AI Is A Money Trap
We recorded 20 claims from this post. 20 can’t be checked. 11 more are held. Read the post at its source.
Claims from this post (20)
In the order they appear in the post. Each quotation is the speaker’s words in this post. A label such as “Supported” or “Can’t be checked” is the claim’s current assessment; its page has the evidence and the reasons.
Assessment: Can’t be checkedSaid
Recommendation or value judgment
“And now they're in "early-stage discussions" about an employee share sale that would value the company at $500 billion, a ludicrous number that shows we're leaving the realm of reality.”
Our reading: The $500 billion valuation implied by OpenAI's reported employee share sale discussions is a ludicrous number that shows we are leaving the realm of reality.
No horizon
Assessment: Can’t be checkedSaid
Observation
“I know it sounds a little insane, but I believe that Cursor is the weak point of the entire AI bubble, and I’ll explain why, and how this could go.”
Our reading: He believes Cursor is the weak point of the entire AI bubble.
No horizon
Qualifier: I believe
Assessment: Can’t be checkedSaid
Observation
“The unit economics of this business do not make sense and yet, on some level, its existence is deeply important to the valley’s future.”
Our reading: Cursor's unit economics do not make sense, yet its existence is important to Silicon Valley's future.
No horizon
Assessment: Can’t be checkedSaid
Recommendation or value judgment
“Is Cursor worth $10 billion? Nope! No matter how good its product may or may not be, it is not good enough to be sold at a price that doesn’t require Cursor to incinerate hundreds of millions of dollars with no end in sight.”
Our reading: Cursor is not worth $10 billion, because however good its product is, it is not good enough to sell at a price that would spare Cursor from burning hundreds of millions of dollars with no end in sight.
No horizon
Qualifier: no matter how good its product may or may not be
Assessment: Can’t be checkedSaid
Observation
“I’m not saying these companies are unnecessary, so much as they may very well be impossible to run as real businesses.”
Our reading: Generative AI companies may be impossible to run as real businesses.
No horizon
Assessment: Can’t be checkedSaid
Observation
“And, like homeowners in the dismal years of 2008 and 2009, they’re almost certainly underwater — they just haven’t realized it yet.”
Our reading: VCs invested in unprofitable generative AI startups are almost certainly underwater on those investments.
No horizon
Assessment: Can’t be checkedSaid
Causal claim
“But I’ve been dancing around the real reason they won’t sell: because, fundamentally, generative AI does not let companies build something new.”
Our reading: Generative AI startups won't sell because generative AI fundamentally doesn't let companies build anything new.
No horizon
Assessment: Can’t be checkedSaid
Causal claim
“This isn’t anything like any boom that leads to something, and it’s because the economics do not make sense.”
Our reading: The generative AI boom is unlike booms that lead to something because its economics don't make sense.
No horizon
Assessment: Can’t be checkedSaid
Observation
“It must go public, because at a valuation of $300 billion, OpenAI can no longer be acquired, because nobody has that much money and, if let’s be real, nobody actually believes OpenAI is worth that much.”
Our reading: At a $300B valuation OpenAI cannot be acquired and must go public; nobody truly believes it's worth that much.
No horizon
Assessment: Can’t be checkedSaid
Observation
“Outside of ChatGPT, there’s really no proof that these products are anything remotely essential, and I argue there’s very little about ChatGPT that Microsoft couldn’t provide with rate limits via Copilot.”
Our reading: Outside of ChatGPT there is really no proof that generative AI products are remotely essential, and he argues there is very little about ChatGPT that Microsoft could not provide, with rate limits, through Copilot.
No horizon
Scope: outside of ChatGPT
Assessment: Can’t be checkedSaid
Causal claim
“OpenAI doesn’t break out the actual revenues behind these numbers for a reason, and I believe that reason is “they don’t look as good.””
Our reading: He believes OpenAI does not break out the actual revenues behind its numbers because they do not look as good.
No horizon
Qualifier: I believe
Assessment: Can’t be checkedSaid
Forecast
“I don’t think this happens! I think this is a silly idea, and the most likely situation would be that Microsoft would unhinge its jaw and swallow OpenAI and its customers whole.”
Our reading: He does not think a government bailout of OpenAI will happen and calls the idea silly; he says the most likely situation is that Microsoft would swallow OpenAI and its customers whole.
