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aurareturn
$2b/month which is $24b/year. Not as much as I expected considering they were at $20b by end of 2025.[0] They only added $4b since?
Anthropic had $19b by end of February 2026 and they added $6b in February alone.[1] This means if they added another $6b in March, they're higher than OpenAI already.
However, I heard that OpenAI and Anthropic report revenue in a different way. OpenAI takes 20% of revenue from Azure sales and reports revenue on that 20%. Anthropic reports all revenue, including AWS's share.[2]
[0]https://www.reuters.com/business/openai-cfo-says-annualized-...
[1]https://finance.yahoo.com/news/anthropic-arr-surges-19-billi...
manquer
They aren't reporting anything yet. What we hearing is just from news media who get their leaks/info from investors who get some form of IR reports/ presentation.
Both will do public reporting only when they IPO[4] and have regulatory requirement to do so every quarter. For private companies[1] reporting to investors there are no fixed rules really[3]
Even for public companies, there is fair amount of leeway on how GAAP[2]expects recognize revenue. The two ways you highlight is how you account for GMV- Gross Merchandise Value.
The operating margin becomes very less so multiples on absolute revenue gets impacted when you consider GMV as revenue.
For example if you consider GMV in revenue then AMZN only trades at ~3x ($2.25T/$~800B )to say MSFT($2.75T/$300B) and GOOG ($3.4T/$400B) who both trade at 9x their revenue.
While roughly similar in maturity, size, growth potential and even large overlap of directly competing businesses, there is huge (3x / 9x) difference because AMZN's number includes with GMV in retail that GOOG and MSFT do not have in same size in theirs.
---
[1] There are still a lot of rules reporting to IRS and other government entities, but that information we (and news media) get is from investors not leaks from government reporting - which would be typically be private and illegal to disclose to public.
[2] And the Big 4 who sign off on the audit for companies prefer to account for it.
[3] As long as it is not explicit fraud or cooking the books, i.e. they are transparent about their methods.
[4] Strictly this would be covered in the prospectus(S-1) few weeks before going public and that is first real look we get into the details.
SilverElfin
Does the GAAP accounting matter if everyone passively buys shares due to the new fast entry rules, which corruptly will force us all to buy into these companies? The fundamentals and true value seem less relevant than ever:
https://www.benzinga.com/markets/tech/26/03/51248353/michael...
throwaway2037
For other readers, I want to add some context here. NASDAQ is pondering whether or not to change their NASDAQ 100 index membership rules for IPOs. Currently, there is a three month waiting rule for IPOs. They are proposing (not sure if passed/agree/completed yet) to remove this waiting rule for IPOs.
Real question: What is the real impact of this rule change? To me, it seems so minor. Three months is just a blip in time for any long term investor.
> which corruptly will force us all to buy into these companies
Also, if you don't like the NASDAQ 100 rules, then you don't have to invest in securities that track it. You can trade the basket yourself minus the names that you don't like.
Finally, I would say that S&P 500 index is far more important than NASDAQ 100. To join the S&P 500 index, the name must be profitable for the most recent year. (four quarters). Recall that Uber IPO'd in 2019, but was not profitable until 2023. OpenAI probably will not be profitable when it goes public; thus, it will not join the S&P 500 immediately.
I think the bigger story is SpaceX. It will likely IPO very close to a 1T USD market cap (with a small float: ~10%). And, thanks to StarLink, I assume that SpaceX is now wildly profitable.
manquer
Diluting the index entry rules, only devalues the index utility. When it becomes a bigger problem, other indices with higher quality controls will out compete the current ones and be used by asset managers seeking safety.
More likely than not, most of us are already holding stock in these companies one way or another. All the Mag 7 hold a major chunk of OAI and Anthropic stock anyway, slower entry does not make it less risky for us.
Even if the big tech companies did not hold any stock, they are still the biggest vendors and their own order books is hugely impacted by the AI demand from these two ( and others in this space), either way we are all in this together.
gloryjulio
Yes gaap absolutely matters.
You can just choose not to play the accounting game, and only choose the ones that actually gaap viable as investment opportunities. For example mag7 - tesla are all relatively cheap when they dip.
Some times the best play is just not to play. If you think they are too risky, walk away. There are enough good oppotunities
master-lincoln
what would force you? I guess if you are a greedy bastard you might feel that way...
aurareturn
They aren't reporting anything yet. What we hearing is just from news media who get their leaks/info from investors who get some form of IR reports/ presentation.
