OpenAI Is Preparing to File for an IPO Soon
wsj.com156 points by louiereederson a day ago
156 points by louiereederson a day ago
https://archive.md/0Ez3C
Non profit files for IPO should be the headline. I understand what you're saying, but strictly speaking is it fair to say they aren't profitable? Didn't they along with other participants of LLM-race invest heavily into the infrastructure and the said infra wasn't yet delivered. My understanding is that it's unreasonable to claim a hotel isn't profitable when they're still on the building stage. I do understand that we don't have enough energy to turn it on when all of them are delivered, but that's a separate issue. e: gah. Answered to the wrong post. Sorry. > My understanding is that it's unreasonable to claim a hotel isn't profitable when they're still on the building stage. It's not unreasonable at all, it's a honest description of the hotel's current situation. Would you call it profitable? If a hotel stays on the building stage for half a decade, getting a loan after another to pay for that, that unprofitability is acutely relevant. This has less to do with their balance sheet and more to do with the intent of the organization when it was founded. They were supposed to create open-source AI models and only let revenues influence the direction of the organization so much when weighed against the public good. ... but they did it in a place and culture filled with people who would probably sell their own mothers into slavery if they were allowed to provided it increased the valuation of their startup, so here we are. If you're an investor you should try Deepseekv4 before you put your hard earned money in this gambling spree. Context - Deepseekv4 is freely available to download you can host your own and sell it keeping the proceeds and it rivals Claude Opus 4.7. "Thank you for your attention to this matter" It is worse than GPT5.5 ... but is so cheap that it doesn't really matter. cheap for whom? local hardware + electricity bills don’t even begin to get close to frontier model subscription even in price > Deepseekv4 is freely available to download you can host your own and sell it keeping the proceeds and it rivals Claude Opus 4.7. good luck getting a machine that can run its specs though. Even flash is goign to require ponying up 5-10 grand to run the minimal specs for it. The vast majority of people will find their machine falls behind as tech progresses long before they get a return on that investment. That said, it does mean there will be a healthy market for "generic providers" in the AI landscape with these open weight models. It's not "there will be", there already is a market of generic providers and you can use millions of tokens of DeepSeek-v4-flash for like 1 dollar. Yeah, but will those hosted models help me write smut, advance my weekend CBRN hobby, advice on how to kill myself, advice on how to kill the person who made me want to kill myself, and how to set up a mega drug manufacturing operation like a real life Walter White? you don't need AI to deal drugs, plenty of people with little education do it all the time You only need about a mac w 96GB or 128gb to run deepseek v4flash with ds4(https://github.com/antirez/ds4). Works mostly well That's only antirez's 2-bit version though. The real version of DeepSeek V4 Flash will be slow on that machine. Companies still pay 5k and more for a basic website. 5-10k is quite affordable. Investment is not basic math. Its also dependencies to US companies, trust etc. Investment and finance in general, at this scale, is far more geopolitics than it is math. It’s self evident. We’ve all seen how the “math” on so much of the AI business sector literally doesn’t check out, and here there are: still ballooning, still making deals, still directly crafting laws through political influence, still taking over damn near every user space. Politics at a high enough level lets you play a different game with different rules. Politics at a low enough level lets you do the same actually, but we usually call that civil unrest, guerrilla warfare, or collective action depending on how many of which group is defying which “rules”. It’s very easy to get used to the guardrails and guidelines around us when they persist and succeed for decades, but they are much more fragile than they appear. > good luck getting a machine that can run its specs though. That's any machine that can physically host the weights and context. You'd need a highly-specced machine for better performance and throughput, but it's not a requirement as far as literally executing the model and getting output. But...so does the tech sector. They will also have to continually upgrade their AI slop data centers to run newer better models, generating a heap of waste along it. And that money has to be made back. Even investor knows this well, they will still do that if they can make other people to invest their hard earned moneys into this after them. Isn’t knowing how to scale and optimize llm traffic the main barrier ? That's just a "more hardware" problem. I'll bet Deepseekv4 could answer any questions you had related to that. How much of a moat will it prove to be in the long run? "Scale and optimize" sounds like a commodity business. I was wrong - not investing in FB and Amazon many years ago - thought those businesses will shrivel and die. I believe OpenAI is a bit of a coin flip as the AI space evolves. In fact I feel all AI will be marginal return generators at best.
There are a lot of incumbents and a lot more coming as barriers to entry get increasingly lower. Unless a company can build a near monopoly it'll be hard to justify a 100X revenue valuation despite heavy losses. I feel it's safer to take a punt on alternate compute companies (Musk leads but others exist) than take a bet on one of many AI companies to build a monopoly. If you were going to invest in any AI company literally the only one I would trust to still exist in 10 years would be Google Exactly. I remember the beginnings of ChatGPT, OpenAI looked like the future and Google had Bard, which was not very good. It looked like Google was soon to become irrelevant. Fast forward to today and they have a lot of great products in this space powered by their own custom AI chips. Yep. Two simple boring bets on AI: NVIDIA and Google. You are probably too late for both. But if you buy the AGI line, then yeah, those are the ones to go to. I still think NVIDIA is a bad bet--where is their moat in the long term? Doesn't the sort of work NVIDIA engineers do look vulnerable to AI-assisted automation? NVIDIA engineers code against a well-defined test suite/specification, right? Their moat is cuda and cuda libraries and everything built on top. When a new architecture drops, it's always PyTorch running on CUDA, other PyTorch backends are best effort, even if they reach feature parity, many industry power users went closer to the metal to squeeze performance and that stuff is too specific to Nvidia stuff. if there is something that will beat Nvidia, it won't be something reaching feature parity with slightly better economics (like AMD, also Nvidia could just reduce their margins), it needs to be a novel approach worth rewriting the codebase for (maybe Cerebras, maybe a new player). At some point there will be models that are ‘good enough’ and run on chinese chips, mobile processors, and run of the mill chips from Apple. Whether this is a one bit ternary model, innovations to limit the size of the context, or something else it is coming. The balance has already shifted to making these systems less
resource intensive which is a clear need based on the enormous data center cost. I don't understand why AMD can't offer a drop-in replacement for cuda which implements an identical API. How much actual diversity is there among standard AI workloads? I would expect this is an 80/20 thing where 80% of the workload uses 20% of the features. >Nvidia could just reduce their margins Commoditization is great for stock prices ;-) 3 things, they can, there is a precedent for that with Google v. Oracle for Java, and they have something! AMD engineered something called HIP which is CUDA API compatible libraries that targets AMD's hardware, it's the closest thing we have for drop-in replacement to Nvidia's software moat. It works for simple stuff but loses terribly for frontier kernels (like Flash Attention 3), novel approaches (e.g. Mamba) or networking (e.g. NCCL), also they are rough on the edges, so what you gain from GPU costs is lost in engineering cost. My previous company tried to compete in this GPU game while putting effort to have a good software stack (Rivos), drop in replacement and cheaper with decent software. But that vision was rough, any new player had to implement the bad APIs due to backward compatibility concerns, following specs wasn't sufficient as a lot of the AI stack was depending on observable effects (Hyrum's Law), and Nvidia simply just had a long head start, the company is now dead (acquired by Meta) and AFAIK there isn't another player. Best case scenario AMD puts more effort into their software stack but I just think they do not have enough internal talent to compete. Training will continue to be an Nvidia's thing and that's where most of the money sits, unless suddenly the AI research scene pivots to using JAX but I do not see it coming any time soon, if anything, I've seen internal efforts at Google to make PyTorch work nicely with TPUs. Some players like Anthropic started using JAX for training but all the small players are using Nvidia, I'm guessing it has something to do with Nvidia partnering aggressively with startups. The most reasonable story you can tell for a nVidia moat is their know-how in designing datacenter-scale hardware and getting it fabbed and deployed. That's inherently hard to replicate. CUDA itself can be replicated