There is a lot of hype about a possible IPO from OpenAI with a valuation between 750 billion and 1 trillion dollars. But if you look deeper, there are some serious risks that people are not talking about enough.
First, AI is not like normal software. Every time you use it, it needs real computers running in real time. That means expensive chips, electricity, and cooling. So as more people use it, costs also keep increasing. It does not get cheap to run like typical software businesses.
Second, the company could keep losing huge amounts of money. Some estimates say losses could reach tens of billions per year in the future. Over time, that adds up to very big numbers. So the question is, can this business ever become truly profitable?
Another concern is the IPO itself. To invest in something this big, large investors might sell shares of stable companies like Apple, Amazon, and Tesla. If that happens, it could put pressure on the overall stock market.
People also think big tech companies will support OpenAI if things go wrong. But companies like Microsoft and Nvidia are also heavily connected to the AI boom. If AI spending slows down, they could also be affected.
There is also the issue of transparency. If OpenAI becomes a public company, it will have to share detailed financial data. That means everyone will see the real costs of running AI systems. If those numbers look worse than expected, it could hurt confidence in the whole AI space.
Finally, there are real limits to growth. AI needs physical infrastructure like data centers, power supply, and hardware. These things cannot grow instantly and could slow down expansion.
So the big question is simple. Is this the future of technology, or is it being valued too high for a business that is very expensive to run?
OpenAI IPO could shake the market more than people think
byu/adarshverma07 ininvesting
Posted by adarshverma07
5 Comments
There is a real risk that the OpenAI IPO might not go so well. I think people will hype into it. Then, people will start going over their books and realize things aren’t so great. Will this crash the AI boom? Will it be temporary and we’re off to the races again? Or, will it be a repeat of dot com disaster? I think it would be prudent to trim some positions during the ramp up to the IPO.
Your last question.
Is this the future of technology. Yes.
Is it being valued too high. Also yes.
It’s not an “or” question imo. Just like the internet boom, there will be winners and losers and some use cases will work, others won’t.
I play with this stuff daily. The coding agents are incredibly useful. I prefer the cloud versions as they handle complexity very well.
For other general stuff, I’ve played with local LLM’s which run on my local machine. They are also capable of chat and generating emails/Reddit posts that nobody wants to read. I see an eventual split between local inference and actual heavy use going to cloud. The heavy use will be priced higher, the majority of the dum shit it’s used for now will be done by local “free” models imo.
Tesla is stable? Lost me a bit with that one.
Open Ai is a cash burning machine that will never recoup any ROI from the money dumped into it. Marc Cuban had a solid interview saying as much the other day.
“First, AI is not like normal software. Every time you use it, it needs real computers running in real time.”
WDYM?
This is how most software works for decades now.
Remember FAANG? They all (aside from AAPL maybe) made their stellar growth from building software that runs on real computers far away from where the user actually is… Like this is not a unique feature of AI at all.