short: in feudalism, the lord still depended on the peasants. The lord would be inconvenienced if he had them all killed. Not so with AGI! He won't even notice their gone.
Exactly why I’m confused with the “techno-feudalism” point as well. What are the serfs for if they’re useless (sans some physical labor maybe?). The AGI dream is for the smallest amount of humans needed to keep the system running, and if AI can do everything feasible, then that group is basically those that “own” the AI. Techno-feudalism, if even necessary, would be a fleeting blip in the end.
The investors need to make a couple trillion dollars soon or it all falls apart, right? Maybe I misunderstand how the financing for this works, but my understanding is they have borrowed and set on fire an enormous pile of money as a sacrifice to summon the Machine-God.
If He fails to arrive, or arrives late, they will be the railroad financiers in the Panic of '73.
At scale that OpenAI is valued at public markets are only place with enough of liquidity. At smaller scale private equity is an option. But if you are speaking of near trillion scale it really is not.
They are in a vicious circle there’s no good way out of. Building and operating their services is not operationally profitable. Therefore they need more funding. The only way to get more funding is to get a wider adoption and show new features. The only way to do that is to keep spending money.
Not being profitable in itself is not a problem or has not been historically. With software, there’s a bunch of investment into making the service but the variable cost of providing it is negligible. It’s ok not to be profitable because the growth of userbase will pay you back. Capex isn’t a thing, you can just rent somebody else’s from the cloud. This is how the world used to work pretty much for a quarter century, ever since the dot-com bubble. But OpenAI is not like it. Their variable cost is huge as is the capex to enable being able to even make that cost happen. It’s not that they are not profitable, it’s that their financial profile does not fit into anything this generation of decisionmakers is used to.
> I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
> OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
If a startup is riding a hype cycle and is one of two leaders in the global industry with unreal growth numbers, they can IPO whenever they want. The incentives lean toward doing an IPO before the hype runs out, not delaying it.
If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Companies don't actually have to go public quickly or even at all, even though that's been drilled into us as the only goal of every investor-backed startup.
I know it would be unworkable ripe-for-abuse, but for a moment I wished there was no tax if you sold from an index fund that broke its core rules and operating principles to invest in another that preserved them.
American venture capital and by extension US power (because the expectation is this is re-invested) means that it has to be allowed to happen whether you and I like it or not.
This is the entire game if you zoom out.
Exit -> Recycle some of the money so USA stays ahead. That is the entire game, you see it right...? I hope you do.
> If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Yes? They were geared up for IPO this year until pushing it back. See all the marketing shenanigans around solving mathematics for this month's flavour. They have a balancing act to manage between the hype and the reality of the business.
Sam conceded he had no business plan in 2022 after releasing chatgpt. He even said he doesn't intend to come up with a business model, he would rather wait for the model to reach AGI then ask it to come up with a model.
No he wasn't wearing a red ball on his nose. He didn't even smile saying this. Dead serious.
"If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd."
This is a fallacious assertion, there are so many big private companies with strong businesses that stay private for a whole variety of reasons. E.g. Stripe, Revolut, Databricks, etc.
it really is a privatize the gains socialize the losses situation, isn't it? due to the new rules (or lack thereof), public investors didn't have access to all that growth.
no way it ever gives you a return like, say, the amazon IPO could've.
Losses are much more privatized staying private. Instead of hitting people's 401k or pension fund, this is mostly contained to a concentrated set of VC and PE investors, not large public markets.
The companies involved still come for the 401k/pension funds, they just now wait until the majority of the upside growth has been realized and then dump the downside on to 401k/pension funds.
What regulation makes it so that a large private company would have to go public? You have it backwards. Increased regulations make it more burdensome for a company to go public, driving companies like OpenAI to remain private. If you made it less expensive and burdensome to IPO (decreased regulation), you would see companies go IPO earlier.
This also coincides with a growing market for private credit and VC which certainly helps companies stay private for longer.
Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private.
I'd say it's the growth of private markets to allow companies to keep getting funding even at the $100 billion range while staying private that has fueled the trend to stay private rather than SOX and other new regulations for public corporate governance dissuading them from going public.
>Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private.
It's not that you couldn't stay private before, but there wasn't much benefit because after crossing that cap you had reporting obligations comparable to public companies anyways.
I searched around and your original claim doesn't seem too convincing. Recall the original claim was
>Regulations that limit the ability of investors to invest in private companies ...
The JOBS act raised the cap from 500 investors to 2000, but with VC funds, that's hardly an issue. Does Anthropic (and other unicorns) really need 500+ VC backers? It might change behavior on the margins, but it's hard to imagine that's the cause for the paucity of public listings.
The actual change that made it more tenable to stay private is arguably the carveout for employee stockholders, but summarizing that as "limit the ability of investors to invest in private companies" is a bit misleading.
Meta (formerly Facebook) was forced to take their company public because of how many private investors they had. It’s the Securities Exchange Act of 1934 and also the Jobs Act of 2012 which set these limits (currently 2000 shareholders is the limit). Companies use right of first refusal on their shares to keep the number of shareholders low.
There was a rule[1] pre-2012 that forced public disclosure (akin to listed companies) for private companies when it had >500 shareholder (which counted employees with shares). This made it so that companies had a choice to stay private with all obligation of public disclosure or go public for added benefit of tapping public market.
In 2012 this was relaxed in JOBS Act which relaxed the 500 threshold to 2000 but more importantly it ignored employees so now private companies of gargantuan trillion dollar valuation and thousands of employees have no disclosure requirements.
So, this is a classic case of regulation that did well but was relaxed and now creates hidden risks.
I think they would have kept it under 500 if they had to. I doubt this is the determining factor. In fact a lot more than 2k investors have exposure through SPVs or holding companies on top of holding companies. So no, I don't think this was the determining factor that allowed OpenAI to stay private longer.
Seems really unfair to early stage employees as without this they would be much less likely to receive equity from employers. I guess it would force some companies to go public earlier but at the expense of employees who would get virtually none of the upside, and startups can't compete for talent.
> Seems really unfair to early stage employees as without this they would be much less likely to receive equity from employers.
We have historical data on how it worked out for companies that were pushed into going public by the old regulations... Microsoft, Google, Facebook, et al.
Their early stage employees did... pretty well... financially.
The only real difference from the employee perspective is that a lot of the money that made them rich came from public investors (who also had a chance to make a lot of money), whereas now it only comes from private investors and the public is locked out.
It's because reporting requirements changed, in particular employees with stock options no longer counted as shareholders for the purpose of crossing the mandatory reporting threshold.
Before that change companies like MS were in essence forced to IPO, because they'd get all the downsizes of public reporting, without the benefit of accessing market liquidity. So once you were over the threshold, it made no sense to not go all the way.
That's no longer true, and has coincided with a huge expansion in private equity funding growth stage companies vs needing public liquidity. As a result these IPOs being done after their growth stage is largely over are offering the public a very different bet that tech company IPOs of the past.
They would also stop selling equity to private investors. They are likely diluting their own stake.
But they need the money. After all that has already been invested they still need more. That is all I need to know about any delusions that they are currently profitable.
> This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
There's a good recent YouTube video about the shift in regulations that switched IPOs from being a way to raise money for growth to being a way to dump on retail investors after all the significant growth has been funded by private investors:
There are bits and pieces of info scattered everywhere but no coherent picture. We know from a16z report [1] that only 2% of US households pay for AI subscriptions, so most of the seat based pricing comes from business and enterprise agreements. We know that OpenAI ads business has $1 billion USD in annualised revenue run rate [2]. We know from OpenRouter data [3] that in 2025 70% of the API token spend was across all the proprietary models (Anthropic did very well in 2025, while OpenAI clawed back market share in 2026).
It all starts to look like a very low margins business, and reminds me very much of telecom industry.
>Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
This is definitely by design and encouraged by the VC’s. It’s disgusting to consider what a simulacrum of a market the stock market has actually become.
It’s because this IPO is backed by those who grew up through the boom and bust of the dotcom era, so they know now to do all their growth in secret behind the scenes and then dump onto the market when there’s nothing more in that tank. Rather than letting the public have any major growth out of their baby, and only letting the price discovery phase work one way.
I agree with you and the parent comment, but to be fair to VC, they're also assuming risk. For example, if Wework had IPO'd earlier the public would've been holding the bag instead of private investors.
I agree but not sure WeWork is a good example. That smelled like pump and dump scheme from the beginning. They pretended to be tech company, while actually being landlord middlemen. Plenty of people predicted that downfall.
WeWork collapsed because of their S-1 was on fire. If they had gone public earlier, it would have still been on fire. The reason they lasted that long is because Masayoshi Son didn't do anything that resembled due diligence, but the market would have always done it.
Right but why would VCs want this? Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions? I really wish there were a simple explanation of why companies don't want to IPO as early as they used to but there isn't. The closest I've found when talking to CEOs has been they don't want shareholders putting pressure on them for quarterly results and diluting the company's focus, especially when it's still growing and doesn't have a mature business.
> Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions?
Everyone's eager to get a slice of these pre-IPO companies, and the marginal utility of having it be more liquid on the public markets probably doesn't outweigh the legal requirements behind going public. It's not like VCs are stuck holding the bag until an IPO these days. I'm not sure why that changed, but it's probably not healthy.
> Everyone's eager to get a slice of these pre-IPO companies
I know plenty of companies that are failing on VC dime, whose investors can't sell their equity. I disagree that everyone wants a slice of these companies. It's not clear to me whether it's a net win for VCs to hold onto illiquid investments for so long (meaning I can see both the upsides and the downsides.)
This mad dash to build companies worth TRILLIONS and with trillions of dollars in capex commitments based on the best of all possible worlds coming true for their products comes from this generation of CEOs. Nobody is saying “ok we’ve reached a new threshold in AI let’s see if we can expand slowly so it improves over the next 20 years”. They’re saying “we are on the verge of AGI and Superintelligence so we need hundreds and hundreds of billions of dollars to be spent to make it happen NOW”.
"Right but why would VCs want this? Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions? I really wish there were a simple explanation of why companies don't want to IPO as early as they used to but there isn't."
To me it's pretty clear. The earlier investors take out all the possible upside and then dump it on the retail market. The retail investor will be less and less able to buy stock that will grow 10x and more. It's hard to imagine SpaceX, OpenAI or Anthropic will multiply in value after the IPO. They are priced in a way that they have to execute perfectly for a long time to justify even their current price.