The $19b ARR and $6b added in Feb came directly from Anthropic CEO recently.
diatone
Until they’re using consistent methods of reporting those figures, they’re not comparable. Same as any other company pre vs post IPO
lelanthran
> The $24b figure is literally in OpenAI's announcement.
And? That's not a legislated report; they can use whatever mechanism they want to, without disclosure, to produce numbers.
Lets wait until they are regulated as a public company, then their mechanism has to be both aligned with what legislation requires as well as clearly documented in their report.
bandrami
Announcing isn't reporting. Am I the only one old enough to remember Enron?
robonot
True. That's reporting and they are also reporting numbers internally, which are getting leaked.
undefined
manquer
I am reminded of the "I declare bankruptcy" meme from the 2000's TV series Office.
When we say reporting it means there are statutory submissions with an auditor signing off, with legal liability. As the other reply referenced consequences for doing this incorrectly can be severe - Arthur Anderson is no more after all because of Enron.
A Press Release (of a private entity) does not have to satisfy this high bar.
Press release does mean no constraints, for public companies, disclosure of important information by officers and other insiders have strong controls. Even if its the just a rocket/poop emoji on a casual social media platform. Lawyers have to refile with the SEC in the expected format. Even private companies have restrictions on not claiming things fraudulently to investors, but these are accredited investors with lesser controls than retail.
maerF0x0
30x revenues at 17% revenue growth is... aggressive.
jsnell
Except it's not 100x revenues, and it's not 17% growth. I don't know where you got those numbers from?
The numbers OpenAI gave in the post would mean a 30x multiple pre-money. And the $20B -> $24B run-rate growth since the start of the year could plausibly mean anything from 110% to 200% annualized growth rate, depending on whether that happened over two or three months. The $24B is a lower bound as well, since they only gave use one significant digit for the monthly revenue.
maerF0x0
You're right, I was thinking about 100x revenues and forgot to confirm the math. Updated to reflect your point. ChatGPT itself provided the 17% number (it's most recently available growth rate)...
YetAnotherNick
> 17% revenue growth
I think ads is going to massively change this number.
troupo
And that is revenue only. In the past 15 or so years most US companies (and especially startups) always talk about revenue only. Wheras only profit should matter.
E.g. what good is 20 billion per year when "OpenAI is targeting roughly $600 billion in total compute spending through 2030". That is $150 billion per year?
muzani
The startup game is about building assets and then cashing out on them during exit.
Assets are harder to measure. Facebook used to say something silly like every user was worth $100. That sounded ridiculous for a completely free app but over a decade later, the company is worth more than that. Revenue is an easier way of measuring assets than profit.
Profit doesn't really matter. It gets taxed. But it's not about dodging taxes; it's because sitting on a pile of money is inefficient. They can hire people. They can buy hardware. They can give discounts to users with high CLTV. They can acquire instead of building. It's healthy to have profit close to $0, if not slightly negative. If revenues fall or costs increase, they can make up for the difference by just firing people or cutting unprofitable projects.
Also when they're raising money, it makes absolutely no sense to be profitable. If they were profitable, why would they raise money? Just use the profits.
Swizec
> Wheras only profit should matter
Profit is money you couldn’t figure out how to spend. During growth, you want positive operating margins with nominal profits. When the company/market matures, you want pure profits because shareholders like money. If you can find a way to invest those profits in new areas of growth, that’s better.
badpun
A lot of investments gets amortized over many years so even if you're investing all your free cash you'll still show a lot of profit.
troupo
> Profit is money you couldn’t figure out how to spend.
Profit is the money showing your business is sustainable. Ever since the ZIRP era US companies keep haemorrhaging money at a rate that is physically impossible to recoup.
If OpenAI plans to lose 100+ billion dollars per year for half a decade, what profits are you talking about to offset the losses?
> When the company/market matures, you want pure profits because shareholders like money.
Ah yes. Shareholders like money. And not, you know, basic accounting like "we need money to actually pay salaries, pay for equipment and offices etc. without perpetually relying on seeming endless investor money".
aurareturn
Not sure why you’re downvoted.
Everyone wants to treat OpenAI like a car wash business where they need to make a profit almost immediately. I don’t know why people can’t understand that the industry is in a rapid growth stage and investing the money is more important than making a profit now. The profits will come later.
aurareturn
It's not as much as you think. Google is spending $185b on data centers this year alone. Amazon is spending $200b this year. Total capex for big tech is ~$700b in 2026 and we're not including neo clouds, Chinese clouds, and other sovereign data centers.
