I already use ChatGPT as my first go-to stop for certain search queries.

Normal people would need to start using a Chat GPT owned interface for search to make an ad based business viable surely? And there's no real sign of that even beginning to happen.

Dissenters should consider that their might be short plays, that if what they think is true they could make some money.

I encourage you to visit https://chatgpt.com in incognito mode.

Are they? I would guess that the cost per query for Google, even back then was insignificant compared to how must OpenAI is spending on GPU compute for every prompt. Are they even breaking even on the $20 subscriptions?

During their growth phase Google could make nothing from most of their users and still have very high gross margins.

OpenAI not only has to attract enough new users but to also ensure that they are bringing more revenue than they cost. Which isn’t really a problem Google or FB ever faced.

Of course presumably more optimized models and faster hardware might solve that longterm. However consumers expectations will likely keep increasing as well and OpenAI has a bunch of competitors willing to undercut them (e.g. they have to keep continuously spending enough money to stay ahead of “open/free” models and then there is Google who would probably prefer to cannibalize their search business themselves than let someone else do it).

> in fact as bezos demonstrated with Amazon for many years, profit is an indication you’ve run out of uses for capital to grow.

Was Amazon primarily funding that growth using their own revenue or cash from external investors? Because that makes a massive difference which makes both cases hardly comparable (Uber might be a better example).

It’s not even clear if OpenAI is breaking even with the $20 subscription just on GPU/compute costs alone (the newer models seem to be a lot faster so maybe they are). So incrementally growing their revenue might be very painful if they keep making the UX worse with extra ads while still simultaneously losing money on every user.

Presumably the idea is that costs will go down as HW became faster and models themselves more optimized/efficient. But LLMs themselves already seem to almost be a commodity so it might become tricky for OpenAI to compete with a bunch of random services using open models that are offering the same thing (while spending a fraction on R&D)

They are spending a lot on shovels but it’s not clear that there is that much “stuff” (consumer demand) to be shoveled.

VC money can only take you so far, you still need to have an actual way of making money.

LLMs might effectively replace Google but they are already a commodity. It’s really not clear what moat OpenAI can build when there are already a bunch of proprietary/open models that are more or less on the same level.

That basically means that they can’t charge much above datacenter cost + small premium longterm and won’t be able achieve margins that are high enough to justify current valuation.

Facebooks IPO financials were among the best financials at IPO ever

OpenAI has negative 130% adjusted operating margins.

Revenue - 3,711 - 88% YoY growth.

Net Income - 1,000

Cash - 3,908

Tell me how those are bad?

Google's generative ai models probably are used more in a day than the rest combined. Google is a highly profitable business that still has never not grown YoY in its nearly 3 decade history.

In you mind you might think Google is going down, but in reality they have only been going up for nearly 3 decades now.

only display ads business, which is a fraction of total ads revenue

Love the use of the personal anecdote to refute my point BTW.