in theory (it's basically just a compute API) but that turns out not to be worth it since the nVidia ecosystem really is higher quality for the cost. AMD should have been ideally placed to compete with them, and haven't. > NVIDIA engineers code against a well-defined test suite/specification, right? The spec is the value. And the patents. I admit I'm not too knowledgeable about the semiconductor industry. But it seems to me that there two likely scenarios: AI Bear or AI Bull. In the AI Bear scenario, NVIDIA is obviously overvalued. In the AI Bull scenario, we get full automation of software engineering. With "just a few clicks", an AMD employee can extract and replicate whatever subset of the spec is needed for AI workloads. Didn't the Google vs Oracle case find that copying an API can be fair use? And NVIDIA's patents haven't stopped Google from training on TPUs have they? Im more into buying Shovels. NVIDIA is arguably one of them, and I already have some. But I recently added POET, CBRS and similar. I think whatever happens, "shovel sellers" will be the main winners in this bubble. They will exist, but at what valuation? Can NVIDIA really continue to raise? Prices for both companies are already very forward looking, and assume best case scenario of insane growth for at least a decade while assuming no risk or competition. But tech is also one of the fields that is more prone to disruption. Nvidia is consistently one product away from it's competitors to eat highly into their margins. Google may have a stronger moat. No company in Italy I'm aware of is using anything but copilot or Gemini/notebooklm (talking legal, insurance, etc, not tech) because they are natural extension to the cloud and Microsoft 365 existing plans. Recency bias seem to push investors to ignore those risks and plenty reason like you: they use recent hindsight to project future growth. I think that NVIDIA is quite risky. I still don't understand what is their moat. There is nothing in their hardware to make them irreplaceable. There isn’t in time what will happen is that they will be designed around be it the Chinese or someone else, see Intel another company that will also be designed around will be ASML its just a matter of time. I have a suspicion that when China will roll out their NVIDIA capable chips - and that is a question of when, not if - NVIDIA stock will plummet as it is heavily overvalued atm. Never thought about Amazon, but I did completely expect Facebook to tank. Apparently I underestimated their level of deviousness and willingness to manipulate people. I don't even think I want to take a guess on OpenAI. I just don't think they can deliver a good product that aligns with my own moral compass, while trying to generate profit for shareholders. For the first year or more after IPO Facebook's stock was completely flat. I bought around the IPO and it went down significantly and only recovered after a couple years. I stupidly sold at that point once I'd had about a 10 or 15% gain. Everyone forgets that Amazon, Google, eBay had tens of competitors at the time. We only remember the winners. All that is a side show. What would you have done with the cash if you were right? Thats always the real story. My Aunt runs an accounting firm and is constantly moaning about the number of people who have over accumulated cash from IPOs and have no clue what to do with it all. I would retire. If you have two million euros lying around, that would be life-changing money for me. I'd put everything into VWCE and then live off interest. I think I'd spend a year in Japan just to see what it's like, then travel around a few other countries, and finally settle somewhere back in Europe - buy a small house in the middle of nowhere, renovate it, and then smoke weed and play video games until the end of my days. Don't you think sitting alone at home smoking weed and playing games might get a little bit lonely? Humans need human contact. Might as well pick up a night shift at the convenience store so you can talk to people. At which point the plan becomes something you can put into action tomorrow, if you wanted. It's like the parable of the Mexican fisherman: https://www.thekinnardhomestead.com/the-parable-of-the-mexic... Stoner WoW addicts working dead-end jobs live better than kings did in previous centuries, and we're too status-obsessed to notice this. Why can't you just play games with other people? Do you really need _work_ to not feel lonely? Gaming communities can be very toxic Just like corporate jobs. The issue I have with the advice is I don't see why _working_ is supposed to be solution, rather than trying to find community somewhere else. Most communities suck. This is why I want to live far away from everyone and sit at home and smoke weed rather than deal with people. That's something I have at the back of my mind. My company is completely dysfunctional so 90% of my job is literally doing nothing, which is amazing. The problem is the fear of losing this position. You could spend some of that 90% time building skills for hobbies / a hypothetical future job search. But why? If I manage not to get fired for 12 years then I'll reach the endgame. > and then smoke weed and play video games until the end of my days. This might be less fun than you imagine. > I'd spend a year in Japan just to see what it's like There's laws and shit about that. You can't just immigrate to a country illegally. You can however signup for a long-stay tourist visa, which lets you spend a year in Japan with enough money, anything is possible 2m isn't going to make Japan allow more than 6 months of stay in a year on a tourist visa. It might be enough to hide yourself from deportation, though who knows what happens when you try to leave. It might be enough to convince a local to get into a sham marriage for spouse visa sponsorship. That's such a cynical take. If everyone does what you're describing, we will never make progress as a society. I can think of lots of people that would make society better if they would do that instead of what they are doing now. Nah, it's just a small-scale form of wealth redistribution. The poster takes themselves out of the job market (making way for someone else), and then goes and spends their IPO money at a favourable exchange rate overseas. Literally everyone wins (versus the poster hoarding money and holding a lucrative job). Progress towards what? Do you think "progress" as conceived by sillicon valley billionaires aligns with the type of life you would like? There's a non-trivial chance "working hard" as defined by the modern ethos is doing more damage than good. It’s not cynical, but it is overly consumerist. I cannot imagine having untold amounts of money only to do nothing afterwards except consume the stuff put in front of you. Sure. If everyone became software engineers then we'd have 8 billion IT staff and zero food production, which would lead to the extinction of human race by mass hunger. I'm not sure what's exactly your point besides "if everyone does exactly the same thing, then society collapses". I believe Apple had a TV series lately which proffered a solution to this. We love in a kind of bizarro world where the “capitalists” have printed so much money that they’re wildly inefficient in allocation of resources, as evident by all the excess cash sloshing around; while the “communists” of China and to some degree Russia and the BRICS in general are widely efficient in allocation of resources, as evident by the creativity and innovation and advancements they’ve made in very short order. That’s at least my generalized perspective. Russia has allocated a significant proportion of its resources to exterminating its own children. China has done well, but the rest of the BRICS categorization makes no sense to me. India (and also Pakistan) are behind China on renewables but are having a huge surge right now. Well, China's efficiency seems to come mostly from the government enforcing competition between companies by several mechanisms, and creating some "free entrepreneurship" areas where they allow people to start companies with almost no strings attached. And I don't see what you are seeing on the rest of BRICS. I can't see much creativity and innovation in Russia. They sell oil and natural resources & use the money (whatever is not stolen by oligarchs) to fund an unnecessary war which they are losing. If anything, Russia is a prime example of inefficient allocation of resources. Including Russia and BRICS doesn’t support your thesis. Nothing efficient about their resource allocation (And China is a state capitalist economy) Russia is incredibly isolationist which makes it categorically different to the other BRICS IMO they cannot let OpenAI fail. It's not only an AI company, it's the symbol of AI hype. This AI hype is significant part of the US economy, and the AI infrastructure spending basically half of its growth. ("it's not this it's that", I swear it's human generated slop) The bubble either pops or it gets bigger. We've survived worse, better it pops now. Anthropic actually turned an operating profit recently due to huge revenue growth. Do you have a source for that claim? Hmm, it looks like if their revenue doubles to ~$10B and their expenses don't, they stand to gain a very sweet ~$500M. https://www.reuters.com/business/anthropic-nears-first-quart... That being said, it does look like it's being partially subsidized by Elon burning lots of money. We'll see if he can keep it up or if it will be left behind as hardware evolves. > its June quarter sales could reach at least $10.9 billion It COULD reach $10.9 billion. It COULD also completely shit itself and go bust. We'll just all have a fun time finding out together, won't we, investors? Do this: pick a public company (because their numbers are available), look at their quarterly reports in the last 3 years. Check the numbers they forecasted for the subsequent quarter. Verify how bad they missed. See how likely they could "completely shit itself and go bust". Hint: extremely unlikely. WCGW… Companies with $500B+
