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OpenAI and Anthropic are both seeking trillion IPOs, while Chinese labs are pumping out open-weight models that are free for US providers to host and monetize.
by MangoCoffee 1mo ago
OpenAI and Anthropic are both seeking trillion IPOs, while Chinese labs are pumping out open-weight models that are free for US providers to host and monetize.
These Chinese models cost less of US SOTA models to run, even if they are less capable. Providers can just run them, offer cheap tokens, and pocket the margin.
I just don't see how you justify a trillion valuation for US AI labs when the underlying models are being commoditized this fast.
- grey-area 1mo agoIt is impossible to justify the absurd private valuations they have given themselves in collusion with investors. I wish they had tried to IPO because then we’d see the judgement of the market on this. But that’s why they didn’t this year. How long can they keep up the charade that their models are uniquely valuable and on the path to AGI?
- andsoitis 1mo ago> private valuations they have given themselves in collusion with investors. What's the collusion?
- grey-area 1mo agoCircular investment deals and investment deals at valuations which have no possible justification.
- andsoitis 1mo agoLet me ask it differently. You state the companies and their investors are colluding. Who are they colluding against?
- deleted 1mo ago[deleted]
- cyanydeez 1mo agoits interesting, as it's typically the banks and against the public at large because the goal is to jimmy up valuations to justify IPOs then sell on opening; just like spacex. It's what enron was doing; it's what most of crypto's offshoots were doing. Sure you can blame the marks of the grift and say "well the public should know they're faking all this cash flow expectation". It seems like you're either driving the grift economy or part of the collusion. It's similar to how a cult operates, so I'll be frank: your skepticism seems biased.
- andsoitis 1mo ago> It's what enron was doing; Enron hid billions of dollars in debt and fake profits. Is this what you think is happening here?
- grey-area 1mo agoNvidia has made a lot of very suspicious circular funding deals. I suspect we’ll find fraud when the bubble bursts yes.
- andsoitis 1mo agoYou're the first person I hear claiming NVIDIA is hiding billions of dollars in debt and fake profits, never mind at the scale of Enron. Bold claim!
- sampullman 1mo agoI see the claim made somewhat commonly here.
- grey-area 1mo agoThat’s not the claim I made.
- grey-area 1mo agoThe public that buys the stock at ipo at this inflated valuation and unwittingly buys indexes which include it (as with spacex).
- WarmWash 1mo agoAll of this is public info though, and pretty well publicized at that.
- danny_codes 1mo agoDoes collusion require privacy? You can collude in public if you want.
- nkmnz 1mo agoI think at this point the question is: will the US government be willing and capable to justify the trillion dollar valuation for _one_ of the companies via regulatory capture? The US has a workforce of 170m, so 1.7 trillion would come down to 10k per person, or a discounted cashflow at 3% of 25 USD per month - not including private use, students etc.
- kaashif 1mo agoWhy would you restrict to the US workforce? ChatGPT has a billion users.
- switchers 1mo agoBecause it would be the US taxpayers bailing them out.
- topato 1mo agoThey have a stupid plan to buy ten to fifty percent of all the SOTA AI companies, and giving us all a fraction of the money. Trump keeps calling his enemies “communists”… then turns around and ‘seizes the means of production’ himself.
- nkmnz 1mo agoIt’s a common denominator if you want to do napkin-math for a whole national economy. Regulatory capture is like a tax on those people not on the beneficiary side, so if the government were to nationalize both supply (no export license for SOTA models) and demand (no foreign or self-hosted LLMs allowed), they’d end up making everyone else pay for it in some way or the other. The governmental utility function will then include only those using the services for direct economic benefit.
- chrismsimpson 1mo ago> Providers can just run them, offer cheap tokens, and pocket the margin. There’s an assumption that you can spin up the infra and acquire customers within that margin
- KeplerBoy 1mo agoWhich is not unreasonable. Just hosting it in the EU and promising not to retain / sell the data let's you charge a healthy extra and compete in many areas other players can't.
- chrismsimpson 1mo agoKeeping SLAs spinning isn’t this trivial
- andsoitis 1mo ago> Just hosting it in the EU and promising not to retain / sell the data let's you charge a healthy extra and compete in many areas other players can't. It's been a few years. Has anyone done this successfully yet?
- KeplerBoy 1mo agomelious.ai comes to mind.
- layer8 1mo agoThere are a over a dozen EU open-weight providers. I’m not sure if they are even charging that much of an extra. EU-based clients have little reason to use non-EU inference providers.
- andsoitis 1mo ago> EU-based clients have little reason to use non-EU inference providers. Which models are most popular in Europe?
- charcircuit 1mo agoI suggest you think why OpenAI was worth billions before ChatGPT. The valuation is not about how the current set of models can be monetized.
- nozzlegear 1mo agoCould you just tell us why you think they were worth billions before ChatGPT, instead of suggesting that we think on it? You seem to know the answer already, so please share it with the class.