Just another step for the super wealthy to keep profits for themselves instead of letting the broader population to benefit.
Companies used to *need* to go public in order to either raise capital or because they were going to have to start publicly reporting anyways due to the number of shareholders.
The JOBS Act and proliferation of double-vesting trigger RSUs effectively negated these forcing functions and 'going public' went from a necessary growing pain to a burden and distraction.
Yeah, I have similar thoughts. If SpaceX's IPO has been a dumpster fire, and share price dropped to the third of its initial value, it would still have been massively overvalued, and made Musk much richer than if they went with a more realistic market cap, and let the market carry them upwards.
I agree with you for sure, but fwiw there’s a simpler alternate explanation, or at least there’s another way of saying the same thing
I’ve asked at rapidlu growing unicorns where I’ve worked “why don’t we ipo” and the big wigs every time just say, “why?”
If the original point of the ipo was to raise money and now you can do that privately, it stands to reason that a simple explanation might be that it’s not worth the hassle until the VC’s say they want their money back
Casual Finance did a video on this recently. He explains that prior to 2012 there was a rule that private companies would need to start reporting their financials once they reach the threshold of 500 investors. Because of this they would usually just choose to go public at that point. But since the rule was removed, companies are waiting longer because they don’t have that forcing function anymore. Also, the rich have never been richer so the private money is abundant anyways so there isn’t really a need to go public until you’ve reached the highest valuation you think you can ever get.
We actually have a lot of information on this [1], just indirectly: reported figures, revenue commitments with the hyperscalers, announced funding rounds, and so on. The hyperscalers invest directly in OpenAI and Anthropic, so their bets rest on growth they can see from the inside. They have a clear view of the slope of the curve.
OpenAI is already at about $50B in annualised revenue, up from $21B at the end of last year. That puts it on track to beat its internal projection of $58B by year-end.
Of course, none of this answers the trillion-dollar question of whether that growth will continue. But that question is separate from the claim that OpenAI needs to go public before we can see what’s going on. If anything, I think it’s better for them to stay private while venture capital keeps funding them and until they’ve shown they can sustain their growth. The longer they wait before raising public money, the less risk they add to public markets.
Apparently they overstated revenue in an attempt to try to provide a direct comparison with Anthropic's reported metrics.
From the article: "According to a person with knowledge of the matter, the discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not.
Efforts to “gross up” OpenAI’s annualised revenue led to reports that the group’s annualised revenue had hit $40bn in August. The company has since told investors its revenues have grown more than 70 per cent, leading to the $70bn figure"
**sorry the gift link can only be viewed 3 times..
Obviously not the same thing as lying, but Anthropic had also been juicing the revenues with making smart models incredibly verbose. In August my org 3x more in API credits vs July. In September the spend returned to July levels partially because they made models less verbose, but mostly because we've changed how we are using them.
All that tells you is that they haven't at all abandoned the disinformation: Now they are blaming Anthropic for it and trying to shift attention to them.
You can still learn something from it: Look at what they do, not what they say - look at how sophisticated their public communication is. They deliver that information in the perfect manner - not only the redirection and striking a blow against their rival, but they use an anonymous "person with knowledge of the matter": A named source at OpenAI might betray the self-interest in the statement, but some anonymous third party is just reporting what they know.
These guys are very good at it, though that shouldn't surprise you. Look at their product, in one sense a highly effective disinformation machine.
* Due to the highly persuasive, human-like, manner in which AI output has been designed, users are persuaded to believe absolute falsehoods. As one popular example, lawyers filings with courts sometimes include fabricated citations - even the experts (the lawyers) are fooled.
* AI software is used for mass disinformation campaigns.
That's not all AI software does, but it's a significant part. You might say that the persuasive human tone is the defining characteristic of AI for most people.
>The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not.
gift link didn't work for me, and is this poorly phrased? because it seems implausible that OpenAI doesn't typically include revenue from their models being used on AWS. Perhaps the "gross up" is referring to how the number is included? like Anthropic was using the value pre-removal of revenue sharing and putting the revenue share subtraction as a separate expense?
[not a finance guy so someone tell me I'm wrong if that's not a plausible reading]
in this case nothing. they are not public, and they never lied to their actual investors that we know of, they were just being tongue in cheek with the press and never actually made any materially false statement. Being oblique does a lot of the heavy lifting here.
You can be charged with securities fraud for selling private company shares and still have an obligation to honesty and candor to investors. The real difference is that private companies aren’t trusted to sell to the general population and are limited to qualified investors.
> OpenAI is under pressure to justify its $852 billion valuation to investors as it gears up for what is widely expected to be a blockbuster IPO. OpenAI confidentially filed its prospectus with regulators in June, and executives have signaled that the company is eyeing a 2027 debut.
> Anthropic is also readying for a major IPO. The company has not officially disclosed when it plans to debut, but it’s been engaging in meetings with prospective investors and is reportedly seeking a $2 trillion valuation. In August, Anthropic told investors that its annualized revenue run rate hit $65 billion at the end of July.
Is 15 billion annualized (30% more) supposed to justify the $1 trillion+ difference between the two valuations sought in any event? Or are Anthropic's numbers better because of margins or something?
Zitron complained about a lot of things, one some he was wrong (eg. llm are not useful), on others(eg. "magic accounting" or datacenters ) he has very good points ... but we will see.
He did not say LLMs are not useful, he said they’re valuable for software engineering and could justify a hundred million or billion dollar valuation but not a trillion dollar valuation
This is latests refactor, in older videos he stated more than once that llms are basically crap (and at the time he said that he was probably right, but it was very short sight)
This is pretty much the main point of his frustration.
The world has standardised methods of accounting. Not only do Anthropic and OpenAI avoid using those methods, they both use the same phrase “annualised revenues” to describe two radically different accounting processes.
They’re both also leaking those annualised numbers slowly to the press at irregular intervals, which hints that they’re disclosing new numbers in the days after a big sale lands. So you see “$30bn annualised” because they managed to land a $1bn contract the week before, bumping the annualised figure up by $12bn compared to the start of the previous month, and the end of the next.
Yes, This is the one thing he says that generally resonated with me. A lot of his talking points (harnesses as elaborate rude goldberg machines) read more as exaggerated negative statements supporting a pre-concieved narrative
I tried to make a similar play on Heath Robinson but couldn't make it work. In any case check him out, he's more-or-less the English version of Rube Goldberg. Both a lot of fun.
No one has rebutted Ed's points. The only rebuttal is "but look how cool AI is!". He mainly sticks to objective facts about their financial situation, and an honest analysis of that situation is dire, regardless of what you think of AI.
So? Tell me his data is wrong, and then I'll care. His primary "prediction" is that it's a bubble and will crash. And he has lots of empirical facts regarding Anthropic, OpenAI, and all the related companies' actual financial situation. Him being wrong on different predictions does not change the fact that Anthropic and OpenAI are in massive debt and do not have the revenue to handle it, and that a huge percentage of the stock market is being propped up by AI. As he himself says, I really hope nothing bad happens, but the financials are to dire to ignore.
>For example, when Timothy B. Lee looked at a spreadsheet that Zitron used to create a projection of Anthropic's revenue, he found
>He doesn't count February 1-10, counts March 1-10 twice, counts August 21-October 21 as one month instead of two, and doesn't count October 21-November 1. [another commenter notes that his spreadsheet also contains February 30] ... Ed claims he tried to compute Anthropic's revenue for 2025 and came up with $3.6 billion, suggesting some funny business [but the numbers work out once you fix the errors]
from the above link. Personally I agree it's a bubble and there will likely be some sort of crash. But Ed is way to pessimistic on the underlying technology.
And bubbles and crashes are kind of inevitable with any hot new tech given human nature trying to pile in and get rich quick. It's a bit like prediting it'll rain one day.
His "facts" are not facts, he makes stuff up, miss-states things constantly, and is financially illiterate. Whenever I read anything he writes I'm constantly face-palming because it's basically all rubbish.
He's anti-tech, anti-AI, incredibly biased, and just honestly full of bile.
And yes, I'm saying his data is wrong, his interpretation of the data is wrong, and his conclusions are wrong.
Do you know who is not surprised by this? Ed Zitron, and anyone who has read his articles or anyone who have looked into these companies at any level deeper than "AI do cool things! AI must be good investment! AI must make much money!"
For those that care about the truth: This is a non-story.
The $70b estimate was based on a comparison to Anthropic, which includes revenue from cloud providers. OpenAI does not include this in their numbers.
So, the number did not come from OpenAI. It was an accounting mistake made by some investors and media, who did not adjust for this before reporting on it. I see fintwit calling on FT/Axios to issue a retraction; good luck with that.
It sure is interesting to see the rush to judgement in this thread. Another poster correctly pointed out this mistake (now buried under the sea of misinformed posts trending above it.) The Internet is cooked.
"The $70b estimate was based on a comparison to Anthropic" -- Can you prove that? All I could find were major outlets (Reuters, Yahoo Finance) citing an Axios report, that itself cited "sources familiar with the financials tell Axios.". I haven't found anything similar to what you are claiming.
It says the 70B figure "was based on _information shared with investors_ in an attempt to create a more direct comparison to rival Anthropic".
That's a different thing from what you said, that the 70B "was based on a comparison to Anthropic". It wasn't, or we can't say that using the source material. The 70B was based on an anonymous source, which used the different metric (including cloud revenue etc) supposedly to make a comparison with anthropic, which does those things, easier.
> Anyway, it doesn't seem like this is "not news".
Given that the number in the headline is based off of a nonsensical apples-to-oranges comparison of revenue figures, I think at a minimum we've got a misleading headline, don't you think?
The headline should've been "OpenAI annualised revenues $20B less than previously signalled by us". The FT is just reporting high number to create a story, then a low number to create another story.
> based on information that was provided to investors.
It was OpenAI spreading their bullshit annualized revenue.
OpenAI and Anthropic always play this silly game to pretend they are in anyway viable. It is always ARR, "adjusted" revenue, etc. "We are profitable when we pretend we don't have expenses".
How does that contradict what parent said? Yes, obviously they are pointing at something for their numbers, but something as vague as "based on information that was provided to investors" might still just be entirely nonsense and is certainly not enough to establish confidence as to the validity of the claim.
Parent implied that the previous number was a fabrication from FT, instead of it being a fabrication from OpenAI.