valuation don’t bancrupt… Enron entered the chat. If Enron were running today, they’d put Don Jr on the board, have the US Attorney reassigned to Guam, and sell them Venezuela for a dollar. Looks like there is only limited money in the market and there is a race to get it first. Wonder if the free market concept should move the prices down in such a scenario? I think it's because the private market can't possibly go any higher. OpenAI is already valued at around $1 trillion and just raised $122b. The only next step is the public market. >the private market can't possibly go any higher Can public markets go higher? Shiller P/E is closing in on the peak of the dot-com bubble: https://www.multpl.com/shiller-pe This is already close to being the frothiest market in US history. Consider two competing forecasts for AI: it's a "normal technology", or it will be superintelligent. If it's a "normal technology", where's the moat? Why won't this turn into a boring commodity business, like telecom after the bubble? Sure, railroads transformed the US, but that didn't prevent investors from losing a bunch of money first: https://news.ycombinator.com/item?id=47900502 If it's superintelligence, we're most likely either all dead (in which case you helped cause human extinction by investing, congratulations) or else we're living on generous UBI: https://www.astralcodexten.com/p/you-have-only-x-years-to-es... P/E is not an indicator of available to deployed capital. Just in the EU alone there is about €12 trillion in bank deposits which could be invested. There is no lack of liquid capital to be invested. Basel capital rules are supposed to mitigate against the insane idea of banks deploying all their capital in a single high risk stock. If you think you can get all the _public_ to pull their short term bank deposits into stock .. well, (a) you've not met the Germans, and (b) that is how the economy of Albania collapsed in a pyramid scheme. There is the amount of capital which is technically available, and the amount of capital which is available in practice. If EU depositors want exposure to US AI firms, why didn't they already withdraw their money to invest in Microsoft/Google/etc.? I'm a bit doubtful that an OpenAI IPO is going to trigger major shifts in asset allocation. The M2 money supply is ~4x higher now than in 1999. Does that indicate there is a lot more runway now, than then, at least on that metric? The P/E ratio references "price" and "earnings". Both "price" and "earnings" are denominated using money. So it's not obvious to me how an increase in the money supply should affect this ratio. BTW, in Shiller's book which was published right as the dot-com bubble popped, he has a chapter listing out similar late 90s structural factors, many of which could lead to permanently higher stock prices in theory. Nasdaq is about 8x higher now than then, so 4x higher M2 is tight. Ofc there is always a chance that this time is different and that the markets are genuinely much more efficient :-) > Can public markets go higher? Shiller P/E is closing in on the peak of the dot-com bubble: Shiller PE is near 44. Japan had an equivalent price to earnings ratio of over 70 during their 1989 bubble. Hm, wasn't Japan's bubble in part due to easy credit? Are we going to see easy credit in the US given recent memories of inflation? Quite possible that there will be a Trump effort to drive down rates and abandon inflation control for political reasons. There already was such an effort but Trump lacks enough federal reserve votes to succeed at present. > I think it's because the private market can't possibly go any higher. OpenAI is already valued at around $1 trillion and just raised $122b. How many public companies even get 122b? They definitely can go higher if they really are that valuable. With public companies come the other factors which might not be based on the actual value and can cause people to throw money. Meanwhile Chinese AI companies outputting open weight models nearly as good are valued in the low single digit billions. Go figure. Current chinese AI company valuations (USD): Knowledge Atlas Technology (Z.ai): 57B MiniMax Group: 26B Deepseek: 45B (rumored) > Meanwhile Chinese AI companies outputting open weight models nearly as good are valued in the low single digit billions. That's surprising to me; I thought (or heard) that it was low 3-digit millions. Wasn't there a Chinese ai startup that got bought recently but the government wouldn't let the founders leave china? I think stuff like that would have an effect on valuation Yeah, Manus were supposed to be acquired by FB, but the Chinese government nixed it. They are dirty communists. We prefer red blooded American scam artists here, buddy. Hell, Elon probably found some bullshit way to recognize Chinese AI as Twitter revenue, used to buy cyberattacks to sell to SpaceX. That's not how money works. It's not an asset which is subject to conservation of matter like gold. Banks make money by giving out loans is a meme, but it's actually true here. You kind of need collateral to do that, but a stock of a company which has revenue is a perfectly cromulent collateral even by strict standards. It's not even some infinite money glitch - it's kinda how the whole system is supposed to work. The stock market is largely about betting on expectations of future value while money is just a token which is used to settle things. E.g. if you think about simplified mechanics of IPO, say, investor Alice buys OpenAI shares, OpenAI gets the money and Alice has shares. If for simplicity we assume that Alice and OpenAI use same bank and there are no intermediaries, then it literally just updates two cells in a database. And Alice now has shares which is an asset of known value, thus can be borrowed against, etc. Also, say, OpenAI can use that money to repay debt, then perhaps lender would buy SpaceX stocks - it's not like money was withdrawn from the system. Of course, there can be some interference: multiple companies do IPO around same time it would reduce FOMO, and if they did it literally in one day there might be lack of liquidity. There are regulations that mostly forbid stock movements from creating new money. The money available for an IPO is pretty much finite and independent of those companies' actions. > free market concept should move the prices down Kind of a radical idea. I did read about that in economy books way back when at uni... but I don't think it's really happening actual. At least my walled doesn't seem to get it. PS: it's a joke, free market works when there is competition. VCs are making damn sure it's just enough monopolies that they get wealthier while consumers themselves get milked. Without antitrust actually being enforced, there is no free market. Prices do go down for electronics: https://ourworldindata.org/grapher/price-changes-consumer-go... That was then and this is now. RAM and storage prices are through the roof, effectively erasing the price drops of the latest 15 years or so. Since it appears that LLMs can't achieve AGI and lose hallucinations, I presume a new company will appear with a new architecture that can - what happens to the current behemoths and their stock prices? Will they jump architectures? Splendidly interesting times. This is also my understanding of why Twitter (and thus Grok) was acquired by SpaceX (which was already having an IPO). Less to do with GPUs in space, more to do with the first way to invest 'directly in AI companies without a proxy (e.g. nvidia). Soon to be part of your portfolio if you hold Nasdaq 100 or S&P 500 trackers line QQQ or SPY. Note that index funds don't hold companies in proportion to their market cap, but in proportion to their free float (shares available to purchase on the market). Both SpaceX and OpenAI's estimated free float are around 4-5% of their shares at IPO. This means that we really are talking about companies in the sub $100M valuation in term of index fund impact (assuming under $2T for each). That's true for the S&P but not nasdaq, nasdaq is market cap weighted. There used to be a limit that the available float couldn't go below something like 20%. (This is because 5% float available but 100% market cap would cause a huge supply/demand mismatch). But for spacex they changed the rule so there's no minimum, it's just that below 20% float, companies would be weighted at 5x the float instead of 100% of market cap. If spacex is planning on something like 5% float, it would be weighted around 25% of market cap with only 5% of float available to buy. But it gets worse because when the lock-up period expires in 180 days after ipo (currently scheduled right before quarterly index rebalancing), it's possible that frees up more than 20% of float and it suddenly has to be weighted at the full 100% of market cap -- triggering additional automatic buying. It certainly seems like it's set up for our retirement accounts to be the insider's exit liquidity. > it's possible that frees up more than 20% of float and it suddenly has to be weighted at the full 100% of market cap In your scenario, that 100% cap would by definition be less than 5x float so it shouldn't trigger any more buying than the lock-up expiration itself did. Not sure what you mean, can you help me understand? Do you mean if free float goes from 5% to 100%, and weighting goes from 25% to 100%, it's more "extra supply" than "extra demand"? That's a good point I hadn't considered. I'm not sure the details of the lock-up period though, it might be staggered. So if it goes from 5% float to 50% float, that's 45% of additional shares available to buy, but an addition 75% of the market cap that indices