Since everyone is trying to get compute from anywhere they can, including OpenAI going to Google, it's hard to tell what is used internally vs externally.
For example, it's entirely possible that Google's internal roadmap for Gemini sees it using $600b of compute through 2030 as well. In that case, OpenAI needs to match since compute is revenue.
hvb2
But if Gemini doesn't end up using the compute because of whatever reason, Google has other ways to monetize that compute. OpenAI doesn't?
So the same money spent by OpenAI and Google doesn't carry nearly the same amount of risk?
pier25
Give me a billion and I'll have 500M of revenue in no time by selling dollars at 50 cents.
aurareturn
Why are we treating OpenAI and Anthropic differently than say, Amazon or Uber? Both companies invested in growth for many years before making a profit. Most tech companies in the last 2-3 decades lost money for years before making a profit.
Why are we saying that OpenAI and Anthropic can't do the same?
merlindru
why should only profits matter? if i had a killer product today that i just need to sell tomorrow, wouldn't you still invest today knowing i'll probably only start to make money tomorrow (or perhaps next week)?
the expectation is that they'll eventually make money. they can't raise forever. only startups are not profitable for a few years. but most companies that have existed for a long while have been profitable
and since they're expected to make a LOT of money, everyone wants a piece of that future pie, pushing up the valuation and amount raised to admittedly somewhat delusional levels like here
bandrami
> why should only profits matter?
In this case because it's not clear that anybody has actually figured out how to sell inference for more than it costs
Barrin92
not if your product is selling two dollars for one dollar and as soon as you'll start to charge more I'll switch to one of your twenty competitors
profit isn't a function of having a killer product, it's a function of having no competition
nl
What is the point - exactly - of profit?
Profit is money you can't find a use for to grow your business, so you give some of it to the government in the form of tax.
Also there is a big difference between operational expenses and capital expenses like building data centers.
I think OpenAI is being very aggressive on the growth vs conservative financial management spectrum but just saying "only profit should matter" is just wrong.
bandrami
> What is the point - exactly - of profit?
It's what attracts capital investment, which businesses need
troupo
What's the point - exactly - of a company being sustainable?
natas
OpenAI is a few years behind Anthropic, and it's unlikely they'll catch up at this point.
muskstinks
I'm following this very closly and i'm stunned. Any infos on why you think they are behind antrophic in years?
I do see less quality from reasoning at chatgpt compared to Gemini but otherwise i'm not seeing a year or years gap.
empath75
Anthropic is _unquestionably_ ahead product wise because of their agentic coding tools, but they are not _years_ ahead. In particular, their advantage is in the harness, which is not hard to replicate!
rafaelmn
Lol if CC is the advantage that's the larges indictment of AI coding there is. Don't get me wrong CC gives me good results, but I very much doubt their tooling is great, they just spew tokens at the model and the model is quite good at making sense of it and following through.
I suspect they have better RL setup for coding that makes their models better at coding than GPT/Gemini in practice.
0xy
It's not just the CC harness. The models are fundamentally better.
baq
They’re about even in general, but for me OpenAI is slightly or significantly ahead in the areas I care about the most. E.g. claude code is a backend slop cannon if you don’t tell codex/gemini to review the outputs.
interludead
I'd be pretty cautious comparing those numbers directly
dmix
Still a huge amount of revenue for any company. Those $20/month fees are going to triple in a couple yrs. But the VCs expect much much more.
willio58
Friends of mine working in AI companies are saying we’ll be lucky if they only triple. More like 10-20x long term, especially for enterprise
duped
People working in AI companies are the last people I'd trust on price forecasting
riskable
This assumes that these companies aren't going to use smaller providers or hosting models themselves. THAT is the great big assumption going into all the Big AI funding.
I think it's a very, very bad assumption. After trying GLM-5 and Qwen3 on Ollama Cloud, not only were they faster than OpenAI's offerings (by a huge amount) it was just as good if not better at doing what I asked of it.
Claude Code is still superior to anything else but GLM-5 and Qwen3 are easily just as good as GPT-5.X (for coding).
mrweasel
Oh, I read it as the number of subscribers would triple, but you're suggesting the price will?
That makes a little more sense, because the number of subscribers are so low that tripling won't really make much difference in terms of turning a profit.
avaer
This announcement completes the betrayal of their founding principles.
"Our goal is to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return."
