The real headline is that they couldn’t hit what they wanted in terms of valuation and funds raised. Just were not enough people willing to invest given concerns that it may be downhill from here for a while on AI.
This will also make it even harder to avoid any future IPO being a down round. They’re almost certainly worth much less than Anthropic and Anthropic is, per reports, struggling to keep its valuation much above 1T, and even that may fall through.
No idea who's actually worth more than who here, but I will say that recently I've stopped using Opus at work for the lion's share of technical work. I used GPT-6.1 Sol for one big project I tackled last week, where the agents spent about 20 hours to produce ~73k LoC across 22 PRs. While the technical decisions and code weren't bad and design gaps were left clearly enumerated, the overall "human factor" was terrible, in the sense that the plan docs were overly-verbose and difficult to read and PR descriptions were abysmal. Numbers and words were run together all over the place where there should have been spaces. At that point I pointed Opus 5.5 at the whole thing and asked it to double-check design and code and rewrite all the "for human consumption" text in plan docs and PR description, and it did a phenomenal job of that part of it. Plan docs were made much more concise with emphasis on the strategic parts of the problem. Opus accepted the vast majority of the design and code that GPT-6.1 Sol had produced.
Of course I have no idea what the technical results would have been if I had just used Opus 5.5 end-to-end, but I'm fairly confident it would have been more expensive given the rates my company pays for each. For that matter I wonder how Kimi3.1 Pro or DeepSeek 4.1 Flash 1017 would have done with various parts of the job. In fact I may try rerunning the whole thing using open weight models next week just out of curiosity.
If Kimi+DeepSeek produce something roughly equivalent, then just from my own personal experience with a novel problem involving legacy in-house code, as opposed to public benchmarks for which I don't have a great handle on how well they correlate with value produced by the models, that will make me question the valuation of both OpenAI and Anthropic.
OpenAI is a bit more scattered brained and spread across multiple products.
Anthropic is way more focused. That helps in a way that builds upon another: their product tends to be better and the people's perception of it as well.
But "much less"? OpenAI needs a month or two of good choices, progress & announcements, and that flips. On the other hand, Deepseek could blow both out of the water unexpectedly, ending the argument about who has the superior tech.
There's also the Elon factor. Anthropic has a good relationship with Elon (to the point where he discounted the compute sold to them by quite a lot) while OpenAI/Sama is the devil to him.
> Anthropic is way more focused. That helps in a way that builds upon another: their product tends to be better and the people's perception of it as well.
But they are still not likely to be investment-grade at IPO.
What if I asserted that the MCP economy could be worth 5x more than LLM market since tools usually end up just being a fraction of the opportunity compared to market domination.
> How could anything else be bigger than Super Intelligence? Which is supposed to be the next step after AGI, which we presumably already have?
Meh. We both do and don't have AGI, because everyone before ChatGPT thought it was obvious what it meant and it turned out we all disagreed with each other about that obvious meaning. We can't even all agree about the "artificial" part, which is the most surprising part to me, let alone "general" or "intelligence".
If you applied some thinking for a moment and not spiraled out you probably would realize the the tools that control a market are worth less to sell themselves then to utilize them.
This would by my question. Why do they need money at all after just raising 9 months ago?
But none of these numbers are real. Softbank and MGX are re-arranging the deck chairs between OpenAI and Stargate so the actual new outside money here indicates very weak demand.
This is a press release to try to anchor the valuation but it doesn't seem like a lot of people are buying that.
I do expect them to IPO in ~6 months - they were planning to IPO in 2026Q4 but they torpedoed those plans, and Sam Altman said it's off the table for the rest of 2026. The implication is that it's on the table for 2027Q1.
Interest rates are the big wildcard. If this is the start of a significant rising cycle, akin to 2022/2023, then the AI bubble is toast and all these companies are dead. If the Fed pauses in December/January there may be a window of opportunity in early 2027 and we'll see both OpenAI and Anthropic IPO and possibly jump.
Rising interest rates are a triple whammy to AI companies: 1) risk capital always flees first when rates go up, so the available capital dries up 2) they and their suppliers have borrowed significantly to fund datacenter expansion, so rising rates will directly increase their expenses and 3) AI is considered an investment for their customers, and corporate finance always pulls back on more speculative investments when rates go up, and so their customers will likely pull back and directly shrink their revenue.
>> I do expect them to IPO in ~6 months - they were planning to IPO in 2026Q4 but they torpedoed those plans, and Sam Altman said it's off the table for the rest of 2026. The implication is that it's on the table for 2027Q1.
Whether they IPO depends on a lot of factors. For example, if we see a market meltdown triggered by data center moratoriums, then neither lab will IPO in 2027 at the very least. And if Anthropic achieves RSI first, there won't be much investor interest in a clearly inferior lab.
RSI has already been achieved, but it is not the infinite wealth, eternal life, ending all disease fantasies, and there is no monopoly, just more intense competition as everyone is capable of replicating it, so bad news for that investment thesis.
Developer sentiment seems to be awarding Anthropic on quality and efficiency with more usage (plus Claude Code CLI being earlier to market), although maybe OpenAI is in bed with enough non-coding enterprises that it has an edge there.