now need to weight to. But it's true this would only happen once (when free float goes from below 20% to above). Then after that the extra supply would be more than the extra demand. Or do I misunderstand? If free float is 19%, the firm is being weighted at 95% of its market cap, which is 5x the float. If free float is 21%, the firm is weighted at 100%, which is less than 5x the float (that would be 105%). The transition from "5x the float" to "market cap" doesn't increase the weighting any more than the change in float would. Collectively, Alphabet (Google), Amazon, Microsoft, and Nvidia already own approximately 25 - 35% of OpenAI and Anthropic respectively. They already are a part of your portfolio. This kind of indirect exposure might look good on paper but it's never even remotely a linear mapping in practice. Holding the underlying directly is the best bet if you want to minimize the possibility of getting screwed over by external factors while maximizing your practical exposure. It really sucks to be right and still get punished for it because Xbox or windows shit the bed last quarter. Agreed. The mere "mass" of these companies dampen any movement that the underlying asset has. I mean, in a earning call it might just be a line item in the "Others" section. And even if they made/lost billions it is a small % of the quarterly profits of such companies. Afaik, Nasdaq removed the seasoning rules to include it from the start, S&P would usually be only a year after IPO but they are also discussing changes What will managed funds do? Are we now suggesting people get out of index funds? Worse, will this and spacex ipo destroy the index funds? The important thing to remember is: - With the SP500 you're not that diversified because you're very exposed to the tech sector - With a world ETF like MSCI World you're still extremely exposed to US stocks (about 70%) and of course the tech sector Destroy is a strong word. Rather, it will make the pension funds and passive investors the bag holders for the oligarchs. > Rather, it will make the pension funds and passive investors the bag holders for the oligarchs. Care to explain the mechanics? I’m an investor (both in passive and more active vehicles) and don’t understand what you mean. Index funds buy companies, for the most part, according to their market capitalisation. They own more of bigger companies than small. There's the option of "equal weight" or other strategies but the overwhelming majority is market cap weighted. Index funds are also really, really big now and contain a lot of money earmarked for retirement/pensions. In theory if you had a temporarily very frothy market into which you could sell a part of your unprofitable company to some people at a very high valuation, index funds would then mechanically move in and need to purchase and add significant support for insiders to sell into. In this case, Elon has moved the wildly unprofitable XAI into SpaceX. SpaceX will IPO with a trillion dollar valuation, while only releasing a small number of shares for public trading. Due to the high valuation, index funds are required to buy SpaceX stock, which Elon will presumably slowly sell them in order not to crash the stock. The funds will be left holding the stock, while eventually the price will crash, because the company will simply not make enough money to justify the valuation. > Elon will presumably slowly sell them in order not to crash the stock. The funds will be left holding the stock, while eventually the price will crash, because the company will simply not make enough money to justify the valuation. Musk owns about 50% of SpaceX. You are saying he is planning to sell the vast majority of that holding at a gradual pace that will not be noticed by anyone but fast enough to get a high price? I'm sure there are multiple ways to profit from the situation. Even having just a small fraction of the shares publicly traded, while the index funds keep the price high is a huge win for him, as his net worth will be extreme on paper. Ok, but how does this "hold the bag for the oligarchs"? And which specific oligarchs do you have in mind when you say this? Are you thinking of Sam Altman and Dario Amodei and Elon Musk? Index funds will prop up the valuations of these companies, while they return nothing but value on paper. The owners on the other hand can use the valuation as collateral to loans, which then generates cash for them. Musk and Altman would be the most visible benefactors of this scheme, yes. All of the mentioned will dump their overhyped and overvalued trash onto retail investors which are forced to buy it due to it being part of the NASDAQ. It will tank in value afterwards due to public scrutiny revealing thr fiscal unprofitability. Retirement funds will be ripped apart, trust in the financial system will evaporate, people will be left holding the bag on a scale that makes Lehman brothers seem like a trial run. They (everyone) are not forced to buy it. They’re buying it on the hype. Tesla for example is done worldwide aside from the USA, but it still has a cult and hype behind it, if you are a smart early investor, you have already sold all your shares in Tesla and moved on because they will never be as big as they were five years ago. Tesla’s done BYD has seen to that. Many investors haven’t figured that out yet but they will eventually and they will be the ultimate bag holders once the bubble bursts for Tesla for good. There are other companies that are remnants of what they were but they still survive on hype. It just takes a long time for them to die. Another example of that is IBM. They are functionally done in the tech world. It just takes a long time to die other companies that fit that mold is Xerox and Kodak still floating at a much lower level, but they are functionally done. > They (everyone) are not forced to buy it. They’re buying it on the hype. But they are and that's the key part of the scam. The index funds will have to buy these, since they are so highly valued. Index funds in turn are very popular investment devices used by pension funds, banks, individuals etc. >They (everyone) are not forced to buy it. They’re buying it on the hype. I think you may not understand the problem. As noted, unmanaged/passive index funds invest using market capitalization as a metric. And anybody who is invested in these ETFs thus unknowingly buy into these astronomically overhyped companies, and once these company valuations fall (and they will), pension funds/IRAs/401k will be the bagholders. So these extremely risky companies will become a big part of American retirement funds. I am sure nothing bad will happen ETFs are a trap. Put most of your money in single stocks. It is ok to diversify, you don't need an ETF for this. > It is ok to diversify Nay, it is not just “ok”. It is imperative that you diversify if you want a strong and resilient portfolio. Absolutely, I moved all my investments to single stocks that I thought would do well that decision the best that I’ve ever made from an investment standpoint, the returns are infinitely better… This is terrible advice, are you buying and self balancing hundreds of different stocks? What is the problem? If you buys a SP500 ETF you're effectively buying 500 stocks. You don't need that much, but if that is your wish it is still better than using ETFs. I can’t say I’ve tried this but the thought just came to me that generating such trades would be trivial to do monthly now. Sure, if you want to print a 1000 page supplement and staple it to your taxes. More seriously, I would still worry about order execution and transaction costs. You are likely to end up on the wrong side of the bid/ask spread when playing against the big boys. If you're actually serious about this, you might as well start your own ETF. Or just buy this one I found after a quick Google: https://www.proshares.com/our-etfs/strategic/spxt Buying multiple sector-specific ETFs is another approach. I'm told that utilities are good to hold during a downturn. In some countries (like Switzerland) you don't have any capital gain tax __unless_ you are a professional investor. What makes you a professional investor? One of the things that can elevate you to that status is the amount of trades you make. So I am sure this is not viable for many people as buying an ETF counts like 1 trade, but investing the same money in the underlying assets count like 10s of trades. Unless you have huge amount of money to play, there is no need to buy dozens of stocks every month. If you already have a portfolio of several stocks, you can buy just one or two every month and increase your portfolio. If you are just starting, you can buy a few more, or decide to start just with the most boring and safe stocks like coca-cola or IBM. Direct indexing is a thing. It’s a thing but your order execution won’t be as efficient as an ETF, so you will be losing a non-negligible amount each year in slippage from the large number of small transactions > It’s a thing but your order execution won’t be as efficient as an ETF, so you will be losing a non-negligible amount each year in slippage from the large number of small transactions Not necessarily ETF managers execute block trades outside the normal market, sometimes through dark pools, not even reported to the public. Fidelity, Vanguard, etc ask JPMorgan, Goldman to execute these block trades and pay them a fee. This fee can exceed the “slippage” a retail investor can face. Unless you're over trading (which is not the goal) you'll pay very little because you're buying and not selling for several years. This will end up being less than the fee you pay to the ETF every year. You don't have to do the large number of small transactions, you know? Just diverge from the index, it's fine! It is very true what they said. In an ETF you get both bad stocks and good. You have no choice.