- Not advancing digital intelligence
- While locking people into a superapp
- Because they are further constrained to generating financial returnsclass3shock
Founding principles = initial marketing strategy
pattt
Is there a way out of this though? The seed is already planted and everything else is just a PR.
sharts
Not too dissimilar from what most companies that start prioritizing growth also do, unfortunately.
ajam1507
That was before they knew AI needed a bunch of money.
alyxya
> Today, we closed our latest funding round with $122 billion in committed capital at a post money valuation of $852 billion.
A couple things that stand out to me about this is the use of the phrase "committed capital", which only sounds like a promise that could break from various circumstances, and the valuation of their funding keeps changing so it sounds like a max rather than the valuation every investor invested at.
strongpigeon
I do wonder how much of Amazon's $50B share (per last press release) is in AWS credits rather than money in the bank.
dheera
Probably a lot? It would be much more tax-advantageous to do it this way, $50B worth of credits != $50B worth of spend on Amazon's part, and they might meet in the middle about how much equity that translates to.
HWR_14
I can see a lot of advantages for Amazon, but I don't see why it would be tax-advantageous.
cmiles8
To then claim that Trainium is “selling” and not a dud? I’d bet a lot.
snoren
good catch! committed capital is not same as we raised.
whiplash451
It makes sense for such a huge amount to be "committed", not sitting idle in a bank somewhere.
Aurornis
That’s typical. Large funding rounds usually aren’t delivered as one single giant lump sum into the bank account. The capital is committed in stages that can depend on hitting milestones or goals.
This is done even in smaller startup funding rounds some times.
alyxya
Fair, I think a lot of what I've been perceiving is the gymnastics in how funding and valuation and deals get reported. There ends up being a ton of asterisks that makes the headline news deviate quite significantly from reality, e.g. https://arstechnica.com/information-technology/2026/02/five-...
bko
I assure you committed capital is very much common parlance in finance
ta988
that's why they have to open through banks and other less valuable more sliced share system.
interludead
I think this is more about deal structure than spin
Jaskhy
The title is incorrect. The $122B includes previous promises. They raised an additional $12B of promises:
"The round totaled $122 billion of committed capital, up from the $110 billion figure that the company announced in February. SoftBank co-led the round alongside other investors, including Andreessen Horowitz and D. E. Shaw Ventures, OpenAI said."
This IPO, if anyone underwrites it, is going to fleece retail so hard. Better make it a SPAC with the help of Chamath and Cantor & Fitzgerald.
samdjstephens
> The broad consumer reach of ChatGPT creates a powerful distribution channel into the workplace
They mention this line in different forms a couple of times in the article. It’s clear they’re pretty rattled about Anthropic’s momentum in enterprise, I wonder how confident they really are in this rationale.
zmmmmm
It's an interesting strategy, I see a pretty big risk from them leaning into it like this. We already have a vibe in my circles of the old "gmail vs yahoo" type thing where if you saw someone had a yahoo mail address you assumed they were technologically illiterate. Similarly it's mildly embarrassing already to say you used ChatGPT for something. It's not unrecoverable, but it's a pretty steep slippery slope they probably don't want to be anywhere near if they care about enterprise.
voganmother42
After the DoD moves? It is not just the technologically illiterate, it is part of the US culture war. OpenAI is the MAGA brand, like tesla.
gunsle
What an absurd leap. OpenAI is the maga brand because they simp for government contracts like any massive company would?
kevinqi
I don't know if it's guaranteed to work, but the strategy is real. I know Notion won vs. competitors in the space because they focused on consumer first, and consumers then brought Notion into their workplaces.
evgen
I am amused that you think IT is going to respond to an unmanaged LLM tool that operates outside of the LLM policies all serious enterprises have set up by now and say 'wow, that is cool and maybe we should buy in to this!'
What is going to happen is that the emplyee who tries to sneak OpenAI into our org is going to have two meetings set up by the end of the day, one with IT to ensure the whatever tool they installed is burned out with fire and one with HR to ensure they know the company policy and acknowledge that another fuck-up like this is a firing offense.
thmsths
Isn't that exactly how the iPhone won though? As another commenter said, once the cool gadget becomes a must have for executives, IT will be told to find a way to make it work.
hrimfaxi
What if that employee is in the C-suite?
interludead
I don't read that as "rattled" so much as leaning into the one thing they clearly have that Anthropic doesn't: massive consumer distribution
Ethee
Kind of makes me wonder how 'accelerated' the timeline of publishing this article was based upon the Claude Code leak today. Considering everyone has gotten a sneak peek at what Anthropic is working on OpenAI might be a little worried. This could also just be coincidence, but this piece really does read like self-encouraging fluff.
changoplatanero
The timing of this coming out today is cause today is the last day of the month/quarter and has nothing to do with Claude.
