Remember, this is all about OpenAI convincing investors to shovel more money into their furnace.
They are not profitable. They have no realistic path to being profitable. Their only hope for survival is to South Seas Company their through round after round of investor funding. And to do that they have to create the appearance of near unlimited demand for their services, and therefore for additional capacity to run those services.
The writing is on the wall. Microsoft and Amazon, two of the biggest players in the compute space, both of which also run their own AI projects, have both massively scaled back their plans for future compute expansion. If anyone should be building out like crazy it’s them. If anyone has a clear idea of what the actual demand is, it’s them. If Amazon and Microsoft are out, this thing is fucked.
OpenAI is fucked. Sam Altman knows it. But if he can keep the illusion going, the money train doesn’t have to stop. Yet.
Ok this is interesting can I ask how you know that they scaled back their compute? Without looking into it too much it seemed like they were full steam ahead (revamping three mile island).
TD Cowen (which is basically the US arm of one of the largest Canadian investment banks) did an extensive report on the state of AI investment. What they found was that despite all their big claims about the future of AI, Microsoft were quietly allowing letters of intent for billions of dollars worth of new compute capacity to expire. Basically, scrapping future plans for expansion, but in a way that’s not showy and doesn’t require any kind of big announcement. The equivalent of promising to be at the party and then just not showing up. Not long after this reporting came out, it got confirmed by Microsoft, and not long after it came out that Amazon was doing the same thing.
Amazon isn’t the big surprise, they’ve always been the most cautious of the big players on the whole AI thing. Microsoft on the other hand are very much trying to play things both ways. They know AI is fucked, which is why they’re scaling back, but they’ve also invested a lot of money into their OpenAI partnership so now they have to justify that expenditure which means convincing investors that consumers absolutely love their AI products and are desparate for more.
As always, follow the money. Stuff like the three mile island thing is mostly just applying for permits and so on at this point. Relatively small investments. As soon as it comes to big money hitting the table, they’re pulling back. That’s how you know how they really feel.
Remember, this is all about OpenAI convincing investors to shovel more money into their furnace.
They are not profitable. They have no realistic path to being profitable. Their only hope for survival is to South Seas Company their through round after round of investor funding. And to do that they have to create the appearance of near unlimited demand for their services, and therefore for additional capacity to run those services.
The writing is on the wall. Microsoft and Amazon, two of the biggest players in the compute space, both of which also run their own AI projects, have both massively scaled back their plans for future compute expansion. If anyone should be building out like crazy it’s them. If anyone has a clear idea of what the actual demand is, it’s them. If Amazon and Microsoft are out, this thing is fucked.
OpenAI is fucked. Sam Altman knows it. But if he can keep the illusion going, the money train doesn’t have to stop. Yet.
Ok this is interesting can I ask how you know that they scaled back their compute? Without looking into it too much it seemed like they were full steam ahead (revamping three mile island).
TD Cowen (which is basically the US arm of one of the largest Canadian investment banks) did an extensive report on the state of AI investment. What they found was that despite all their big claims about the future of AI, Microsoft were quietly allowing letters of intent for billions of dollars worth of new compute capacity to expire. Basically, scrapping future plans for expansion, but in a way that’s not showy and doesn’t require any kind of big announcement. The equivalent of promising to be at the party and then just not showing up. Not long after this reporting came out, it got confirmed by Microsoft, and not long after it came out that Amazon was doing the same thing.
Ed Zitron has a really good write up on it; https://www.wheresyoured.at/power-cut/
Amazon isn’t the big surprise, they’ve always been the most cautious of the big players on the whole AI thing. Microsoft on the other hand are very much trying to play things both ways. They know AI is fucked, which is why they’re scaling back, but they’ve also invested a lot of money into their OpenAI partnership so now they have to justify that expenditure which means convincing investors that consumers absolutely love their AI products and are desparate for more.
As always, follow the money. Stuff like the three mile island thing is mostly just applying for permits and so on at this point. Relatively small investments. As soon as it comes to big money hitting the table, they’re pulling back. That’s how you know how they really feel.
https://www.datacenterdynamics.com/en/news/microsoft-cancels-200mw-of-ai-data-center-leases-report/