If you diversify manually you can pick and choose only the crème de la creme
But… people love to be lazy or just aren’t knowledgeable enough to pick their stocks themselves and thus it is safer for them to just stick to broad strokes of an index fund.
For starters as basic portfolio, you could 1:1 an index fund but take out all the garbage from it and keep only the strong, bright future companies. ETF are just noob introduction to the stock market and great one at that but to maximize returns you want to be more specific and intentional about your picks. Where etfs are great even after you learn a lot, is exposure to whole sectors of the industry. That’s how I treat them: one - etf - an index of how a particular industry fares. Source: I basically live solely from investments at 30 If that were true, then one would expect a competitive fund that does just that and that give higher ROI than an S&P 500 index fund (or index ETF) when you consider expense ratio. What is a such a fund? Or, alternatively, can you point us to a comprehensive list of those companies you would exclude from the index to get superior returns? My returns are around 20 percent per year for years. I lack will and energy to list everything I owned but it’s basically a method of value investing + momentum trading so two opposites. You could say it’s a diversification of investing philosophies. Honestly it’s a free for all game so no one has any interest to share their secrets and methods. When you lose money I make money. Better player wins. > My returns are around 20 percent per year for years. That's unbelievable! Even Warren Buffet only makes 19% - 20% compounded every year. That would make you one of the top investors ever. > Even Warren Buffet only makes 19% - 20% compounded every year. That would make you one of the top investors ever. Not really. Plenty of hedge funds and HFT firms make 40-100% each year (before fees) over 30-40 years… Citadel’s “stock picking ability” is 40% annual returns since 1999 They just don’t advertise this because it’ll make retail traders and passive ETF investors really sad Lots of people think they can do better than the index funds. Some do, for a while. Buffet was severely handicapped by the amount of money he had available. He mentioned that himself. If he had to manage only a smaller amount of money he would easily achieve 40% or more per year. I can't wait to invest an OpenAI and lose all my retirement fund. A race to lock in the money next to SpaceX (which just filed an S-1)? This can't go well. I am starting to speculate that was the purpose of the openai lawsuit. Delay IPO. The summer of Trillion dollar IPO’s is upon us. OpenAI, Anthropic, SpaceX Will they eat each others potential capital appetite? Or is there just that much laying around for them all to gobble up the bag? It depends at least partially on how much they're going to float. I think SpaceX is only planning about a 4% float, so even at $1.5T they only need around $60B. Which is a drop in the bucket. EDIT - but that's just the IPO, I wasn't even thinking about how much insiders will want to sell after the lockup ends... I think one of them is not like the other. I would invest in OpenAI or Anthropic or both but I doubt I'd invest in SpaceX. Isn't SpaceX the only one of those that actually makes money? Personally, I don't worry about profitability in the short term. If Anthropic is adding $15b ARR every single month, and their gross margins are 50%+ (per Dario), profits are inevitable. The thing I'm most worried about with SpaceX is bundling X.com, xAI with it. I don't want to invest in X.com nor xAI. Lastly, I don't my money tied to the Elon rollercoaster. How are the margins 50%+? There's an article from today where if they double their current revenue to $10.9B they will make ~$500M profit. Maybe I just can't count, but that's a margin of ~5% no? These numbers should be inference only: https://www.reuters.com/business/anthropic-nears-first-quart... I understand very little of this, but hasn't OpenAI burned so much money, which it now need to be recouped, making any profit short or long term is mostly a fantasy. If OpenAI IPOs, then investors will expect a return. OpenAI can't generate that, so they'll be forced to slash R&D, stop datacenter roll outs and layoffs, so what's left? A model that will grow stale in six month, massive commitments and debt? Can't wait to see where they stick the cost frontier model updates in the P&L. Maybe some kind of NRE they can amortize so it's outside of EBITDA? 5 trillion IPO of three companies this year! They still need real money to buy the offered stocks, I am wondering which markets will be sold in order for investors to get the cash. Are we not going to talk about the literal CFO saying their books aren’t up to rigorous reporting standards and need to wait until 2027? Current investors know the hype is sufficient to not worry about all those niggling financial details and want liquidity now -- retail will buy them out. How does a company even consider this while the CFO is privately saying the books / revenue accounting are not ready for public scrutiny? Edit:
Or has so much somehow changed in two weeks that it’s no longer necessary to wait until next year? These companies are burning enough cash that they will need to be public. We’re about to have 3 of the worlds’s largest corporations be massively in the red. Anthropic said they’ll be profitable by q2 of this year. https://www.ft.com/content/a67248e7-f819-4dba-b0f7-3847df0a7... In my mind, if they believed that they would IPO now, and not still be courting investors (which I believe they are still doing). At the size of IPO courting investors is inevitable. You need to make sure that there is enough money available. I believe, but could be wrong, is that the big change is the time frame for index and managed funds buy in. It used to be a year, but it's much shorter now, like 2 weeks. Which means as long as they can maintain a high market cap relative to their exchange for that time period they will be stabilized by institutional funds and basically crowd sourcing any losses to the public and massively cashing out the internal pre-ipo investors. At least that's my understanding of the current market dynamics regarding IPOS, if I'm wrong that would be great, and if someone else would explain it even better. I think some ETFs need just 5 trading days for it to show. For S&P500, to my knowledge, the stock needs to be traded at least for 1 quarter. Current administration might rig the rules to take the credit of AI boom. Even third world doesn't have this much shameless and corrupt regime as much as this one is. What is the third world in 2026? "Developing nations" if you will. Like these days banks are referring to labour class as "low quality human capital". Whatever terms fancy you, the underlying reality remains the same. > "Developing nations" if you will I wouldn't, I'm not sure which nations are developing or that they're developing into. Aren't we all developing all the time? > Whatever terms fancy you, the underlying reality remains the same. That's great, could you just explain the underlying reality without the loaded terms then? People usually use the term for poorer countries, as opposed to the rich ones. Originally third world meant those not aligned with the USSR or NATO, I believe. I get the meaning of "third world" but the USSR hasn't existed for decades, is China the modern equivalent? And it wasn't made clear why a neutral country like Switzerland would be expected to be highly corrupt while Russia would be low in corruption. Or indeed why Switzerland would be seen as a country in the process of becoming financially rich. > How does a company even consider this while the CFO is privately saying the books / revenue accounting are not ready for public scrutiny? Perhaps they will just tell a lot of lies. In the past people would generally avoid this when it came to stock market filings for fear of legal consequences, but the OpenAI C-Suite is already at least +$26 million to Trump and has plenty more to send his way if that doesn't cover it. Crime is legal in 2026 (if you can afford the kickback fees). Crime is legal, but investors can and will dissect your 10-Q/10-K statements. Anyway, I think that the Administration covering their asses in the face of doubtful numbers will shake investor confidence in the tech field. In fact, most investors will think one of these two things: 1. "Look, even OpenAI, which is the face of the LLM tech with ChatGPT, needs assistance from POTUS to stay afloat, the tech is not profitable" 2. "Crap, all this circular economy going on with Nvidia/OpenAI/... is bogus after all if even OpenAI needs the White house support to survive. There is not enough demand". Regardless of the specifics, if this sentiment spread enough (and it doesn't have to be the majority of investors) everyone, regardless of their beliefs, will start selling to avoid being the last one standing when the music stops. I'm guessing they had a