Ethee
Ah, yeah that makes way more sense, I always forget about financial quarter timings.
serioussecurity
0. These things take an enormous amount of time and coordinating to release.
joaohaas
> This is not just product simplification. It is a distribution and deployment strategy.
iykyk
maxverse
Are you suggesting this was written by AI?
sunaookami
You are absolutely right.
keybored
It’s not just a suggestion. It’s a demonstration.
dgellow
And you are so bold for identifying it. You’re not just passively commenting. You’re creating something bigger, larger than yourself.
simonreiff
It's the demonstration layer
dabbz
It's a very frequently used structure by LLMs especially ones writing for LinkedIn.
bigwheels
"It's not X, it's Y."
A linguistic presentation commonly referred to as constrastive negation.
wmf
Why would they not use their own AI?
simonebrunozzi
No, they didn't raise $122B as the HN title implies. A big chunk of that $122B is a "maybe" that depends on various things that need to happen in the future.
Oh, man... I can't wait to see where this is going. Might not be pretty after all.
apparent
I've wondered how many announced fundraising rounds were like this. It's in everyone's interest (VCs and entrepreneurs) if the message to the outside world is "this company is amazing so they've raised a boatload of cash". But VCs might not want to give it all up front, or unconditionally.
It makes it hard to say what the valuation of a company is. If the milestones are unlikely to be hit, then it's anyone's guess.
Aurornis
This is a common structure. It's confusing to people who don't know finance or startups when they first see it.
Even VCs don't get all of their fund money delivered into their bank account when they raise a funding round. It's inefficient and undesirable for everyone involved to have to move all of the money up-front, at once.
If you talk to anyone in startup funding or finance they'll be familiar with the term "capital call" which describes how committed capital obligations are delivered at a later date than the initial deal: https://en.wikipedia.org/wiki/Capital_call
hn_throwaway_99
I've been involved in many startups, and this type of fundraising is not common, or at least it wasn't common before a few years or so ago
The whole concept of talking about "runway" is basically calculating how much cash in the bank, that is actually in your bank account, will last. And this arrangement is different, as there are contingencies. In the past, VCs would just give you money in a particular series, and then if your business did well, they'd eventually give you more money in a later series. But it wasn't like they announced it all up front in, say, a Series A, but a big chunk of the money would only be delivered if you met milestones.
danielmarkbruce
No, it's not common for the startup itself to make capital calls. The phrase (and your link) refers to capital calls made by VC firms to their limited partners. Same thing in PE.
Nevermark
> Amazon agreed to invest up to $50 billion in the startup
> Nvidia invested $30 billion
> Microsoft, one of OpenAI’s longtime partners, also participated
There is a lot of non-cash, never-will-be cash, investment here. Credits for compute.
apparent
I think more people are aware that VCs raise commitments for a fund that they can pull in via capital calls than are aware that startup funding from VCs come with hurdles to clear.
This is perhaps because the most common round to raise is a small/early one, and these tend not to have hurdles. Founders that only ever raised these rounds wouldn't necessarily know what happens in later/bigger rounds.
Also, I wonder if capital calls come with hurdles as well? That is, can an LP refuse to put in more money if the VC's recent investments have not done well? I would think not, since it typically takes many years to determine whether investments were good or not.
undefined
ifwinterco
I think both things are true at once:
1) For a $100bn round, you won't get a single transfer of $100bn into your checking account, this is normal
2) Sam Altman is a liar and people (correctly) don't really believe him when he starts throwing numbers around
johnebgd
Gotta hit that high IRR as a fund manager and the clock starts when the cash comes in so capital calls are appreciated by fund managers. Unless they are emerging managers (the startup equivalent in finance) and their LP’s are less than institutional and ghost them when the capital call hits.
pimlottc
It’s confusing because it’s meant to be confusing. Bigger numbers are more impressive.
komali2
There's an accelerator here in Taiwan with a model I truly don't understand: 100k usd for 10%. 10%!! You've just valued the company at only 1 million! And taken a HUGE chunk of equity, not much left on the table!
Maybe it makes sustainable sense but in the world of venture capital it seems the most profitable thing to do is lie through a Cheshire grin, every day.
Saline9515
This is very standard, Ycombinator, which hosts this board, does the same: https://www.ycombinator.com/about
SilverElfin
With NASDAQ and NYSE looking to reduce the timelines for new public companies to be included into indices (“fast entry” rule), I have a feeling that OpenAI and SpaceX and Anthropic are mostly looking to dump their inflated shares into the public’s retirement accounts by force.