No horizon
Qualifier: I don't think this happens
Assessment: Can’t be checkedSaid
Observation
“If OpenAI is making a billion dollars a month, it is possibly losing that much (or more) after revenue, and that’s the money it can get selling the product in a form that can never turn profitable.”
Our reading: If OpenAI is making a billion dollars a month, it is possibly losing that much or more after revenue, and that revenue comes from selling the product in a form that can never turn profitable.
No horizon
Qualifier: if OpenAI is making a billion dollars a month
Assessment: Can’t be checkedSaid
Conditional forecast
“The revenue you see today is what people are willing to pay for a product that loses money, and I cannot imagine they would pay as much if the companies in question charged their costs.”
Our reading: He cannot imagine customers paying as much as they do today if AI companies charged them their actual costs.
No horizon
Only if: if the companies charged their costs
Assessment: Can’t be checkedSaid
Forecast
“To be clear, OpenAI, by my estimates, has only made around $5.26 billion this year (and will have trouble hitting its $12.7 billion revenue projection for 2025), and will likely lose more than $10 billion to do so.”
Our reading: OpenAI will likely lose more than $10 billion in 2025.
No horizon
Assessment: Can’t be checkedSaid
Conditional forecast
“Private equity may ultimately face the same problem as many AI startups: there is no clear exit strategy for these investments. In the absence of real liquidity, firms will likely resort to all manner of financial engineering (read: bullshit) —marking up portfolio companies using internally generated valuations, charging fees on those inflated marks, and using those marks to entice new commitments from limited partners.”
Our reading: Private equity may ultimately face the same lack of a clear exit strategy as many AI startups, and in the absence of real liquidity, firms will likely resort to financial engineering such as marking up portfolio companies with internal valuations, charging fees on those marks, and using them to attract new commitments from limited partners.
No horizon
Only if: in the absence of real liquidity
Assessment: Can’t be checkedSaid
Causal claim
“In fact, generative AI is turning out to be a fever dream entirely made up by big tech. OpenAI would be dead if it wasn’t for the massive infrastructure provided by Microsoft at-cost in return for rights to its IP, research, and the ability to sell its models on top of the tens of billions of dollars of venture capital thrown into its billion-dollar cash incinerator.”
Our reading: OpenAI would be dead without Microsoft's at-cost infrastructure and massive venture funding.
No horizon
Assessment: Can’t be checkedSaid
Causal claim
“Anthropic would be dead if both Google and Amazon — the latter of which provides much of its infrastructure — hadn’t invested billions in keeping it alive so that it can burn $3 billion or more in 2025 while fucking over its enterprise customers and rate limiting the rest.”
Our reading: Anthropic would be dead if Google and Amazon had not invested billions to keep it alive, investment that lets it burn $3 billion or more in 2025 while mistreating its enterprise customers and rate-limiting the rest.
No horizon
Assessment: Can’t be checkedSaid
Observation
“The generative AI industry is, at its core, unnatural. It does not make significant revenue compared to its unbelievable costs, nor does it have much revenue potential.”
Our reading: The generative AI industry makes little revenue relative to its costs and has little revenue potential.
No horizon
Assessment: Can’t be checkedSaid
Rhetoric
“It feels as if everything is aligning for disaster, and I fear there’s nothing that can be done to avert it.”
Our reading: It feels to him as if everything is aligning for disaster, and he fears nothing can be done to avert it.
No horizon
Qualifier: it feels as if
Held from this post (11)
These records did not pass every check, so nothing about them is published. Held is not a finding.
- The criteria are ambiguous. Our reading, not assessed: Big tech has not profited from AI data centers and makes little generative AI revenue.
- A required check could not run. Our reading, not assessed: Reduced AI capex will cut NVIDIA GPU spending, hit the US stock market, and the AI bubble's popping will damage the wider economy like the dot-com bust.
- A required check could not run. Our reading, not assessed: Generative AI companies are unprofitable with no end in sight, in most cases do not make much money, are valued at more than anyone would ever buy them for, do not have much valuable intellectual property, and the two biggest players burn billions of dollars more than they make.
- The two reviews read the claim differently
- The record does not meet the current rules. Our reading, not assessed: OpenAI will struggle to reach its $12.7 billion 2025 revenue projection.
- The two reviews read the claim differently
- The two reviews read the claim differently
- The two reviews read the claim differently
- The two reviews read the claim differently
- The two reviews read the claim differently
- The two reviews read the claim differently