significant revenue spike from gpt 5.4 and gpt 5.5 being so good at coding, and hiccups at anthropic making it easier for programmers to try the models. They say that the CFO isnt ready for public scrutiny and deny her access to the accounting. The CFO doesn't even report to Sam Altman directly. I would not assume that the decision is up to her in any meaningful way. I predicted a while ago and still stand by an 80% chance that their S1 is disastrous on the scale of WeWork; so, so much of what people think they know about OpenAI's finances is based on snippets and rumors rather than firm audited statements. They’ll be using every trick in the book to massage the numbers as much as possible, but even so it’s hard to see how an S1 for OpenAI or Anthropic doesn’t look pretty terrible Given the nature of private conversations, I suppose there is no source to this claim? Can't they just tell GPT-5.5 to fix their books, make no mistakes? Are the accountants also not replaceable by AI when doctors, lawyers and engineers are? Maybe they need those accountants to buy stock first before they put them all out of work? Cool does this mean they'll disclose their revenues and expenses in line with GAAP? yes, they will. That will be interesting, to say the least Will it be a WeWork moment? I hope so, I want some comedy gold (I cannot afford the mineral kind). The funniest possible outcome is OpenAI going public and then having to explain to shareholders that the path to AGI requires losing more money than previously expected, but with greater confidence. Let's hope—and I say this with zero sarcasm—that their relationship to Wall Street is cruel indifference. How many retail investors plan to buy? The folks I hear most excited about this have equity from the startup/PE companies they were involved in and are treating it like a big future payday. Apparently there is a big Whatsapp chat for them to discuss it all. My recollection is that retail investors end up losing in these situations. I'm personally staying away...feels too much like a grift, but I won't pretend I have some magical analysis to prove it. Reporting is going to be interesting. I wonder how their filings will look like and what will appear there I'd be willing to make this a ban-bet, but my prediction is that either OpenAI or SpaceX's IPO will flop and that will be the signal that will start the new stock market crash. When it happens people will point at how obvious it was with the war and the bubble going for a while. But these 2 mega IPOs back to back will be interesting to follow. Has there been any good recent ipo’s? They’re all down significantly from the date of going public. I don’t really see how the price of OAI et al can go up - it’s already richly priced! The only way is down imo. But how much? Considering how much they were priced a year ago even dropping 20% wouldn’t be bad… it’d be bad for insiders if the drop prolongs prior to the lock up period which is long enough to cause an even steeper drop. Also depending on the float - any non public trading shares face an illiquidity discount. Can't wait to see those revenue numbers. OpenAI reported ~$20 billion annualized revenue for 2025, up from $6 billion the year before. And that covers their model training and infrastructure costs? each new model brings in revenue that is multiple times the cost to create said model Is that the case? What about gpt 4.5? o1-pro? with revenue >2x cost, they can afford to have a miss now and then If you have a machine that reliably takes $1 and makes $2 you raise debt not equity care to elaborate? if my machine is doubling my money, why do I have to raise debt? Presumably there is some time component, i.e you need to use the machine quickly or risk losing it. Also, it's better to double $2 instead of $1, and then pay back that $1.1 and end up with $2.9 instead of $2. But it was a more facetious comment than I would have preferred to make, I actually went to delete it but you got in too quickly. There are many reasons it's wrong, too, eg. at some level of risk debt becomes more expensive or impossible But the intent of the comment was to say that if you owned as sure a thing as the GP proposed you'd do what you could to avoid selling parts of it. So their CFO's publicly voiced concerns are unwarranted? The efficient market hypothesis has taken a real beating in the age of tech industry anti-gravity valuations. I’m less interested in revenue and more interested in their operational costs I'm personally interested in their growth rate more than anything else. I'm not a believer that AI can't be profitable and has no moat narrative that is popular here. Both Altman and Dario have consistently said inference margins are high. Agree, deeply interested in their books and then whatever report cadence we end up on next year. I understand that a lot of people want to cash out, but I'm surprised they're ready to share, especially given I don't think they've had issues bringing in funding in the private markets, but maybe I'm wrong. At one point (1.5 months ago) Bloomberg posted a piece saying the private market was apparently drying up for openai due to anthropic sucking all the oxygen out of the room. https://www.bloomberg.com/news/articles/2026-04-01/openai-de... OpenAI will let down trousers first, Anthropic will be wise to not IPO this year:
SpaceX will collect a lot of money, i guess; then OAI afterwards. Anthropic will probably IPO as well I suspect they might delay if the numbers of OAI are public; and two big IPO before yours (and one of a competitor) is a tricky situation. I would postpone on the very last minute, depending on what my competitors numbers say :-D The "I" in "AGI" stands for IPO. So as we can clearly observe: "AGI" which at this point is (A Giant IPO) is almost here. Now all of humanity will benefit from this being e̶x̶i̶t̶ ̶l̶i̶q̶u̶i̶d̶i̶t̶y̶ shared by everyone for everyone. Right? Yup, Sam can claim that AGI is owned by everyone (he really means their pension funds though), while he makes a hasty exit to his private island retreat which we all have paid for. Sam is a power monster. He'd probably commit suicide before intentionally retiring and stepping away from influencing affairs. SpaceX and OpenAI? Market's gettin' frothy. Oh, this bubble is about to pop. Throughout the “AI bubble” talk in 2024 and 2025, I consistently argued that we were nowhere near the peak of the AI bubble. So far, that view has held up, as valuations are significantly higher today than they were in 2024 and 2025. If you look at the way the dotcom bubble unfolded, dotcom didn't take off until after Netscape IPOed in 1995. The market had 5 more years of growth until the collapse. And even after collapse, the Nasdaq was 2x higher post pop than in 1995. If history repeats itself, the stock market will take off after OpenAI and/or Anthropic IPOs. Be scared when random AI companies IPO with bad ideas and no revenue. My posts on AI bubble over the years: * https://news.ycombinator.com/item?id=40739829 * https://news.ycombinator.com/item?id=43385830 Companies IPO'd at an earlier stage of development in the days before Sarbanes-Oxley. Netscape was a 16-month-old startup when it IPO'd. It had about 250 employees. It had raised a total $27M in venture capital then, and then raised a few hundred million in the IPO itself, which gave it a total valuation of $2.9B. It had $16M in revenue and no earnings. OpenAI is 10 years old. It has about 4500 employees. It's raised about $180B in capital, and has a valuation of roughly $900B on about $25B in revenue. Anthropic is 5 years old. It also has around 3000-5000 employees. It will have raised about $120-140B in capital, at a $900B valuation, on about $30-45B in revenue. In the 80s and 90s companies IPO'd to actually raise growth capital - the public markets provided the money they needed to invest and expand, and then public investors reaped the benefits of their success, or paid the price of their failure. In the 2010s and 2020s companies grow with private capital, which has fewer strings attached, and then they unload the shares on the public market when they reach the top of their growth curve, leaving the public holding the bag. > they unload the shares on the public market when they reach the top of their growth curve, leaving the public holding the bag There are definitely some dogs that IPOd and went straight down, but investing in the broad stock market has absolutely not been a bag holding experience in the past decade+ At issue here is specifically the AI bubble, though, not the broad market. > If history repeats itself, the stock market will take off after OpenAI and/or Anthropic IPOs. Be scared when random AI companies IPO with bad ideas and no revenue. "Be fearful when others are greedy" — Warren Buffett If this isn't a greedy market, I don't know what is. Also what does it mean for the stock market to 'take off' when it's been doing ATHs for a while despite the geopolitical turmoil? Even /r/wallstreetbets has more sensible takes than this. > Be