Michael Burry called out this structural manipulation play recently:
https://www.benzinga.com/markets/tech/26/03/51248353/michael...
singpolyma3
Retirement accounts aren't required to buy a stick just because it's listed.
... probably will though
SilverElfin
Retirement accounts already own funds and those in turn are often tied to the underlying index. If the time to being included in an index is reduced, they end up being automatically bought sooner. And that keeps their price from collapsing artificially.
caycep
that being said, how can Softbank keep throwing around all these astronomical numbers after so many bad investments? Leftover iPhone money?
phillipcarter
Most people know Softbank as the company who lost billions on WeWork and not the company who made several more billions on the ARM IPO.
caycep
with these swings, I'm not sure how Son-san keeps himself from getting an ulcer
IshKebab
Yeah I checked their overall return. It's average. Not better than index funds IIRC.
adventured
Their ~$50 million total Alibaba investment turned into ~$70 billion. As of two years ago they were still liquidating out of it.
January 26, 2024 - "Japanese investment holding firm SoftBank Group Corp has largely cleared its ownership in e-commerce giant Alibaba Group Holding, concluding one of the most successful deals in China's internet industry and a holding that spanned about 23 years."
"SoftBank, which invested US$20 million into Alibaba when it was still a start-up in 2000, said in a corporate filing on Thursday that it was set to book a gain of 1.26 trillion yen (US$8.5 billion) - about 425 times the value of its initial outlay - for the Tokyo-based firm's 2024 financial year after divesting its [remaining] shares via subsidiary Skybridge."
https://finance.yahoo.com/news/japans-softbank-concludes-run...
HardCodedBias
"As of two years ago they were still liquidating out of it"
I get that people are scared of investing in China. But if I still made single stock investments, I would seriously consider BABA, it seems well positioned.
jelling
They borrowed $40B from JP Morgan. They literally did not have the money otherwise.
lefty2
also they need to pay back that in one year, so if OpenAI don't IPO this year they are screwed
Analemma_
Saudi oil money
MidnightRider39
Which might not be a thing anymore soon the way things are going…
Aurornis
Having large funding rounds contingent on meeting milestones is common. Always has been.
jmalicki
It just makes comparing funding rounds hard to understand, since money in the bank is money in the bank, and a lot of the "committed capital if you reach a milestone" is capital that would be easy to get if you reached that milestone, if it is sufficiently advanced, and has enough outs, etc., that you may as well have just raised another round in the future.
nostrademons
Note that even that "money in the bank" of traditional venture firm is not really money in the bank. VC, PE, and hedge fund managers usually don't have all the cash for the fund sitting in the bank at all times. Rather, their agreement with the LPs that fund the fund is structured as a series of capital calls: it gives the fund the right to demand that their LPs deposit cash in their bank accounts within 10-30 days, which can then be used to fund the investments that the VC firm makes. The capital calls are backed by legal documents enforceable in court, with pretty stiff penalties for failing to meet a capital call.
Such a funding structure here isn't all that different: the funding agreement gives OpenAI the right to call on their backers to make certain cash deposits, contingent upon milestones being met. Deep down inside, "money in the bank" doesn't actually exist, it's just mutual agreements backed by force of law.
Aurornis
That’s logically inconsistent. If the company was performing poorly enough that they couldn’t meet their funding milestones from a previous round, they’re not going to have an easy time raising the same money in a future round.
The milestones aren’t a hard-stop that forbids the previous funding round participants from providing the money if they still choose. It’s just an out.
ares623
The assumption that's conveniently left out is that the milestones are realistic
wesammikhail
One of the stipulations is that OpenAI achieves "AGI"... Need I say more?
Also a lot of this "money" is in cloud compute and credits not cash so...
wmf
Why not announce the funding after the milestones have been met?
Aurornis
The funds are committed under the terms of the deal (share price, things like board seats, and other details). There are legal obligations to provide it.
This is a common structure for large investments. It would be really inefficient for all of these investors and companies to have to have the money sitting in cash to do a deal and then transfer it into the company's bank where it sits and earns interest for years until they can deploy it.