- charcircuit 1mo agoI did. It is based off of future models that can be created with the people there.
- hmmidontknow 1mo agoHmm.. how you justify? Provoking war, this is how the empire "defends" itself, usually. I just hope that this time it will get stuck in your throat.
- somenameforme 1mo agoAnother interesting potential market here will be 'LLM in a box'. All the hardware and other tooling in a prebuilt, but modular, package ready to go. Pay one up-front cost, get a system running [whatever open LLM] with a token rate of [x], optionally configured to be immediately ready for distributed usage. Basically the opposite of cloud stuff: no rent, no dependency, 100% guaranteed uptime, guaranteed security/privacy (at least subject to your own actions), and so on.
- jurgenburgen 1mo ago> 100% guaranteed uptime Disagree there but I think this is an interesting idea. We would need to find some more cost-efficient hardware to run it on than Nvidia GPUs.
- pulse7 1mo agoIt will come... all big hardware players (Intel, AMD, Broadcom) and dozens of startups (Tenstorrent, etc.) are working on it...
- Godsend69 1mo ago[dead]
- bevekspldnw 1mo ago“100% guaranteed downtime when you least can afford it and the support tickets are your problem.” We’ve a hybrid shop, including hosting our own ML infra, and we save a ton from cloud spend with local ML. Easily one million USD over past three years. But it’s not “free”, you are shifting a lot of labor into your plate.
- hypfer 1mo agoAnd with that also gain institutional knowledge, skill up your workers and attract talent that wants to work on this stuff. All boils down to short-term/long-term thinking.
- sidd_sarkar 1mo agoOk
- me551ah 1mo agoI think that explains the race for IPO by the US AI labs, they know that the longer they wait, the less they will be worth.
- 0xpgm 1mo agoUS investors are desperate for the next hypergrowth opportunity. From what I can tell the US economic strategy is to outgrow its debt.
- andsoitis 1mo ago> US investors are desperate for the next hypergrowth opportunity All investors.
- piokoch 1mo ago"I just don't see how you justify a trillion valuation for US AI" - military applications - financial applications - medical - applied science In all those cases it is achievable for those who have needed training data, and Chinese are not going to get them easily. US AI Labs are showing: give us the data, we will do wonders, promising "singularity"-level future achievements.
- Gigachad 1mo agoThis is going to be catastrophic. Whether AI works or is useful or not isn’t even the question anymore. It can fulfil every promise Sam Altman has been making and will still make no financial sense to justify these valuations.
- goolz 1mo agoI have already begun winding down my spend on claude and OAI to make room for infra budget. Anecdotal, but I have no doubt a lot of others are doing the same, I very much agree the US players have major issues looming. What an exciting time to be alive!
- netdevphoenix 1mo agoNot exciting for anyone directly or indirectly invested in a frontier lab or its partners. And that is a lot of people, including you.
- gruturo 1mo agoNo time like the present to pull out and reduce your exposure. I brought this up in my employer's forums 4 months ago and honestly it's been clear even before then. In particular, the upcoming IPOs of both oAI and Anthropic will likely be disastrous for the public - the floor is falling from under them and I don't know if they can be scrappy and work with fewer resources - their internal culture may not support this. We all knew in our hearts they're a commodity - just see how easily you can switch between the 2 of them - and now there are 10 more options costing a fraction. When Xi Jinping did the announcement of their open weights push, they might as well cancelled their IPOs....
- topato 1mo agoYes buuuut…. I do quite a bit of day trading (maybe closer to scalping) for the first few hours the market is open, everyday. Anecdotally: despite everyone knowing its valuation was ridiculous, I rode that SpaceX train pretty hard and made a pretty penny. I close-out all my positions by end-of-trading everyday… so when the day came when there was a very clear and very scary indicator during early trading hours, quickly followed by SpaceX’s catastrophic fall right after opening bell, that was the end of my involvement…. And I fully expect oAI and anthro to be the same way. They’re being propped up with private loans, subsidies, and other tricky bookkeeping techniques. You would think their CEOs would pivot away from their current public personas. Ironically, they are like a poor man’s Elon Musk… and that doesn’t bode well for their companies
- miohtama 1mo agoThere could be soon AI safety regulations that will stop the US to host or use the Chinese models.
- dipanshuhappy 1mo agoi doubt alot folks are very reliant on Chinese models
- ilaksh 1mo agoMost are not necessarily free to host and monetize. At least one of them has a license that says if you are re-hosting the model then you need a license with that company that made the model.
- dandanua 1mo agoI'm sure US billionaires will find a way to extract those trillions from the public. They're smart, they can handle it. After all, they can ask AI for advice on how to do it.
- matheusmoreira 1mo ago> I just don't see how you justify a trillion valuation for US AI labs Market is irrational.
- forshaper 1mo agoAs an aside, if one of them nabbed Federal procurement, it would likely hit the equivalent of a trillion in revenue after a century.
- deleted 1mo ago[deleted]