OpenAI has experienced substantial financial losses since launching ChatGPT, losing approximately $5 billion in 2024. Despite this, the company aims for $125 billion in annual revenue by 2029. Critics liken OpenAI's situation to a 'subprime AI crisis,' indicating that firms like OpenAI and Anthropic are heavily subsidized and heavily centralized yet failing to create significant value. Analysts warn that reliance on such technology may lead to consequences like layoffs and price hikes in the tech sector.
I hypothesize a kind of subprime AI crisis is brewing, where almost the entire tech industry has bought in on a technology sold at a vastly-discounted rate.
What happens when the entire tech industry relies on the success of a kind of software that only loses money and doesn't create much value to begin with?
OpenAI has operated at a substantial financial loss, leaking billions, yet insiders believe they can achieve $125 billion in annual revenue by 2029.
ChatGPT is currently valued at around 30 times its revenue, reflecting a frenzy of 'magical thinking' rather than sound financial analysis.
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