The press that reports on this shit is very much complicit, they report on bullshit metrics spread by these companies to generate hype.
> outside of OpenAI control.
If OpenAI is as uncertain of their numbers to the magnitude of 20B, they should stop spreading bullshit metrics. In fact this should be considered fraud.
What I was saying: What FT presents in the way they do should not be enough to move the needle and convince anyone that this happened, regardless of what might have happened and that it could have happened.
People can just write stuff. That does not make it wrong but that also does not make it right. If your claim rests on some claim that some anonymous actor got some information, that's just not super convincing and neither is pointing at it as some sort of truth.
>> based on information that was provided to investors.
>It was OpenAI spreading their bullshit annualized revenue.
Did you read the article?
>The discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues, according to a person familiar with the matter. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as Amazon’s AWS and Google Cloud, while OpenAI does not.
>Investors’ efforts to “gross up” OpenAI’s annualised revenue prompted reports that the figure was around $40bn in July, said the person.
>OpenAI later told its backers that its annualised revenues had jumped more than 70 per cent since July, prompting reports that the figure was about $70bn at the end of September — a number the company did not deny.
>However, the new investor presentation shows close to $30bn annualised revenues in July.
Sounds like what happened wasn't that openai "spreading their bullshit annualized revenue", it was that they gave some vague figure that investors the media and other investors extrapolated, and it turned out that extrapolation was incorrect. Both the $40bn and $70bn figure did not come from openai directly.
> far short of the $70bn reported by the FT and other media outlets late last month based on information that was provided to investors.
Media was mislead by second hand information and misled the public, now they are 'shocked' they reported incorrectly..
Still, seems it is still true that their number is not directly comparable to Anthropic's because they calculate it differently, I think that part still stands and is pretty relevant here.
Stories like these almost always ask for comment from the subject before publishing. If the initial numbers were wrong and OpenAI had a problem with it, they could've responded to the reporters at that time or at publish time, but they didn't. It's highly unlikely the original sourcing wasn't tied to OpenAI.
They didn’t mention asking OpenAI for comment on that figure in the original story. They just quoted a person with knowledge of the group’s finances. Nothing about declining to comment.
Sorry Bence I trust the FT journalists to have due diligence w.r.t. what evidence of AR they got from investors (who got it from OpenAI). I completely believe that the company helmed by "not consistently candid" sama bullshits investors about their AR which is the point of this article.
Though I agree with your sentiment that FT is reporting this stuff in a way to stir the pot and create outrage. Speculating about a private company like this is stupid.
FT clearly didn't do their due diligence, since the auxiliary information provided with the $70B leak (about e.g. growth rates and enterprise sales) made it clear that the number could not possibly be correct.
It just wasn't clear exactly what the error was (e.g. was a projection of a $70B ARR by end of year being misinterpreted as $70B ARR now -- that would have been stupid, but less stupid than the "investors added a fudge factor to the numbers" story that they're now going with).
> As OpenAI bides its time, the company is engaging in early stage discussions with investors about a potential new funding round. The company could raise around $30 billion, CNBC previously reported, but that figure could change.
I predicted last month when they launched Luna that they had raised more funding and I suspect this tidbit dropped to CNBC is just prepping the public for a fundraising that’s already happened. There will probably be an announcement this month.
People have a hard time differentiating between bets vs. fraud.
OpenAI is a bet. Maybe a bad bet. Sure. But everyone knows it is a bet. Their investors are experienced and multi-millionaires with teams of analysts. They cannot just act like they are dumb. Not say it's impossible but highly unlikely they can just claim they don't know any better.
SBF was a fraud for using the customers' funds. The customers were promised that their money wouldn't be used for anything. And their customers are average people. Albeit, SBF's investments are pretty godlike based on the current valuations.
Fraud is problematic because it results in harm. Betting in the way Anthropic/OpenAI/Nvidia are is legal, and still incredibly likely to cause harm. So sure, you're technically correct, but the resulting harm that we will all suffer when it all comes crashing down won't be any easier because it was legal...
I’d consider massaging the figures so your “annualised” revenue looks to be 20 billion dollars higher than it is to be on the side of fraudulent rather than betting. And it’s fraudulent because you need to keep pulling in investor cash to keep the thing pumping and afloat, not just dealing with building a decent product and building it out gradually based on what it costs to run and what people will pay for it.
Technology. Don’t what to be too specific about where I work.
> Was the team disbanded specifically because of your productivity with AI?
Company has laid many people off, and moved many into new lines of business. I don’t know how management decided who went where. I don’t get the impression I’m a special case or anything.
I'm waiting for the IPO; I was hoping we'd see less news like this prior. I'm not sure if plain shorting, or puts are the correct action; I suspect the former, as timing the latter is not reliable.
judging from SpaceX performance, I think the market can handle a couple more low float high valuation issuances
The public markets have floated multiple names up to $6tr marketcap/valuation
so the debuts at $1tr valuation from the private markets don’t mean anything
pre-IPO investors will just collar like they did SpaceX, nullifying any price volatility for them at the high share price, and giving them all the liquidity collateral they need for borrowing
https://www.sec.gov/Archives/edgar/data/1341439/000119312526... says that in June–August 2026 Oracle made $7.39b from cloud infrastructure, $4.22b from cloud applications (aka their SaaS business), $655m from licensing their software, and $4.9b from support.
So, one of the more surprising things that was claimed to me (But I haven't verified myself,) is Oracle doesn't charge for IOPS on OCI the way AWS would for an Oracle instance.
I'm sure there's other devils hiding in details, but that alone would make it a very tempting target for orgs that want to move off-prem to chase the 'move to cloud' 'KPI' 'Synergy' but still have a bunch of trash queries/etc running under the covers, with the additional benefit of you are safer when the sales/legal folks from licensing visit your offices for renewals and the like.
Honest question, everyone really hates annualized revenue, but how else do you measure the revenue for a company that is (presumably) growing so much month over month? You can't just state revenue projections because they are growing too fast for them to ever make much sense.
Obviously for fast-growing companies, they always want to overstate their success to get that next bit of funding (or in OAI, Anthropic's case justify their existing valuation), so what metric should they share to investors?
State the truth, what revenue you collected last month, the month before, etc. We're not children that need help with arithmetic. We can all multiply by 12, but we don't because it's meaningless. Report the truth. Report what you have already done and leave the "make up new measures that make us look good by pretending we can predict the future" to others.
Sure, and you do show that (and most companies who use annualized revenue are growing so fast their monthly chart looks like a hockey stick). Annualized revenue is a revenue number that serves as the minimum you expect to do if you are truly fast growing.
The crash of AI hype will be absolutely beautiful. Sure my 401K will probably tank, but this is honestly not the first time. Have plenty of assets not tied to stock market plus plenty of cash.
Although, I suppose that saying, "the market can remain irrational longer than you can be solvent", is more true than ever.
There is a reason we consider annual results. A year is a natural complete cycle. There isn’t equal amount of demand in January as in June for almost any product.
So taking one good week and multiplying it by 52 (or 4 x 13 as the case may be) is at least naïve and realistically — deceptive.
Now let's think for a second about why you would ever want to report it that way. There is not one good reason other than hiding your actual measly revenue.
This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
How much money do they have left? It is hard for me to see how OpenAI doesn't fail at this point. There is no business, no moat. Honestly, the best outcome seems like failing up into a Microsoft acquisition at this point.
They’re raising another $30B:
https://www.reuters.com/legal/transactional/openai-targets-3...
There is a moat: government contracts. Everything from NSF grant reviews, drone warfare, DHS visa processing and Medicare/Medicaid claims processing are up for grabs under the right administration.
it will fail the day there is a downturn of the economy. That day will be at a 2001 or a 2008 like event - anytime within the next few years (I've no crystal ball, but strong convictions haha).
And yes, they will be acquired by a company which will have survived the next crash at a fraction of their currently estimated valuation and we will truly have the next ride of the economy .. many years ahead if 2001 is an example.
Why does it have to be such a crash? Could it be just flatlining for a long time? Or perhaps slowly going down? What makes you so sure that it will be a big booom like dotcom or 2008?
Many reasons:
- economy has been slowing down (the real one, the people) while stocks are at record high
- a long overdue business cycle which has been pushed back and back and back ...
- rates hiking (in a slowing down economy)
- bubbles, and that AI bubble is huge. Loving AI on an every day basis but revenue wise, it's not mainstream, far from it. Average people want free stuff, they're good with Google or Facebook throwing them ads, they don't want to pay $200 for a subscription and fact is, 2026 revenues are about $100b totall. Meanwhile hyperscalers are spending about $1 to $2 trillion alone in 2026, and meant to increase within the next few years. You need a lot of imagination to see how this can "flatten" nicely.
Like internet didn't disappear after 2001, AI is here to stay, too. But...
The entire US economy is propped up by this bubble, so they will be propped up as much and as long as possible. Basically all money these days is going into this charade, to stop or even slow it down would cause a disastrous collapse
>The entire US economy is propped up by this bubble,
Not really. It'd be a dotcom bust, not a 2008 bust. The average American isn't substantially exposed to these companies and the banking system doesn't hinge on them, there's no systemic risk.
What it would do is wipe out the wealth of a lot of very affluent folks and private investors, which most of us could live with.
The only 'systemic' risk is to venture capital, which the US govt cares a lot about. VC money is why the US has been able to win the past 20 yrs, you realise that? Who funded Google, MSFT, Meta and so on..
Any company that would hypothetically acquire them would need to be able to fully - and indefinitely - subsidize their unsustainable operational costs. I don't see how that's realistic even for a company like Microsoft.
> zero information on how it’s doing
I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
All of this continued stalling and obfuscation can only mean one thing, IMO: OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
The same is true for Anthropic, by the way.
Yep, I agree. The only 'frontier' any of the big labs are racing towards is the frontier of financial ruin.
I think we're going to suddenly see them greatly scale back training and try to sell inference-only, but they all know when they do that someone can jump up and outstrip them.
> I think we're going to suddenly see them greatly scale back training and try to sell inference-only
Remember a few weeks ago when all the AI labs said "we need to slow down, to uh, prevent destroying the world"?
Ding!
In this version of conspiracy theory, all the labs secretly understood that training wasn't economically feasible anymore so they all jointly made it look like they were stopping for safety reasons.