Even VC firms who raise funds work this way. The capital is "committed" but investors don't wire all of the money over right away so it can sit in the VC firm's bank accounts, waiting. The VCs do what's called a "capital call" through which they're legally bound to provide the money they committed when requested, under the terms of the deal.
apparent
It's splashier this way, and is meant to shape the narrative, make other companies fear their warchest, and make hiring easier. Of course, those who are in-the-know won't be fooled, but the perception of the general public will be set in stone by the PR framing.
ds2df
[flagged]
JohnMakin
Don't let reality get in the way of vibes
swiftcoder
It's also like... >$50 billion in compute credits and discounted hardware between Amazon/Microsoft/NVidia. Which is all inside baseball since they simultaneously juice their financials with OpenAI's cloud compute bill
dang
Ok, let's switch to the HTML doc title above.
figmert
Probably again cancelled or significantly reduced in the near future when all the current investors inevitably cash out.
mrdependable
Funny how quickly they have become like every other tech company. There is basically no hint of OpenAI the non-profit anymore.
Edit: Why did this go from their press release to a news story?
interludead
Frontier AI + tens of billions in capex was always going to end here
pembrook
Sir, I'm sorry to be the one to tell you this. But you've been in a coma since 2022 after a severe car accident.
It's now the year 2026. That dead horse has already been beaten.
mrdependable
They were trying to keep the facade up until they were allowed to become a public benefit corporation. At least that's the way it seemed to me. Now they are fully mask off.
spicymaki
LLMs are definitely a game changing technology, but there is just so much fake money in the market right now (circular deals, paper valuations, etc.) that I cannot take this seriously. At some point the musical chairs will stop and we will all be saying how could we let this happen? Where are the regulators (rhetorical question)?
limaoscarjuliet
As with every bubble, we, the people, will pay for it. There will be recession, inflation and general "one step back" to hopefully move "two steps forward" one day in the future.
apparent
I think AI will actually produce price deflation in some areas. There could be inflation based on mechanisms you describe, but it's obviously making it cheaper to make some products/services.
doomslayer999
[dead]
nemo1618
I'm old enough to remember when companies worth $1 billion were called "unicorns." Now we have a company raising 122 times that? Valued at nearly 1000 times that...?
At least they're throwing consumers a bone via the ARK deal. It's crazy how little AI exposure is available to anyone who isn't already wealthy and/or connected.
nine_k
I think this is reality-distortion field rivaling that of Jobs', and a crisis of faith. Nobody apparently believes that capital is worth investing into anything but AI.
randomNumber7
> Nobody apparently believes that capital is worth investing into anything but AI.
This is the main reason we see this insane investment into AI imo. If you imagine having lots of money, where should you invest that currently?
Housing market: Seems very overvalued (at least in germany). Also with the current uncertainty and inflation its hard to make an investment that pays back over 20-30 years. So building is also difficult.
Stocks are very volatile currently. Not only since Iran. To me it seems since the financial crisis 2008 investors don't enjoy stocks as before.
Gold: Only if you are paranoid about collapse of society. It doesn't make sense to invest into s.th. without interest rates.
Crypto: Same as gold, but better if you like gamling. I would assume most people who are very rich don't gamble with most of their fortune.
nine_k
Looking around, and especially forward, it would be military tech, e.g. [1], and its supply chain, e.g. [2] :-\ Valuations are not as crazy, but I bet there'll going to be a lot of demand in the coming decade, unfortunately.
Chip production, too, of course, but it's overflowing with money already, apparently. It's growing though, because there are real actual shortages of stuff like RAM and SSDs, there's money to be made immediately if you can. Chinese RAM manufacturers are building out like crazy.
[1]: https://www.ultimamarkets.com/academy/anduril-stock-price-ho...
[2]: https://www.marketscreener.com/quote/stock/RHEINMETALL-AG-43...
lotsofpulp
> Stocks are very volatile currently. Not only since Iran. To me it seems since the financial crisis 2008 investors don't enjoy stocks as before.
These returns do not qualify as “enjoying stocks”?
https://investor.vanguard.com/investment-products/etfs/profi...
The returns are higher than before 2008, the previous 15 years are unprecedented.
https://www.macrotrends.net/2526/sp-500-historical-annual-re...
triceratops
> To me it seems since the financial crisis 2008 investors don't enjoy stocks as before
Maybe in Europe. The US stock market has nearly tripled since then. Literally the best period of stock growth in history.
heathrow83829
you gotta have some of all the above actually.
woah
OpenAI is making $24b a year. It's a 32x revenue multiple. High, but not insane. Spinning this as a story of overinvestment doesn't make sense.
duchef
Are you conflicting price to earnings to price to revenue?