scared when random AI companies IPO with bad ideas and no revenue. Shouldn't we at least be a little bit scared already when shoe companies pivot to AI and their stock goes up ~750%? I think we're a lot closer to the peak than when Netscape IPO'd relative to the dotcom bust for a few reasons: * big banks are trying to get out of their data center loan commitments, even selling that debt at a discount. From the article: > According to the Financial Times, major lenders are already scrambling to offload pieces of massive data center loans through private transactions, risk transfers and synthetic structures. The reason is simple. AI infrastructure borrowing is reaching sizes that are beginning to choke the arteries of the financial system itself. * there are real questions about long-term liquidity and capital capacity across the entire VC ecosystem. Ed Zitron estimates that the available capital for all technology VC funds will be fully exhausted within roughly two years if current spending levels hold steady. More money has been spent on AI in the last decade than the Manhattan Project, the Apollo Space Program and the US highway system combined[1] * short-term success of these new data centers coming online is heavily reliant on steady fuel prices since hooking up to the grid can take years and many burn diesel generators while waiting for grid access. If the war in Iran drags on, high fuel prices will continue to ratchet up the cost of data center operations. * public sentiment around the economy was largely positive heading into the collapse, whereas we've been in fairly consistent state of economic uncertainty for years now. Affordability was not a topic of conversation back then and a majority of Americans are unhappy with the direction of the economy in 2026. 0: https://www.investing.com/analysis/the-ai-boom-is-starting-t... 1: https://www.aljazeera.com/news/2026/2/19/visualising-ai-spen... > * big banks are trying to get out of their data center loan commitments, even selling that debt at a discount. From the article: This isn't necessarily a sign that they don't believe in the data centre loans, it's more than banks are basically required to avoid concentrated risk, because of the regulations we (mostly correctly) imposed upon them post GFC. Now, personally I'm not convinced there's enough demand for AI services that these datacentres make sense, but we'll see I guess. There seems to be not enough of anything. Apparently, there's not enough demand for the datacenters already operating, there's not enough energy to power all the computers the datacenter companies already brought, there's not enough people to build the datacenters already planned... It's not clear if there's enough money available to go for those giant IPOs, and it's not clear if there's enough GDP available to cover for all the investment contracts out there. But inflation and deregulation can solve those ones. All of that would make sense iff those companies did get something close to AGI. But they haven't, what they have is their bullshit machines and a bamboozled public repeating their lines. This just isn't true. Banks never offload commercial debt to non-bank entities at a discount unless they're under financial duress or they believe the loss is worth more than keeping the debt on the books. Concentration requirements can apparently cause this. Let me dig up the FT article I read about this. Here's the article: https://www.ft.com/content/08aba5e4-5834-4e79-a48d-989a2c5ba... And this quote: >
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https://www.ft.com/content/08aba5e4-5834-4e79-a48d-989a2c5ba... > Investors expect more such moves as banks come up against risk limits that restrict their exposure to individual borrowers or sectors, and seek to free up balance sheet for more lending. Eh, at the beginning of 1995 the Nasdaq PE ratio was about 17.5. The current Nasdaq PE bounces around 33. During the dotcom bubble that would be the early 1998 timeframe. [flagged] If someone comes in and points out a bunch of valid similarities, are you going to start being nice, or are you just going to call that person's ideas stupid too? Now everyone is on the hook for this overpriced unprofitable monstrosity vis a vis pension and index funds. How much longer for the coming economic collapse… It should still take a year until it's added to the indices, no? At least that's how I understood the SpaceX case: Elon wanted to rush it and get it done in 6 months. So there's still hope that the bubble pops before the funds are poisoned. If they list on the Nasdaq, recent changes mean they can now be added after 15 days, instead of 12 months. https://www.etfstream.com/articles/spacex-to-ipo-on-nasdaq-a... Ouch, I wasn't aware it got shortened so much! Yep, this is truly terrible. lol, they reduced the wait time drastically last year I think it's a few weeks now. I wonder if this means solid 10% yearly returns from SP500 is finally over.. Indexes forcing investing will prop the bubble up. It will burst when nobody expects it after a massive IPO pop which makes believers even of the skeptical. >Anthropic is currently in talks with investors to raise money at a $900 billion valuation, which would push it ahead of OpenAI. How you go from 380 to 900 billions in a month, I am very curious? So now Anthropic is evaluated 900 billions! Journalism this days is worse than my kids social media channel. Totally, I believe you, go for it, is just one more zero bro. Everyone Brace for Impact. Let´s do it also, Breaking News: HUGSTON in talks with investors now Evaluated at 1 Billion Euro. > How you go from 380 to 900 billions in a month, I am very curious? Mythos Marketing. Well having "Mythos" at our offices (maybe not so good but 90% or maybe even better) would it be worth 1 Billion, Just saying! You can get exposure to OpenAI now via the Robinhood Venture Fund I (RVI) if you so chose (that fund is up 170% since its inception earlier this year.) At this point IPOs are mainly for unloading bags onto retail. Every institution who wanted a piece of these labs got in years ago and captured all the value. Yeah, and now the you shall not buy this bullshit begins. And then the price soars. :D Well, sad to say this is simply untrue for a few reasons. 1. "Retail" does not have enough purchasing power to have all of these "bags" unloaded on to. 2. Institutions buy shares in public firms post-IPO all the time even when they're "unloading bags onto retail". Take Uber (random example) ~83% is owned by institutions. 3. General factual history of the stock market shows that you are incorrect. Successful companies that IPO and continue to do business still have quite a lot of room left to grow. What was Google's market capitalization at IPO? What is it now? Is it possible some early investors made higher multiples than the IPO -> May 20th valuation? Yea for sure. That doesn't mean that all the value was captured. It also doesn't take into account the early stage risk for investing. Is Google an "at this point IPO"? No, but the principle is the same. It's also worth mentioning however that the number of IPOs is going down over time. You could maybe argue that the only ones that actually IPO are all the bags, but that seems like a stretch. These cynical comments "IPOs are mainly for unloading bags on to retail" lack explanatory power and data. It's absolutely true. Just look at how private equity is now getting access to public markets and retirement accounts[0]. You think PE is letting the little guys in out of the goodness of their hearts? No, they've extracted as much as they can and the market is starting to question the absurd valuation of private assets. A wise man once said: "if you're given an opportunity to cut an amazing deal and you can't tell who's getting screwed, then it's probably you" 0: https://pestakeholder.org/news/trump-admin-bails-out-private... > It's absolutely true. What is absolutely true? I'm not sure specifically what you are referring to. > Just look at how private equity is now getting access to public markets and retirement accounts[0]. Nobody forces you to reallocate your Vanguard Total Stock Market Index Fund or wherever you have your retirement assets into a new Apollo fund. Secondarily, we should treat people like adults and allow them to make their own investment decisions. So I take it you're going to buy shares of OpenAI on opening day then? ;) Institutions merely owning a newly-IPO'd stock means nothing. They get access to shares at a reasonable price before opening while retail is buying at insane prices after open. See Figma as an example where institutional investors got it at $33/share and it ended the IPO day at $115/share with retail buying all the way up (including pops above that at like $127) I thought it was common knowledge that IPOs are a way for insiders and early investors (not IPO flippers) to get a nice exit during the frenzy. > So I take it you're going to buy shares of OpenAI on opening day then? ;) Probably not. Do you understand however