Is there no end to this kind of lazy conspiracy theory
You don't need to communicate to coordinate. All these companies have the same business model, if it was financially advantageous for one of them to push that narrative, then it's financially advantageous for all of them.
Or all the big ones are content with the current status quo and willing to compete amongst each other and want to shut the door to upstarts.
You see it time and time again.
Yup - period 1,2,3 shut the door. Then periods beyond that agree to fight it out.
Posters like simian are in denial and delusional about reality.
He doesn’t know anything about industrial organisation and yet has the bluster to post about it.
He ought to google ‘tacit collusion’.
So the more likely answer is they are on the verge of making super intelligence that could kill us all?
No. But more likely that they, the labs, are acting in good faith.
That's not required, merely that the labs _think_ there is a _chance_ (like Coxon's 10%) that they are on the verge of it.
But only as long as training actually improves models significantly. As soon as those improvements stay below a certain threshold, the better move is to invest your R&D money into other things like harnesses or new tricks one can play with existing models and the immense cost of training is just not worth it to be 0.5% ahead.
I'm absolutely certain that we will reach that point, just not when. Could come sooner than we think though.
Don't get me wrong I still want the models intelligence to improve, but for all practical purposes we are already there this is why many people are already moving to cheaper/open source. There is still a case though for the 1% of queries that demand SOTA
At that point they would lose all advantage stemming from their ability to boil the ocean though.
Well there certainly is at least some kind of viable business running large AI models for a fee.
These are useful and too big to run locally.
The ultimate size of that business in terms of revenues and profits may not match current expectations, but it's also not 0
> Well there certainly is at least some kind of viable business running large AI models for a fee.
ok, where are:
- The economies of scale?
- The network effects?
- The switching costs?
- The intangible assets (e.g. brand?)
Running AI models for a fee has none of these. At best, there are some economies of scale for running a datacenter, but OpenAI and Anthropic have none.
Amazon will be able to run large models for a fee, and make money on it. It's not a trillion dollar business, it may not even be a good business, but they'll be able to do it.
Sure, a supermarket will sell avocados if they make a profit, and won't sell them if they don't. That's a very different business model; the product is the infrastructure, not the AI.
There are not as many network effects, intangible assets, or switching costs as other businesses. I believe there are economies of scale in terms of power and cooling and network bandwidth and the people who plug in cables and other such things.
The business logic is similar to the general transition to cloud. Corporations and individuals are better off paying someone else to manage physical hardware that they just access over the network. That is even more true of large, expensive, fancy AI GPUs than regular web servers.
OpenAI and Anthropic may both fail, or may not, I don't know. But I'm sure there is some kind of viable business running some kind of AI in the cloud.
> OpenAI and Anthropic may both fail, or may not, I don't know. But I'm sure there is some kind of viable business running some kind of AI in the cloud.
The problem is that the investment does not expect "some kind of viable business" ROI needs to be in the order of several trillion for this to make any sense.
Well sometimes when people invest money that does not work out.
That money may not be made back in the way people hope.
But there is a whole ecosystem of companies on OpenRouter etc. who have a viable commodity business serving Chinese open source models on GPUs. I'm sure at least some kind of business like that will survive even if OpenAI and Anthropic completely fail. And I'm sure AWS, GCP and Azure will end up having something like that too.
Anthropic appears to have found a path to profitability: https://www.forbes.com/sites/jonmarkman/2026/08/17/anthropic...
I believe the entire basis of their profitable quarter was getting a discount on compute from Musk.
All these figures are so utterly weaselly. AAR is a made up measure to make them look good. If they cannot show GAAP numbers, they are hiding something. Full stop. While as private companies they are under no legal obligation to show us their books, their PR and intent to go public requires it.
Those numbers intentionally exclude the single largest operating expense that Anthropic has: model training. [1]
So yeah, if they stop training models forever, Anthropic will probably start making a profit... until someone else with better models comes along to eat their lunch.
[1] https://www.morningstar.com/news/marketwatch/2026091414/the-...
In the discussion of a similar article, it was called PBBT - profit before bad things.
So... "revenue"?
Or if model training is more of a rollercoaster, where spending gets you to the top of the hill where you create a massive internal model which can then build the next version of itself for cheaper and cheaper amounts relative to human R&D costs. If Anthropic is first over that hill, they can race far ahead.
Maybe... just maybe companies find an equilibrium? Maybe companies reinvest in training because there's performance increase?
Hahaha here he is.
How confident are you that these firms are going to survive if they’re fudging the numbers?
kind of puts it in 4K the reason behind "we must pace the frontier"
I am not even sure that is true. We don’t know everything that is included or excluded from their calculation. I suspect there is a lot of funny math going on to get to profitability. Remember there was a lot of similar talks and reports about SpaceX and how profitable they were. The reality was much worse. I just don’t believe it until I see it in the S1. Even then they can hide quite a bit.
Hence a company with a second revenue stream such as Google has an advantage, in my opinion
Advertizing is an amazingly durable and high margin business imho.
They have found a path to “profitability” iif you define “profitable” in a way that makes every early stage start-up that has at least one paying customer as “profitable”. Literally any start-up has a COGS lower than their income, but that doesn't mean anything at actual profitability given that the rest of their expenses dwarfs it.
These figures are EBBT.
Earnings Before Bad Things.
If an AI company can exclude the cost of training the new models they release every three months from the business of whether they are profitable, it would be shocking if they weren't profitable. And the figure is tiny compared to the valuation they appear to be seeking, and may only be positive because of a short term boost.
Steve Eisman said the other day that he suspects part of Anthropic's rush to get to IPO is that their third quarter figures are terrible.
I loved how Dario used to AIsplain to credulous interviewers that AI labs had invented an entirely new business model where they were always highly profitable for their current commercially available model, but training the next bigger model made it look like they were losing money.
And suggesting that maybe accounting norms should be changed so they could pretend that they were actually profitable despite the minor detail that they were consistently spending way more than they earned at any given point in time.
This was back in 2024 or so and the zeitgeist was still focused on the idea of the labs racing to AGI instead of building and selling products, with Sam Altman opining about whether money would even exist under AGI and his laughable suggestion that OpenAI might decide to give every American citizen shares in OpenAI for some reason.
If nothing else at least now they seem to be scrutinized more like regular tech megacorps instead of a sort of private yet benevolent Manhattan project of ascetic technopriests building a utopia machine.
And now they spend more time talking about building a doomsday machine that will kill you all and also show you ads.
If the ads are as bad as the AI-generated ads I now get on Youtube, I will take option 1.
(And yeah, there’s always some new variation on “we should be able to call it capex”)
I'm insanely profitable each month if you exclude my mortgage and bills and shopping too.
My low level conspiracy theory is AI is encouraging habits of people not to read so noone can read statements like "we excluded our costs from our profit calculation"
Anthropic likely would not be saying, in October, that they planned to go public next month, if this were also true of their business.
In the last ~month, OpenAI announced a delay to its IPO and Anthropic put a relatively near-term range on its IPO date. These are very different signals.
> Anthropic likely would not be saying, in October, that they planned to go public next month, if this were also true of their business.
they are 50/50 at best.
IPO = It's Probably Overpriced.
The reason is that companies can choose the best timing to go public - when their financial look the best - and they do. Anthropic trying to go public very soon is a good tell their financial look pretty decent. OpenAI postponing the IPO is a very good tell theirs look bad.
> If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
OTOH, if a company has a sound business plan and strong financial footing it may not need to IPO -- unless the founders or VCers want out ASAP.
They do because the other part of the equation is that they need to keep spending a lot of money to build out infrastructure faster than their two most significant competitors, one of which is public and wildly profitable (for non-AI reasons) and another has already filed for IPO. So it puts them at a disadvantage to walk away from a massive cash infusion.
I think the answer is simply that private money is cheaper than public money for these companies right now.
OpenAI hasn’t had any problems getting impressive amounts of funding. So why ipo?
Two reasons. First, there's more money in the public markets, and Altman's appetite seems insatiable (he's the one who's been calling for gigantic, government-sponsored "Manhattan Project" efforts related to AI); and second, public money comes with fewer strings attached - private investors want protections, board seats, etc.
I don't think this is right.
Who knows what Altman wants? It's moot what individual motivations are as he is definitely fronting for investors who have significant power in the business.
Public money comes with legal fiduciary duties.
The reason to IPO is to get private money out, materialise the whole valuation.
I certainly wouldn’t say that public money comes with fewer strings attached. Just different strings. But the strings that come with public money tend to have sharper legal teeth behind them.
I don't know why comments pointing out this simple fact are getting downvoted.
The oversimplified view that has been drilled into startup discussions for years has been that IPO is the singular goal for every startup and they need to get there as fast as possible, but that hasn't been true for a long while. There are high profile examples like Stripe with no intent to go public any time soon. Some public companies are even gradually doing share buybacks partially to remove their public exposure.
Being a public company kind of sucks in many ways. I'll admit my sample size is small, but every post-IPO CEO I've known has expressed some regrets about going public. It was a fascinating revelation to me after being raised on the idea that IPO is the ultimate victory goal of every startup.
I'm guessing downvotes are not because people don't understand that this happens, but because based on OpenAI's words and actions it is highly unlikely that this is what they are doing. Also, Stripe has been confirmed to be profitable.
I understand it as IPO is the ultimate victory for investors. They finally get their reward, sell in the overpriced moment and can go their merry way.
lol but they're trying to IPO, it's what sam altman has been talking about for the past 2 years? Are you saying you know something better about sam altman than his public opinions?
I am not sure why you'd, at this late date, think Sam Altman's public statements have anything to do with anything. Time and time again demonstrated compulsive bullshitter.
What makes us sure, that his public statement reflect his opinion?
If they wanted to IPO they could do it at any moment and have a swarm of bankers and lawyers knocking down their door to work 16 hour days to get it done.
The only reason they’re not doing it is by choice, because they want to find an optimal time to maximize their returns.
There is no “we’re trying to IPO but can’t”. If they were actually trying, it would be in motion.
How do you know they aren't actively working on it?
he just knows ok? /s
That poster has been caught telling a pack of lies borderline fantasy stuff and runs away when confronted.
IPO is the singular goal for a venture backed company…
The founders and VCs can shell shares to private investors, it's the employees who are sitting on options who get fucked.
Whatever private-market liquidity events they will be permitted to participate in will be highly disadvantaged compared to the other two groups.