BadCookie
32x earnings is high. 32x revenue is probably insane.
burnt-resistor
That's the tao of hyper-financialization. It must keep growing irrational exuberance big and up forever like stonks or it bursts like DotCom and tulip mania. It's funny money that cannot be liquidated for real value for more than a tiny fraction of the imaginary trillions being thrown around. Similarly, Nvidia $4T mkt cap makes absolutely no sense when it has but a few incestuous customers-parters-investors throwing around tens of billions each per year devoid of fundamentals like essential service offerings that turn a profit. Those handful of whale customers will make their own chips or cease buying large qtys at any time.
dlev_pika
I wonder what is not getting invested in bc AI has been crowding out everything else since 22.
It has to be brutal out there for everybody else, if all the money is going to AI.
satvikpendem
And not even actual capital either, as much of the investment amounts into AI have been through cloud and GPU credits so that AWS or Microsoft Azure don't actually have to hand over billions in straight cash.
bandrami
But they're really cagey about actually handing money over to them today
roncesvalles
It's the result of too much echo chambered bullshit floating around daily about how capable LLMs really are. It's literally crypto/blockchain all over again. It's one big lie that a lot of people have bought into which causes it to self-perpetuate, like religion.
gavinray
> At least they're throwing consumers a bone via the ARK deal.
https://www.ark-funds.com/funds/arkvx
The fund is invested in most of the hot tech companies.
squirrellous
ARK was all the rage around early pandemic time when wallstreetbets was in the news a lot. Most people probably know it from then.
bluecalm
ARK funds has cult like following but then again they are a typical high beta player who outperforms in hot markets and heavily underperforms in cold ones. Fees are high. The CEO (CIO) is a women who looks for investment advice in the Bible and asks God for his thoughts (I am not joking).
If anything being associated with ARK in any form is a big negative signal.
frankfrank13
An ARK ETF is a smell to me. Besides, based on their holdings, i would never invest. 18% of the fund is SpaceX
chilipepperhott
I would not call an effective 2.9% expense ratio "throwing a bone".
munk-a
Also, the valuation for such a debt laden company should be viewed with great skepticism. I'm afraid a lot of mutual funds will end up holding the bags.
mizzao
It's not that far off from the standard 2% mgmt fee and 20% of excess performance?
carlosjobim
The money is worth much much less than it was before, we live in times of global hyper inflation.
rvz
> At least they're throwing consumers a bone via the ARK deal. It's crazy how little AI exposure is available to anyone who isn't already wealthy and/or connected.
It is deliberate. Period.
It's always been known that you make money in the private markets and pre-IPO companies and retail is the final exit for insiders and early investors.
Retail is not allowed to be early into these companies (Because that would ruin the point of being an insider) and this "exposure" has to be at the near top.
lotsofpulp
Who are "these" companies? Did retail get into Google, Facebook, Amazon, Tesla, etc before the top?
Also, aren't AI businesses losing a lot of money each year? Pretty sure there is some risk involved that is not good for retail.
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monkeydust
There are ways now for retail to get in to these companies including, check out hiive or equityzen...just beware of massive dilution.
a13n
VCX (Fundrise) has way more exposure than ARKVX
xlbuttplug2
It's also trading at a huge premium. Probably worth a read if you're considering it: https://www.morningstar.com/funds/fundrise-innovation-is-not...
torginus
Even a billion dollars is crazy money. If you have a company with a subscription service that costs $100 yearly, you have ~2m customers, with a 50% profit margin. Your company makes ~100m every year in profit. Imo that's what is actually worth a billion dollars, maybe even a bit less.
hunterpayne
That company is probably worth about $8b, FYI. Obviously that's an estimated average but a P/E ratio of 80 give you that valuation.
strongpigeon
This has to be just an extension of their previous raise, right? This was a month ago: https://openai.com/index/scaling-ai-for-everyone/
babelfish
Maybe? Previous valuation is $730B + $122B raised in this announcement = $852B valuation in this announcement (no actual increase in valuation)
strongpigeon
Previous was $730B pre money. This one is $852B post money. So yeah it's the same one. Good catch.
ta988
yup and begging for retailers money.
ricardobeat
Doesn't look like it, that previous round was entirely Softbank + Nvidia + Amazon, while this one is VC + private investors.
The valuation seems odd though, you'd expect $840B post-money from that earlier round?
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motbus3
I lost track when business analysts stopped analysing CEO-level commitments and outputs and performance. right now, it seems that whatever promise is taken as certain and company puffery (using the language invented by themselves) is taken lightly to tricky investor in throwing money.
the whole thing did not yet crash because it seems they can still promise even more without actually delivering definite results
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https://openai.com/index/accelerating-the-next-phase-ai