said in a post on X.\u00a0<\/a><\/p>\n\u201cThe diminishing returns are becoming impossible to hide. Competitors are catching up. The lawsuits are piling up,\u201d Noble added.<\/p>\n
OpenAI has faced lawsuits alleging copyright infringement, such as one in New York claiming that text generated by OpenAI\u2019s ChatGPT violates authors\u2019 copyright protections. Others have alleged that ChatGPT played a role in suicides; for example, a lawsuit filed in Colorado claimed that ChatGPT acted as a \u201csuicide coach\u201d in the death of a 40-year-old man.<\/p>\n
Noble did not respond to Al Jazeera\u2019s request for additional insight.<\/p>\n
Despite growth appearing for OpenAI, the path to profitability requires significant investment.<\/p>\n
\u201cFor OpenAI specifically, they don\u2019t have the deep pockets they need to go through the build-out phase to get to the high revenue phase,\u201d Sebastian Mallaby, a senior fellow on the Council of Foreign Relations, who wrote an op-ed in the New York Times forecasting the startup would run out of money within 18 months, told Al Jazeera.<\/p>\n
\u201cThe scale needed to build is totally off the charts. They need an insane amount of money.\u201d<\/p>\n
OpenAI is carrying roughly $100bn in debt, and that burden is on investors funding their ecosystem and needs, including its push for data centre infrastructure.<\/p>\n
Tomic argues that despite the warning signs, investors continue to pour money in because of the fear of being left out.<\/p>\n
\u201cI\u2019d say the only thing worse than losing money with OpenAI is being left behind entirely,\u201d Tomic said.<\/p>\n
\u201cI think part of it is [the companies] investing to keep up with the Joneses, have a lead on this new technology, and hope they find a path,\u201d Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors, told Al Jazeera.<\/p>\n
\u201cTo become profitable, they really need to transition from what is essentially a subsidised research laboratory to an enterprise software juggernaut, where their core products are being used by everyone. Right now they\u2019ve got 900 million users, but most of those users aren\u2019t paying for the product,\u201d Schulman said.<\/p>\n
An OpenAI bubble<\/h2>\n
Mallaby argues that there is a bubble, but not for AI, just for OpenAI. He argues that OpenAI does not have other products to fall back on.<\/p>\n
If OpenAI does end up failing, Microsoft and Nvidia might take a hit, but it is unlikely that it would be significant, given the diversification of investments.<\/p>\n
\u201cNvidia will continue selling chips, just to other players, so I don\u2019t think it significantly affects Nvidia. Microsoft may lose some of its investment in OpenAI, but it will still survive. It would be a failed experiment, similar to Meta\u2019s failed bet on the metaverse,\u201d\u00a0 Schulman added.<\/p>\n
Nvidia maintains partnerships with competitor Anthopric for example, in which it invested $10bn as recently as November. And Microsoft maintains revenue from its other products.<\/p>\n
\u201cI don\u2019t think any of these are business-ending investments. Microsoft hasn\u2019t put so much money into OpenAI that its survival depends on it. That\u2019s not the case. The company still has Microsoft Office, its operating system business, and many other revenue streams. These aren\u2019t company-ending bets as far as I can tell. If the stock takes a hit, it takes a hit,\u201d Tomic said<\/p>\n
\u201cHow does that affect investors? It depends. If you\u2019re young, you need to be patient and avoid panicking; over time, the stock may recover. If you\u2019re nearing retirement, it\u2019s harder, because you may not have time to wait for a rebound.\u201d<\/p>\n
However, a failure of OpenAI impacts more than tech stocks and their investors. It will have a downstream effect on other companies that have penned deals with OpenAI for use on their intellectual property, including Disney.<\/p>\n
In December, Disney invested $1bn in the company. The deal would allow the use of its characters across franchises to be used across its video generation platform Sora. As part of the deal, it would limit how Disney\u2019s characters are used on the app.<\/p>\n
Tomic believes that an industry-wide bubble is looming, comparing it to the dotcom bubble.<\/p>\n
\u201cIt looks like the only question is when they would burst. If we draw a parallel, there are many similarities to the late \u201990s and early 2000s before the tech bust. Back then, everything was dot-com, just add a \u2018.com\u2019 and valuations soared. Now, everything is AI, AI-powered. There\u2019s a lot of exuberance right now,\u201d Tomic said.<\/p>\n
\u201cA lot of circular deals, right? Nvidia is investing in OpenAI, and then OpenAI is committing to buying Nvidia chips. That\u2019s reminiscent of the early 2000s.\u201d<\/p>\n
For instance, in 2019, Microsoft invested $13.75bn in the start-up, now worth $135bn and is set to potentially invest upto $10bn in the company. In October, OpenAI then announced a contract with Microsoft to purchase $250bn into Azure \u2013 the Redmond, Washington\u2019s based tech giant\u2019s cloud computing platform.<\/p>\n
Comparably, in September, Oracle agreed to a $300bn contract with OpenAI to build out data centres across the United States; OpenAI will then pay Oracle to use the data centres.<\/p>\n
In June, a poll conducted on 150 executives at the Yale Chief Executive Leadership Institute CEO Summit suggested that 40 percent believe that\u00a0the over-the-top hype about the AI sector, will lead to a market correction.<\/p>\n
OpenAI did not respond to Al Jazeera\u2019s request for an interview for this story.<\/p>\n<\/div>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
OpenAI has been the darling of investors, having raised more than $168bn so far. But with still no profitable business model in sight, big tech investors like Nvidia and Microsoft are starting to slow down. On Wednesday, Nvidia CEO Jensen Huang said the company is set to invest another $30bn into OpenAI but said it […]<\/p>\n","protected":false},"author":1,"featured_media":14244,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-14243","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-us-canada-news"],"_links":{"self":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts\/14243","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14243"}],"version-history":[{"count":0,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts\/14243\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/media\/14244"}],"wp:attachment":[{"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14243"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14243"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14243"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}