Unhinged conspiracy, if you take the implicit goals of AI research orgs at face value (I.e., replacing all knowledge work) and assume it possible; why would they drag a few thousand knowledge workers along to the promised land when they can just shed them after their usefulness has worn out?
What does adding a few more suckers to the pile of tens of millions of other suckers do to those that get the real benefits? It’s not like after they achieve their goals, the people who helped them would have the ramp or resources to recreate the process.
That then begs the question of whether there's any promised land at all after all knowledge work is replaced.
If you've made tens of millions of people unemployed over the timeline of a few years, then you no longer have nearly the market to sell goods and services - including your AI - to.
Assuming these guys answer that with "let's make UBI" - which is a huge assumption given the way SV fetishizes those who "create value" and looks down upon those who don't - you now basically have tech feudalism. The remaining upper crust "generously" pays the rest of the population enough to not starve until they die.
You'll basically have an entire society in stasis, with no hope of improving their lot, being given the bare minimum to keep humans alive, if that. Well, no hope of peacefully improving their lot.
It won't be a promised land at that point.
From my read this line of thought was alluded to by GP's ironic "promised land". A promised land for whom? Not for the vast majority of humankind.
Comparisons to feudalism kind of sell the direness of the AGI vision short: in feudalism, the lord still depended on the peasants. The lord would be inconvenienced if he had them all killed. Not so with AGI! He won't even notice their gone.
Exactly why I’m confused with the “techno-feudalism” point as well. What are the serfs for if they’re useless (sans some physical labor maybe?). The AGI dream is for the smallest amount of humans needed to keep the system running, and if AI can do everything feasible, then that group is basically those that “own” the AI. Techno-feudalism, if even necessary, would be a fleeting blip in the end.
Manual labor and, at least for a while, protection.
Mankind has never been content with "basic" income. Columbus was not starving. He sailed into the unknown anyway because he was greedy.
Besides as much as I love UBI it requires Star Trek technology: ubiquitous space travel and replicators.
VCs always want out when they've made their return. They are not in the business of owning companies for income.
The investors need to make a couple trillion dollars soon or it all falls apart, right? Maybe I misunderstand how the financing for this works, but my understanding is they have borrowed and set on fire an enormous pile of money as a sacrifice to summon the Machine-God.
If He fails to arrive, or arrives late, they will be the railroad financiers in the Panic of '73.
At scale that OpenAI is valued at public markets are only place with enough of liquidity. At smaller scale private equity is an option. But if you are speaking of near trillion scale it really is not.
They are in a vicious circle there’s no good way out of. Building and operating their services is not operationally profitable. Therefore they need more funding. The only way to get more funding is to get a wider adoption and show new features. The only way to do that is to keep spending money.
Not being profitable in itself is not a problem or has not been historically. With software, there’s a bunch of investment into making the service but the variable cost of providing it is negligible. It’s ok not to be profitable because the growth of userbase will pay you back. Capex isn’t a thing, you can just rent somebody else’s from the cloud. This is how the world used to work pretty much for a quarter century, ever since the dot-com bubble. But OpenAI is not like it. Their variable cost is huge as is the capex to enable being able to even make that cost happen. It’s not that they are not profitable, it’s that their financial profile does not fit into anything this generation of decisionmakers is used to.
> I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
What about Stripe?
> OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
If a startup is riding a hype cycle and is one of two leaders in the global industry with unreal growth numbers, they can IPO whenever they want. The incentives lean toward doing an IPO before the hype runs out, not delaying it.
If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Companies don't actually have to go public quickly or even at all, even though that's been drilled into us as the only goal of every investor-backed startup.
Which is why Spacex was so rushed, and why they insisted on new rules for early exits and inclusion in the Nasdaq 100 index.
I'm not certain OpenAI or Anthropic have a viable business, either, but Spacex definitely pulled a massive scam.
I know it would be unworkable ripe-for-abuse, but for a moment I wished there was no tax if you sold from an index fund that broke its core rules and operating principles to invest in another that preserved them.
American venture capital and by extension US power (because the expectation is this is re-invested) means that it has to be allowed to happen whether you and I like it or not.
This is the entire game if you zoom out.
Exit -> Recycle some of the money so USA stays ahead. That is the entire game, you see it right...? I hope you do.
> If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Yes? They were geared up for IPO this year until pushing it back. See all the marketing shenanigans around solving mathematics for this month's flavour. They have a balancing act to manage between the hype and the reality of the business.
Sam conceded he had no business plan in 2022 after releasing chatgpt. He even said he doesn't intend to come up with a business model, he would rather wait for the model to reach AGI then ask it to come up with a model.
No he wasn't wearing a red ball on his nose. He didn't even smile saying this. Dead serious.
And yet
I actually found the clip. I paraphrased but the essence is there: https://youtu.be/gjQUCpeJG1Y
Or, as Matt Levine put it, "We will create God and then ask it for money."
Gosh that man has a way with words
If they do make AGI, this is a winning strategy.
And if I found a cheap way to turn lead into gold, I'd be a trillionaire. That doesn't mean it's likely or even possible.
No you wouldn't - that's because everyone else would soon figure out how to do the same and there would be a gold oversupply.
But betting everything on that if is an insanely risky one.
If the AI bubble bursts China will still be the factory of the world. They literally out-export their internal economic problems.
But for the US this is the last throw of the dice. All chips on red.
They also have to be the only one to make AGI. Maybe 1 of 2.
Because he was in YC/Google/MBA-camp ala "If we have enough traffic, we will find out how to become profitable", since this how the valley thinks :-)
That is a caricature.
Sam parlayed working for YC into owning a significant holding of Reddit (and other companies?).
To me, he appears to be a successful parasite that selects the fattest hosts. There are plenty of people that laud VC culture.
Maybe Sam understood the deep wisdom of no revenue.
Silicon Valley No Revenue: https://www.youtube.com/watch?v=BzAdXyPYKQo
“The plan is to invent AGI and then task it with working out how to make money”
"If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd."
This is a fallacious assertion, there are so many big private companies with strong businesses that stay private for a whole variety of reasons. E.g. Stripe, Revolut, Databricks, etc.
You're letting your bias leak out here.
Nobody is quiet about doing well. And the frenetic release schedule of kinda half baked products tells a story (not a good one)
it really is a privatize the gains socialize the losses situation, isn't it? due to the new rules (or lack thereof), public investors didn't have access to all that growth.
no way it ever gives you a return like, say, the amazon IPO could've.
What are you talking about?
Losses are much more privatized staying private. Instead of hitting people's 401k or pension fund, this is mostly contained to a concentrated set of VC and PE investors, not large public markets.
The companies involved still come for the 401k/pension funds, they just now wait until the majority of the upside growth has been realized and then dump the downside on to 401k/pension funds.
See: SpaceX and the Nasdaq 100 rule changes.
the big losses haven't happened yet
IPO, insiders cash out, retail holds the bag
What regulation makes it so that a large private company would have to go public? You have it backwards. Increased regulations make it more burdensome for a company to go public, driving companies like OpenAI to remain private. If you made it less expensive and burdensome to IPO (decreased regulation), you would see companies go IPO earlier.
This also coincides with a growing market for private credit and VC which certainly helps companies stay private for longer.
Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private.
I'd say it's the growth of private markets to allow companies to keep getting funding even at the $100 billion range while staying private that has fueled the trend to stay private rather than SOX and other new regulations for public corporate governance dissuading them from going public.
>Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private.
Which regulations are these?
SEC 12(g). The cap was raised by the JOBS act.
It's not that you couldn't stay private before, but there wasn't much benefit because after crossing that cap you had reporting obligations comparable to public companies anyways.
I searched around and your original claim doesn't seem too convincing. Recall the original claim was
>Regulations that limit the ability of investors to invest in private companies ...
The JOBS act raised the cap from 500 investors to 2000, but with VC funds, that's hardly an issue. Does Anthropic (and other unicorns) really need 500+ VC backers? It might change behavior on the margins, but it's hard to imagine that's the cause for the paucity of public listings.
The actual change that made it more tenable to stay private is arguably the carveout for employee stockholders, but summarizing that as "limit the ability of investors to invest in private companies" is a bit misleading.
Meta (formerly Facebook) was forced to take their company public because of how many private investors they had. It’s the Securities Exchange Act of 1934 and also the Jobs Act of 2012 which set these limits (currently 2000 shareholders is the limit). Companies use right of first refusal on their shares to keep the number of shareholders low.
There was a rule[1] pre-2012 that forced public disclosure (akin to listed companies) for private companies when it had >500 shareholder (which counted employees with shares). This made it so that companies had a choice to stay private with all obligation of public disclosure or go public for added benefit of tapping public market.
In 2012 this was relaxed in JOBS Act which relaxed the 500 threshold to 2000 but more importantly it ignored employees so now private companies of gargantuan trillion dollar valuation and thousands of employees have no disclosure requirements.
So, this is a classic case of regulation that did well but was relaxed and now creates hidden risks.
[1]: https://www.investopedia.com/terms/5/500-shareholder-thresho...
I think they would have kept it under 500 if they had to. I doubt this is the determining factor. In fact a lot more than 2k investors have exposure through SPVs or holding companies on top of holding companies. So no, I don't think this was the determining factor that allowed OpenAI to stay private longer.
I disagree. Not counting employees as shareholders was the main kicker. There was a reason Google and Meta went public so early in their growth story.
Seems really unfair to early stage employees as without this they would be much less likely to receive equity from employers. I guess it would force some companies to go public earlier but at the expense of employees who would get virtually none of the upside, and startups can't compete for talent.
> Seems really unfair to early stage employees as without this they would be much less likely to receive equity from employers.
We have historical data on how it worked out for companies that were pushed into going public by the old regulations... Microsoft, Google, Facebook, et al.
Their early stage employees did... pretty well... financially.
The only real difference from the employee perspective is that a lot of the money that made them rich came from public investors (who also had a chance to make a lot of money), whereas now it only comes from private investors and the public is locked out.
> What regulation makes it so that a large private company would have to go public?
My guess would be - oxytocin, cortisol and dopamine regulation, or rather the failure of said regulation.
It's because reporting requirements changed, in particular employees with stock options no longer counted as shareholders for the purpose of crossing the mandatory reporting threshold.
Before that change companies like MS were in essence forced to IPO, because they'd get all the downsizes of public reporting, without the benefit of accessing market liquidity. So once you were over the threshold, it made no sense to not go all the way.