that your comment does not make sense in the context of my comment? > Institutions merely owning a newly-IPO'd stock means nothing. They get access to shares at a reasonable price before opening while retail is buying at insane prices after open. See Figma as an example where institutional investors got it at $33/share and it ended the IPO day at $115/share with retail buying all the way up (including pops above that at like $127) It also doesn't mean nothing - you have to go and analyze any given stock to make these kinds of claims on a per-IPO/equity basis. You also are ignoring traders and trading algorithms run by... big institutions and trading firms, and you're not accounting for volume or accounting for post-IPO purchases nor breaking those down by segment. In other words, you're just making stuff up. Well, I guess that's an effective way to deflect responsibility for the harms they cause from the people actually in control of their software and databases, onto 'shareholders'. Smart move IPO'ing ahead of Anthropic. Can take a lot of AI capital being first mover... That is, until Anthropic IPO's which I expect shortly. Agreed. They should IPO first if they think Anthropic’s IPO will be bigger. Get as much capital as you can first, then use it to buy more compute and defensively. The hype will be a lot less if Anthropic IPOs first and beats OpenAI’s numbers. I have no personal skin in the game in terms of investment posture, but OpenAI is, by an increasing margin, the weakest player. Claude and Gemini are both blatantly better (better as in smarter/more capable across all measures). Claude seems like the ‘smartest’ model and while Gemini is way more annoying to interact with in terms of its sycophantic nonsense and brain rot writing style, Google also has unlimited compute and I’ve literally never run out of tokens using any of Gemini’s models. And meanwhile Anthropic is seemingly addressing its biggest weakness, which is limited compute, by basically taking over from Grok’s computer hardware (I half expect Grok to get discontinued any day now - it sure seems like xAI has accepted that Claude is the front runner and they’re just getting behind it, kind of like what OpenAI agreed to do if they ever got behind in the AGI race back in ~2017). So what does OpenAI even lead at? Name recognition because they were first? At some point they were supposed to be specialising in medicine but I notice no difference between Gemini and ChatGPT when it comes to medical questions or analysis. My prediction is OpenAI will be the first big one to go bankrupt or be acquired, which is also probably why they are rushing this IPO: gotta get the founders cashed out. Somewhat of an aside, but I have no idea if AGI is actually possible with LLMs, but Claude is the closest thing to a person that I’ve used (even if it has its moments of abject retardation - not unlike humans, I guess). Honestly, even if anthropic models are better than OpenAIs, I don't understand how they want to make money. In October last year, the frontier models from US companies were so much better than the cheapest models, I thought it was over, but nowadays, even smaller models perform adequately enough. I now use free models (or rather, very cheap ones) in all of my personal projects, and even though anthropic's harness is hard to replace on complex cases (it helps understand where the LLM failed better, which allows to correct the mistakes more easily), I'm pretty sure pure LLM gains are less and less with each new models. > I have no personal skin in the game, but OpenAI seems like the weakest player. Claude and Gemini are both blatantly better. The market doesn't necessarily reward better products or (in this case) more intelligence. If it did, I'd be a lot richer than many of the mainstream startups. > The market doesn't necessarily reward better products or (in this case) more intelligence. It does when the product being sold is sold based on how intelligent (and thus how capable) it is. Unfortunately with people intelligence is merely an imprecise proxy of capability or organisational productivity. Anthropic models are well used for coding and similar tasks, and mostly through their own tooling as they are pretty aggressive limiting other usage. But I don't see their models being used that much through api for all the applications that are using api nowadays. Openai is the one with the easiest api to use and the more lax about it. I'll believe it when I see it. Anthropic or OpenAI IPOing is literally signing their own death certificate. The valuation will go to zero as soon as they have to submit actual numbers instead of the salad of bullshit they usually serve investors. It will probably be a failure, that is why they are rushing it to prevent a greater failure. Microslop and Oracle are already way down from their highs. Only Nvidia as the shovel seller still performs well. People generally hate AI. The IPO price will be inflated and the stock will drop 10% on the first day, like many late stage IPOs in the 2000 bubble. Friends and family like the Kushners will cash out. Trump might even suspend wars around the IPO date. What war? We've been assured the war is over, and we already won! Multiple times... Any early guesses on end of first day market cap? I'm going to guess $2.5 trillion which is about 2.5x their current valuation. I think the hype is going to be immense. What is the advice from the internet? Did you invest in Tesla and now invest in Open AI because who cares about ethics if you can make money? Anthropic has the obviously the better product and were seemingly ethically better until they burnt their developer goodwill and started accepting Musk infrastructure. But does having a better product actually translate to making more money? Should I just lay down and die because there's no good choice when it comes to investing in this product they market as killing off people's livelihoods? You can sit this one out. There are many other opportunities to make money in the market. Ai build out is currently in play, and many names are rising accordinglym If you're invested in any index funds or most mutual funds (including through your retirement account) then you can't really sit this one out. We're all going along for the ride, hold on tight. Tesla used to be a kind of “ethical” play. They made electric cars cool. Tesla is still doing that. The CEO is a shithead but that's a different matter. >Anthropic has the obviously the better product According to what metrics does Anthropic have the better product? Reported number of business users, although as with all these metrics I feel obligated to emphasize the caveat that most analysis of the AI labs' finances is speculative. OpenAI remains dominant in the consumer chatbot space, but that's so obviously going to be commoditized that I don't think it matters. Since the source code leak of Claud Code, is there an actual believable moat whatsoever any longer? I’m not nearly an expert at any level, but it seems to me the models themselves are converging on “good enough” for coding, with the real differentiator being the harness and tooling. From a bystander and casual user perspective it all seems running as fast as it can to commoditization to me. I’m certainly the dumb money here so won’t be investing short or long for any of these. But I do find it interesting! The Claude Code client source was never their moat. There are plenty of other companies with equivalent tools (gemini cli, cursor cli, augment, codex, etc.) The models that it talks to are far more important. Not to say you're wrong about commoditization. I don't think these companies will be able to raise their prices and keep them there to make enough money to keep building models like they've been doing. I disagree, Claude harness is the majority of its added value imho. I still use old Claude models over free models for the chain of thought and execution capacity, when free models have largely reached Sonnet 4.5 level and even surpassed it. Alternative to archive.md No CAPTCHA, no DDoS on blogger, works where archive.md is blocked https://www.msn.com/en-us/money/companies/openai-is-preparin... For those who don't use Javascript and prefer text-only https://assets.msn.com/content/view/v2/Detail/en-in/AA23F0Pt... For example, something like "Anyone else having issues accessing www.msn.com on their iPad? Keep getting a blog error. Wondering if it's just my iPad or a larger issue. I don't have an issue accessing the site from my laptop though." "Ok...after playing with every Safari option I figured it out. I have to enable the Desktop option for other websites to ON. seems like the website does not open in mobile mode on my IPad." https://old.reddit.com/r/ipad/comments/12j907w/anyone_else_h...
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curl -Haccept: -Huser-agent: https://assets.msn.com/content/view/v2/Detail/en-in/AA23F0Pt/ \
|(echo "<meta charset=utf-8>";
grep -o "<p>.*</p>"|tr -d '\134') > 1.htm
firefox ./1.htm
1vuio0pswjnm7 - an hour ago