That's no longer true, and has coincided with a huge expansion in private equity funding growth stage companies vs needing public liquidity. As a result these IPOs being done after their growth stage is largely over are offering the public a very different bet that tech company IPOs of the past.
They would go public if they were doing well.
They would also stop selling equity to private investors. They are likely diluting their own stake.
But they need the money. After all that has already been invested they still need more. That is all I need to know about any delusions that they are currently profitable.
> This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
There's a good recent YouTube video about the shift in regulations that switched IPOs from being a way to raise money for growth to being a way to dump on retail investors after all the significant growth has been funded by private investors:
https://www.youtube.com/watch?v=roe3SgezmmU
There are bits and pieces of info scattered everywhere but no coherent picture. We know from a16z report [1] that only 2% of US households pay for AI subscriptions, so most of the seat based pricing comes from business and enterprise agreements. We know that OpenAI ads business has $1 billion USD in annualised revenue run rate [2]. We know from OpenRouter data [3] that in 2025 70% of the API token spend was across all the proprietary models (Anthropic did very well in 2025, while OpenAI clawed back market share in 2026).
It all starts to look like a very low margins business, and reminds me very much of telecom industry.
[1] https://www.a16z.news/p/state-of-markets-ii
[2] https://www.reuters.com/business/media-telecom/openais-ad-bu...
[3] https://openrouter.ai/state-of-ai
>Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
This is definitely by design and encouraged by the VC’s. It’s disgusting to consider what a simulacrum of a market the stock market has actually become.
It’s because this IPO is backed by those who grew up through the boom and bust of the dotcom era, so they know now to do all their growth in secret behind the scenes and then dump onto the market when there’s nothing more in that tank. Rather than letting the public have any major growth out of their baby, and only letting the price discovery phase work one way.
I agree with you and the parent comment, but to be fair to VC, they're also assuming risk. For example, if Wework had IPO'd earlier the public would've been holding the bag instead of private investors.
If they had IPO’d earlier there probably would have been better oversight of the excesses.
I mean "oversight" just means shareholders would lose money. The losers would be members of the public rather than funds invested by KSA.
Kind of agree but their risk is actually spreading through the entire system, as today shows.
VC money is weird. It can come from private individuals, from loans with extremely low interest, from private funds...
The thing is normally it's money that's intended to be burned in the search of a unicorn, cheap money, so there's no real "risk" there.
The common perception is that OAI/Anthropic are pumping up their hype before they unload on retail in their IPOs
The problem is that the US can't even sell treasuries at 5½% and they're safe as houses. Also houses are not selling.
What risk is VC assuming in late stage? The only way a business fails at that point really is fraud or management failure.
I agree but not sure WeWork is a good example. That smelled like pump and dump scheme from the beginning. They pretended to be tech company, while actually being landlord middlemen. Plenty of people predicted that downfall.
WeWork collapsed because of their S-1 was on fire. If they had gone public earlier, it would have still been on fire. The reason they lasted that long is because Masayoshi Son didn't do anything that resembled due diligence, but the market would have always done it.
Good point. The market may not always be rational, but it's often more so than any individual investor.
Don’t sovereign wealth funds and pension funds also invest in VCs? So even if it’s “private” people are holding the bag?
Also, I think comparing WeWork to AI labs is not valid.
These labs have increasingly become of public interest and are shaping economies around the world, WeWork was just not at that level.
What if it's just because the numbers aren't that great at the moment?
Right but why would VCs want this? Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions? I really wish there were a simple explanation of why companies don't want to IPO as early as they used to but there isn't. The closest I've found when talking to CEOs has been they don't want shareholders putting pressure on them for quarterly results and diluting the company's focus, especially when it's still growing and doesn't have a mature business.
> Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions?
Everyone's eager to get a slice of these pre-IPO companies, and the marginal utility of having it be more liquid on the public markets probably doesn't outweigh the legal requirements behind going public. It's not like VCs are stuck holding the bag until an IPO these days. I'm not sure why that changed, but it's probably not healthy.
> Everyone's eager to get a slice of these pre-IPO companies
I know plenty of companies that are failing on VC dime, whose investors can't sell their equity. I disagree that everyone wants a slice of these companies. It's not clear to me whether it's a net win for VCs to hold onto illiquid investments for so long (meaning I can see both the upsides and the downsides.)
https://youtu.be/roe3SgezmmU
VCs just want returns on the money, and they don't need to use the stock market for that as much anymore.
This mad dash to build companies worth TRILLIONS and with trillions of dollars in capex commitments based on the best of all possible worlds coming true for their products comes from this generation of CEOs. Nobody is saying “ok we’ve reached a new threshold in AI let’s see if we can expand slowly so it improves over the next 20 years”. They’re saying “we are on the verge of AGI and Superintelligence so we need hundreds and hundreds of billions of dollars to be spent to make it happen NOW”.
Then they'll turn around and say there's a decent chance ASI will kill us all, so better we build it before China does.
> Then they'll turn around and say there's a decent chance ASI will kill us all, so better we build it before China does.
So true. I know I'd rather be murdered by an American ASI than a Chinese one.
I think that's mostly so govt blocks their competition as much as possible
"Then they'll turn around and say there's a decent chance ASI will kill us all, so better we build it before China does."
And also set up moats so for security only they are allowed to push the state of the art forward.
Yeah that whole mass annihilation of humanity dollar. That’s a good dollar. Worth winning the rush to capture that one.
Paraphrasing Bill Hicks.
"Right but why would VCs want this? Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions? I really wish there were a simple explanation of why companies don't want to IPO as early as they used to but there isn't."
To me it's pretty clear. The earlier investors take out all the possible upside and then dump it on the retail market. The retail investor will be less and less able to buy stock that will grow 10x and more. It's hard to imagine SpaceX, OpenAI or Anthropic will multiply in value after the IPO. They are priced in a way that they have to execute perfectly for a long time to justify even their current price.
Just another step for the super wealthy to keep profits for themselves instead of letting the broader population to benefit.
Have we considered that many of them are rather dumb.
That’s actually not why. It’s because of regulations put into place after Enron collapsed that made it harder and more expensive to go public.
Those regulators in 18 months time: “We had no idea that crash was going to happen. Nobody saw it coming.”
Companies used to *need* to go public in order to either raise capital or because they were going to have to start publicly reporting anyways due to the number of shareholders.
The JOBS Act and proliferation of double-vesting trigger RSUs effectively negated these forcing functions and 'going public' went from a necessary growing pain to a burden and distraction.
It goes both ways. There are a lot of software companies that VCs poured money into that have turned out to be worth a fraction of the valuations.
Yeah, I have similar thoughts. If SpaceX's IPO has been a dumpster fire, and share price dropped to the third of its initial value, it would still have been massively overvalued, and made Musk much richer than if they went with a more realistic market cap, and let the market carry them upwards.
Why is it still afloat then?
I agree with you for sure, but fwiw there’s a simpler alternate explanation, or at least there’s another way of saying the same thing
I’ve asked at rapidlu growing unicorns where I’ve worked “why don’t we ipo” and the big wigs every time just say, “why?”
If the original point of the ipo was to raise money and now you can do that privately, it stands to reason that a simple explanation might be that it’s not worth the hassle until the VC’s say they want their money back
What past regulations would have forced OpenAI to go public sooner?
Casual Finance did a video on this recently. He explains that prior to 2012 there was a rule that private companies would need to start reporting their financials once they reach the threshold of 500 investors. Because of this they would usually just choose to go public at that point. But since the rule was removed, companies are waiting longer because they don’t have that forcing function anymore. Also, the rich have never been richer so the private money is abundant anyways so there isn’t really a need to go public until you’ve reached the highest valuation you think you can ever get.
We actually have a lot of information on this [1], just indirectly: reported figures, revenue commitments with the hyperscalers, announced funding rounds, and so on. The hyperscalers invest directly in OpenAI and Anthropic, so their bets rest on growth they can see from the inside. They have a clear view of the slope of the curve.
OpenAI is already at about $50B in annualised revenue, up from $21B at the end of last year. That puts it on track to beat its internal projection of $58B by year-end.
Of course, none of this answers the trillion-dollar question of whether that growth will continue. But that question is separate from the claim that OpenAI needs to go public before we can see what’s going on. If anything, I think it’s better for them to stay private while venture capital keeps funding them and until they’ve shown they can sustain their growth. The longer they wait before raising public money, the less risk they add to public markets.
[1] https://finance.visnia.xyz/economy/ai-buildout
Gift link: https://giftarticle.ft.com/giftarticle/actions/redeem/f77156...
Apparently they overstated revenue in an attempt to try to provide a direct comparison with Anthropic's reported metrics.
From the article: "According to a person with knowledge of the matter, the discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not. Efforts to “gross up” OpenAI’s annualised revenue led to reports that the group’s annualised revenue had hit $40bn in August. The company has since told investors its revenues have grown more than 70 per cent, leading to the $70bn figure"
**sorry the gift link can only be viewed 3 times..
Obviously not the same thing as lying, but Anthropic had also been juicing the revenues with making smart models incredibly verbose. In August my org 3x more in API credits vs July. In September the spend returned to July levels partially because they made models less verbose, but mostly because we've changed how we are using them.
> Apparently they overstated revenue in an attempt to try to provide a direct comparison with Anthropic's reported metrics.
Just to clarify from my understanding of the quote, "they" here is openai investors, not openai.
The people who are currently holding the bag but would maybe like not to be holding the bag decided it was worth more?
All that tells you is that they haven't at all abandoned the disinformation: Now they are blaming Anthropic for it and trying to shift attention to them.
You can still learn something from it: Look at what they do, not what they say - look at how sophisticated their public communication is. They deliver that information in the perfect manner - not only the redirection and striking a blow against their rival, but they use an anonymous "person with knowledge of the matter": A named source at OpenAI might betray the self-interest in the statement, but some anonymous third party is just reporting what they know.
These guys are very good at it, though that shouldn't surprise you. Look at their product, in one sense a highly effective disinformation machine.
They can afford, and need, the best bullshitters on the planet.
>Look at their product, in one sense a highly effective disinformation machine.
What do you mean by this?
there's a popular theory that AI hallucinates 100% of the time and the coping mechanism is to call it a bullshit machine
I suppose it's really in two senses:
* Due to the highly persuasive, human-like, manner in which AI output has been designed, users are persuaded to believe absolute falsehoods. As one popular example, lawyers filings with courts sometimes include fabricated citations - even the experts (the lawyers) are fooled.
* AI software is used for mass disinformation campaigns.
That's not all AI software does, but it's a significant part. You might say that the persuasive human tone is the defining characteristic of AI for most people.
> Apparently they overstated revenue in an attempt to try to provide a direct comparison with Anthropic's reported metrics.
I'm confident both companies are lying about their revenues.
By how much do you think they are lying?
The link doesn't work.
Ok, we've swapped the submitted URL (https://www.ft.com/content/b66a9858-f8fb-46cb-b506-44bfe26fc...) for a non-paywalled article above.
>The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not.
gift link didn't work for me, and is this poorly phrased? because it seems implausible that OpenAI doesn't typically include revenue from their models being used on AWS. Perhaps the "gross up" is referring to how the number is included? like Anthropic was using the value pre-removal of revenue sharing and putting the revenue share subtraction as a separate expense?
[not a finance guy so someone tell me I'm wrong if that's not a plausible reading]
https://www.axios.com/2026/09/03/anthropic-and-openais-reven...
What’s it called when you misstate revenue while also taking money from investors?
It's called we're lucky we're not listed
I think it’s technically called securities fraud.
Matt Levine likes to argue everything is securities fraud. I'm not close enough to the industry but it seems true enough.
https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...
I thought his deal was "everything is a monopoly", lol.
(I subscribe to his newsletter and generally really enjoy it.)
Not if you haven't issued securities?
in this case nothing. they are not public, and they never lied to their actual investors that we know of, they were just being tongue in cheek with the press and never actually made any materially false statement. Being oblique does a lot of the heavy lifting here.
You can be charged with securities fraud for selling private company shares and still have an obligation to honesty and candor to investors. The real difference is that private companies aren’t trusted to sell to the general population and are limited to qualified investors.
Business as usual
> OpenAI is under pressure to justify its $852 billion valuation to investors as it gears up for what is widely expected to be a blockbuster IPO. OpenAI confidentially filed its prospectus with regulators in June, and executives have signaled that the company is eyeing a 2027 debut.
> Anthropic is also readying for a major IPO. The company has not officially disclosed when it plans to debut, but it’s been engaging in meetings with prospective investors and is reportedly seeking a $2 trillion valuation. In August, Anthropic told investors that its annualized revenue run rate hit $65 billion at the end of July.
Is 15 billion annualized (30% more) supposed to justify the $1 trillion+ difference between the two valuations sought in any event? Or are Anthropic's numbers better because of margins or something?
It signals Anthropic is growing faster than OpenAI, and the market still feels the upside of AI is that it will eat all software and services.
Good point. I didn't think about growth rates here which is probably the whole game.
Does this align with what Zitron was complaining about? Or is it a broken-clock-right-twice-a-day thing? neutral question.
Zitron complained about a lot of things, one some he was wrong (eg. llm are not useful), on others(eg. "magic accounting" or datacenters ) he has very good points ... but we will see.
He did not say LLMs are not useful, he said they’re valuable for software engineering and could justify a hundred million or billion dollar valuation but not a trillion dollar valuation
This is latests refactor, in older videos he stated more than once that llms are basically crap (and at the time he said that he was probably right, but it was very short sight)
This is pretty much the main point of his frustration.
The world has standardised methods of accounting. Not only do Anthropic and OpenAI avoid using those methods, they both use the same phrase “annualised revenues” to describe two radically different accounting processes.
They’re both also leaking those annualised numbers slowly to the press at irregular intervals, which hints that they’re disclosing new numbers in the days after a big sale lands. So you see “$30bn annualised” because they managed to land a $1bn contract the week before, bumping the annualised figure up by $12bn compared to the start of the previous month, and the end of the next.
Yes, This is the one thing he says that generally resonated with me. A lot of his talking points (harnesses as elaborate rude goldberg machines) read more as exaggerated negative statements supporting a pre-concieved narrative
He could just write 1/10th as much and get the point across. The financial shenanigans are the interesting piece while his commentary gets tiring.
I don't remember Goldberg being particularly rude.
lmao oh no, I've been spelling it like that for years. Thanks for the playful correction
I tried to make a similar play on Heath Robinson but couldn't make it work. In any case check him out, he's more-or-less the English version of Rube Goldberg. Both a lot of fun.
Both. But he’s going to be insufferable if the market does go pop.
A blogger saying i-told-you-so will be the least of our problems if he's right. That's the problem.
No one has rebutted Ed's points. The only rebuttal is "but look how cool AI is!". He mainly sticks to objective facts about their financial situation, and an honest analysis of that situation is dire, regardless of what you think of AI.
Zitron has a poor track record: https://news.ycombinator.com/item?id=49526069
He's made dozens of predictions that were just wrong.
So? Tell me his data is wrong, and then I'll care. His primary "prediction" is that it's a bubble and will crash. And he has lots of empirical facts regarding Anthropic, OpenAI, and all the related companies' actual financial situation. Him being wrong on different predictions does not change the fact that Anthropic and OpenAI are in massive debt and do not have the revenue to handle it, and that a huge percentage of the stock market is being propped up by AI. As he himself says, I really hope nothing bad happens, but the financials are to dire to ignore.
re data
>For example, when Timothy B. Lee looked at a spreadsheet that Zitron used to create a projection of Anthropic's revenue, he found
>He doesn't count February 1-10, counts March 1-10 twice, counts August 21-October 21 as one month instead of two, and doesn't count October 21-November 1. [another commenter notes that his spreadsheet also contains February 30] ... Ed claims he tried to compute Anthropic's revenue for 2025 and came up with $3.6 billion, suggesting some funny business [but the numbers work out once you fix the errors]
from the above link. Personally I agree it's a bubble and there will likely be some sort of crash. But Ed is way to pessimistic on the underlying technology.
And bubbles and crashes are kind of inevitable with any hot new tech given human nature trying to pile in and get rich quick. It's a bit like prediting it'll rain one day.
His "facts" are not facts, he makes stuff up, miss-states things constantly, and is financially illiterate. Whenever I read anything he writes I'm constantly face-palming because it's basically all rubbish.
He's anti-tech, anti-AI, incredibly biased, and just honestly full of bile.
And yes, I'm saying his data is wrong, his interpretation of the data is wrong, and his conclusions are wrong.
I think a bit stopped clock and a bit that a clock that puts out 20,000 words a month will have some of them make sense.
Do you know who is not surprised by this? Ed Zitron, and anyone who has read his articles or anyone who have looked into these companies at any level deeper than "AI do cool things! AI must be good investment! AI must make much money!"
I assume Ed Zitron is immune to being surprised by now.
Ed Zitron is a hack with no tech or financial literacy, who gains views from fellow biased AI haters.
For those that care about the truth: This is a non-story.
The $70b estimate was based on a comparison to Anthropic, which includes revenue from cloud providers. OpenAI does not include this in their numbers.
So, the number did not come from OpenAI. It was an accounting mistake made by some investors and media, who did not adjust for this before reporting on it. I see fintwit calling on FT/Axios to issue a retraction; good luck with that.
It sure is interesting to see the rush to judgement in this thread. Another poster correctly pointed out this mistake (now buried under the sea of misinformed posts trending above it.) The Internet is cooked.
"The $70b estimate was based on a comparison to Anthropic" -- Can you prove that? All I could find were major outlets (Reuters, Yahoo Finance) citing an Axios report, that itself cited "sources familiar with the financials tell Axios.". I haven't found anything similar to what you are claiming.
Well, Axios are now reporting this themselves: https://www.axios.com/2026/10/08/openai-50-billion-arr-anthr...
Also bear in mind that the original $70b number came from an 'anonymous' source to Axios.
It says the 70B figure "was based on _information shared with investors_ in an attempt to create a more direct comparison to rival Anthropic".
That's a different thing from what you said, that the 70B "was based on a comparison to Anthropic". It wasn't, or we can't say that using the source material. The 70B was based on an anonymous source, which used the different metric (including cloud revenue etc) supposedly to make a comparison with anthropic, which does those things, easier.
Anyway, it doesn't seem like this is "not news"
> That's a different thing from what you said
Huh? Sorry, I don't see the confusion.
> Anyway, it doesn't seem like this is "not news".
Given that the number in the headline is based off of a nonsensical apples-to-oranges comparison of revenue figures, I think at a minimum we've got a misleading headline, don't you think?
The headline should've been "OpenAI annualised revenues $20B less than previously signalled by us". The FT is just reporting high number to create a story, then a low number to create another story.
No. You should read the article
> based on information that was provided to investors.
It was OpenAI spreading their bullshit annualized revenue.
OpenAI and Anthropic always play this silly game to pretend they are in anyway viable. It is always ARR, "adjusted" revenue, etc. "We are profitable when we pretend we don't have expenses".
How does that contradict what parent said? Yes, obviously they are pointing at something for their numbers, but something as vague as "based on information that was provided to investors" might still just be entirely nonsense and is certainly not enough to establish confidence as to the validity of the claim.
Parent implied that the previous number was a fabrication from FT, instead of it being a fabrication from OpenAI.
The press that reports on this shit is very much complicit, they report on bullshit metrics spread by these companies to generate hype.
> outside of OpenAI control.
If OpenAI is as uncertain of their numbers to the magnitude of 20B, they should stop spreading bullshit metrics. In fact this should be considered fraud.
What I was saying: What FT presents in the way they do should not be enough to move the needle and convince anyone that this happened, regardless of what might have happened and that it could have happened.
People can just write stuff. That does not make it wrong but that also does not make it right. If your claim rests on some claim that some anonymous actor got some information, that's just not super convincing and neither is pointing at it as some sort of truth.
>No. You should read the article
>> based on information that was provided to investors.
>It was OpenAI spreading their bullshit annualized revenue.
Did you read the article?
>The discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues, according to a person familiar with the matter. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as Amazon’s AWS and Google Cloud, while OpenAI does not.
>Investors’ efforts to “gross up” OpenAI’s annualised revenue prompted reports that the figure was around $40bn in July, said the person.
>OpenAI later told its backers that its annualised revenues had jumped more than 70 per cent since July, prompting reports that the figure was about $70bn at the end of September — a number the company did not deny.
>However, the new investor presentation shows close to $30bn annualised revenues in July.
Sounds like what happened wasn't that openai "spreading their bullshit annualized revenue", it was that they gave some vague figure that investors the media and other investors extrapolated, and it turned out that extrapolation was incorrect. Both the $40bn and $70bn figure did not come from openai directly.
OpenAI only provided the 70% increase figure. The investors were assuming a $40bn base number, which the media then took to mean the ARR is now 70bn.
Its comically bad how this circus is playing out.
Exactly.
Media was mislead by second hand information and misled the public, now they are 'shocked' they reported incorrectly..
Still, seems it is still true that their number is not directly comparable to Anthropic's because they calculate it differently, I think that part still stands and is pretty relevant here.
Stories like these almost always ask for comment from the subject before publishing. If the initial numbers were wrong and OpenAI had a problem with it, they could've responded to the reporters at that time or at publish time, but they didn't. It's highly unlikely the original sourcing wasn't tied to OpenAI.
They didn’t mention asking OpenAI for comment on that figure in the original story. They just quoted a person with knowledge of the group’s finances. Nothing about declining to comment.
They asked for comment for the misleading original $40bn base figure.
Sorry Bence I trust the FT journalists to have due diligence w.r.t. what evidence of AR they got from investors (who got it from OpenAI). I completely believe that the company helmed by "not consistently candid" sama bullshits investors about their AR which is the point of this article.
Though I agree with your sentiment that FT is reporting this stuff in a way to stir the pot and create outrage. Speculating about a private company like this is stupid.
FT clearly didn't do their due diligence, since the auxiliary information provided with the $70B leak (about e.g. growth rates and enterprise sales) made it clear that the number could not possibly be correct.
It just wasn't clear exactly what the error was (e.g. was a projection of a $70B ARR by end of year being misinterpreted as $70B ARR now -- that would have been stupid, but less stupid than the "investors added a fudge factor to the numbers" story that they're now going with).
fair enough
“However, the new investor presentation shows close to $30bn annualised revenues in July.”
2.5bn in revenue for all of July. That is a disaster.
Squeaky bum time
> As OpenAI bides its time, the company is engaging in early stage discussions with investors about a potential new funding round. The company could raise around $30 billion, CNBC previously reported, but that figure could change.
I predicted last month when they launched Luna that they had raised more funding and I suspect this tidbit dropped to CNBC is just prepping the public for a fundraising that’s already happened. There will probably be an announcement this month.
Sam A = SBF 2.0
When the dust settles, I reckon OAI will make FTX's losses look like chump change
When the dust settles, the housing bubble of '08 will look like chump change.
When the dust settles, I'm re-investing all of this liquidity that I'm keeping out of the market back into the market :)
When the dust settles, you might want to spend it on land where you can farm sheep.
I doubt it.
People have a hard time differentiating between bets vs. fraud.
OpenAI is a bet. Maybe a bad bet. Sure. But everyone knows it is a bet. Their investors are experienced and multi-millionaires with teams of analysts. They cannot just act like they are dumb. Not say it's impossible but highly unlikely they can just claim they don't know any better.
SBF was a fraud for using the customers' funds. The customers were promised that their money wouldn't be used for anything. And their customers are average people. Albeit, SBF's investments are pretty godlike based on the current valuations.
Fraud is problematic because it results in harm. Betting in the way Anthropic/OpenAI/Nvidia are is legal, and still incredibly likely to cause harm. So sure, you're technically correct, but the resulting harm that we will all suffer when it all comes crashing down won't be any easier because it was legal...
I’d consider massaging the figures so your “annualised” revenue looks to be 20 billion dollars higher than it is to be on the side of fraudulent rather than betting. And it’s fraudulent because you need to keep pulling in investor cash to keep the thing pumping and afloat, not just dealing with building a decent product and building it out gradually based on what it costs to run and what people will pay for it.
Is there any understanding of how it's even 50b? Makes no sense to me.
It is rarely a challenge to turn $100 into $50.
Nvidia’s revenue is more than that per quarter, the demand for AI workloads is through the roof.
Yeah, take your most profitable day/week/month and multiple it by 365/52/12.
They can be more creative than that, they can get their most profitable hour and multiply by 8760.
So much ARR.
My employer is paying thousands per month for my tokens. Multiply that by a million people and there’s your $50B per year.
You might ask: how could this possibly pencil out for my employer? Answer: I’m the only person left on what used to be a team.
What industry are you in? Was the team disbanded specifically because of your productivity with AI?
> What industry are you in?
Technology. Don’t what to be too specific about where I work.
> Was the team disbanded specifically because of your productivity with AI?
Company has laid many people off, and moved many into new lines of business. I don’t know how management decided who went where. I don’t get the impression I’m a special case or anything.
My team at my company alone burned through $100k worth of tokens in September.
When it hit $20k it triggered a talk with management, but ultimately they decided it was worth because of the value the LLM was providing.
Do you have any insight into how your management tracks the value it is providing?
This is something we've been trying to do for a while now and have not found a convincing metric.
Nope. It wasn't about metrics, it was a persuasive conversation with stakeholders.
I'm waiting for the IPO; I was hoping we'd see less news like this prior. I'm not sure if plain shorting, or puts are the correct action; I suspect the former, as timing the latter is not reliable.
judging from SpaceX performance, I think the market can handle a couple more low float high valuation issuances
The public markets have floated multiple names up to $6tr marketcap/valuation
so the debuts at $1tr valuation from the private markets don’t mean anything
pre-IPO investors will just collar like they did SpaceX, nullifying any price volatility for them at the high share price, and giving them all the liquidity collateral they need for borrowing
The margin call will be brutal if you’re wrong and it takes a few more years than you thought for the trend to break.
As NVIDIA hits it's highest price per share... like clockwork.
I mean, if you picked almost any random time in the last 4 years that'd be true.
>> "Oracle ... and other artificial intelligence companies"
Uhm, that's definitely not their business, despite what they want to you to believe.
https://www.sec.gov/Archives/edgar/data/1341439/000119312526... says that in June–August 2026 Oracle made $7.39b from cloud infrastructure, $4.22b from cloud applications (aka their SaaS business), $655m from licensing their software, and $4.9b from support.
Sorry, is this meant to be a confirmation or a rebuttal of GP's statement?
That's for the reader to decide.
Personally I found it shows Oracle is more of a data center company than I had realized.
So, one of the more surprising things that was claimed to me (But I haven't verified myself,) is Oracle doesn't charge for IOPS on OCI the way AWS would for an Oracle instance.
I'm sure there's other devils hiding in details, but that alone would make it a very tempting target for orgs that want to move off-prem to chase the 'move to cloud' 'KPI' 'Synergy' but still have a bunch of trash queries/etc running under the covers, with the additional benefit of you are safer when the sales/legal folks from licensing visit your offices for renewals and the like.
Wait… this is about their annualized run rate, not their actual annual recurring revenue?
Even their hokey run rate figure is falling?
You don’t say…
Anyway, if I had a hundred bucks to burn, I’d bet this is a move to undermine Anthropic’s IPO.
They don't need help, as most firms with that much red on the books shouldn't be allowed to float an IPO based on fictional future growth forecasts.
IMHO, the Bears will be proven right on this one sooner or later. =3
OpenAI is just Netscape at this point
Sam Altman genuinely needs to be exiled as far away from openai if they want to have a chance with it's rising competitors
I'm now pro sam altman
To witness the joy of his professional demise?
To witness the implosion of openai
Honest question, everyone really hates annualized revenue, but how else do you measure the revenue for a company that is (presumably) growing so much month over month? You can't just state revenue projections because they are growing too fast for them to ever make much sense.
Obviously for fast-growing companies, they always want to overstate their success to get that next bit of funding (or in OAI, Anthropic's case justify their existing valuation), so what metric should they share to investors?
Who hates annualized revenue?
Monthly revenue?
State the truth, what revenue you collected last month, the month before, etc. We're not children that need help with arithmetic. We can all multiply by 12, but we don't because it's meaningless. Report the truth. Report what you have already done and leave the "make up new measures that make us look good by pretending we can predict the future" to others.
Sure, and you do show that (and most companies who use annualized revenue are growing so fast their monthly chart looks like a hockey stick). Annualized revenue is a revenue number that serves as the minimum you expect to do if you are truly fast growing.
The crash of AI hype will be absolutely beautiful. Sure my 401K will probably tank, but this is honestly not the first time. Have plenty of assets not tied to stock market plus plenty of cash.
Although, I suppose that saying, "the market can remain irrational longer than you can be solvent", is more true than ever.
still waiting and my popcorn is spoiled already
It's funny because this is the same thing that startups do all the time
yeah because every startup that does this is asking for 2trillion dollar evaluation, lol lmao even
That's not the point. Startups will often project MRR as ARR, not an unreasonable thing to do, but investors are constantly flinching about it.
OpenAI is caught doing the same thing, just like a 'startup' which is funny.
OpenAI is asking maybe $60B BTW not $2T.
> Startups will often project MRR as ARR
Yes when asking for VC funding, not when asking for IPO. That thing is qualled quarterly earnings.
Does any company besides OpenAI get to misreport $20b in revenue and still get taken seriously?
Maybe Anthropic.
I imagine, when your company grew astronomically fast to the level that was unseen in the past, the investors would be a lot more forgiving.
Annualised revenue is bullshit revenue for the gullible.
My anuallized revenue is about 4.5M. I just need now to get a salary every day.
The annualized their revenue based on a single day! So yes, total bullshit.
And the sad fact is even though they did this, they were still 20 billion too low.
Not only will this never be an IPO, this is a signal of a collapse of the economy
Phone call for Ms. Friar.
Not a good day for OpenAI!
Not a good day for the entire Nasdaq thanks to Scam A and his magic numbers.
What's plus or minus $20bn between friends?
Really just a rounding error when you’ve mentally committed 7% of global gdp to your fun lil chatbot app.
the models are extremely dumb today too, sol 6.1 in particular
“Annualized revenues” is the same as “oh you got married? At this rate by next year you’ll have 500 husbands”
https://m.xkcd.com/605/
There is a reason we consider annual results. A year is a natural complete cycle. There isn’t equal amount of demand in January as in June for almost any product.
So taking one good week and multiplying it by 52 (or 4 x 13 as the case may be) is at least naïve and realistically — deceptive.
Now let's think for a second about why you would ever want to report it that way. There is not one good reason other than hiding your actual measly revenue.