Is anyone actually using those features? I feel like this still very much just Codex vs Claude code, and if codex has the better model everyone will switch in a week.
All the other products feels like a (desperate?) attempt to create moat and friction for switching models.
I feel like all these versus arguments are absolutely opinion and preference, but really deep down do hint at a modification that will be hard to ignore as an investor.
If AMD and Nvidia could make the exact same thing the exact same rates, why would the stock price of one be higher than the other?
For me OpenAI doesn't have any stickiness/moat. I only use it because Sol 6.1 tokens are cheaper for similar quality for typical tasks. I also find it can be hit-or-miss more so than others when designing a system interactively.
Opus 5.5 came out more than a month and a half ago and is the clear favorite amongst developers, and OpenAI has yet to release something that can match or exceed it. That means they don't have their ducks in a row, and the internal models they do have take too long to prepare for general release.
"They're almost certainly worth much less than Anthropic" you type that with so much conviction. I have no dog in this fight, but I'm not so such. We have seen OpenAI provide models in Audio, Image, Video, etc. Perhaps it's for publicity, but their models have tackled difficult math problems and those that I know that use their top models are just as happy with it as they are with Opus 5.5. IMO, I think they are neck and neck.
Yes that is all interesting but the only thing that matters for company valuations is how much money they make, how quickly the amount of money they make is growing, and how much the assets they own are worth.
Weird, I've been told repeatedly that inference is wildly profitable for both of these companies and waves hands training costs are irrelevant for some reason.
It’s: we spent X billion to train our HUGE model and it’s so good we can make money off it. Please fund us for Y billion to build the HUGER model that will maybe destroy the planet, and if it doesn’t we can’t sell it back to users at profit because of legitimate security concerns. And then we’ll need Z billion to train...
Does anyone see the path to ROI here? There is clearly a profitable business model within these big AI labs, but it’s held captive by messianic 90-page IPO risk statements. I know they want to sell restricted access to the more capable models but the market for those kind of professional services doesn’t even exist yet.
I would be shocked if Anthropic IPOs below 1.25T. Prediction markets have it at 1.625T now. Even quite conservative Aswath Damodaran puts it at 1.45T.
I think once you go below that you can probably just sell on open market without any IPO dance like finding institutional investors.
Less sarcastically though the bet on how much AI company IPO at attracts a certain type of people. People who may have a certain believe about AI companies which will bias their assumptions quite a bit.
Prediction markets are sometimes wrong but they are very accurate on high volume markets like this one. Here we have hyperliquid perpetual futures among other things. Volume on those alone is above 10M USD per day.
>>Less sarcastically though the bet on how much AI company IPO at attracts a certain type of people. People who may have a certain believe about AI companies which will bias their assumptions quite a bit.
They're not very accurate. They are generally accurate with a margin of error big enough that they're far from a sure thing. If they were accurate then no one would take a contrarian position. I'd look at a prediction and say "well obviously the favored side is going to win" and put all my money there, over and over again, until I was the richest mortal in the universe.
Polymarket has it at ~50% that their IPO value is between 1.25T and 1.5T. Do you think that is representative of reality? It's not like we get to flip the IPO coin ten times.
I mean unless you think the valuation multiple on AI companies have compressed by over 50% in the past week, the prediction markets seem pretty accurate.
OpenAI will be just fine, they are building superintelligence. I think these comments will be pretty funny in a few years. This is the best wealth building opportunity of my generation.
OpenAI seems to me like they are operating with a slightly longer horizon strategy than Anthropic. Going for the IPO is the last resort in my mind. It is what you do to get ahead of deteriorating financial conditions. I don't think Anthropic had a choice at their projected burn rate. Why would we surrender all our cloaks and daggers unless we absolutely have to? The political and regulatory headwinds are not looking favorable for AI companies as of a few days ago.
Going for the IPO collapses a large space of options that are available to the business. The AI business is entirely about data. Anthropic's IPO would generate an incredible amount of data that could be used by its competitors to refine their strategy. Knowing where to allocate capital is perhaps worth more than the capital itself at these scales.
Issue is the deteriorating market conditions are already happening, Anthropic didn’t really get ahead of them, but they might just about be able to get the IPO over the line this year albeit for less than they hoped.
What OpenAI will do if market sentiment around AI really falls apart I’m not sure
They probably could have pushed the IPO through like Anthropic. Sensing the headwinds and delaying it was the smarter move though. With how quickly things are changing in the space who knows how the economy and the public perception on AI and data centers will be in mid-2027.
Amazing, UAE is paying protection money. The Iran war pays off for Josh Kushner, who is invested in OpenAI (and already had been "lucky" with the outrageous price that Musk paid for Cursor).
I don't like open AI but it seems their model is good now to eat up CAD, a craft I had learned, it's really impressive by now, more impressive than claude with code if you ask me.
while some mild bug or hallucination can go unnoticed, CNC machines and 3d printers are absolutely gonna choke on mistakes, which seems to be plenty according to youtube vids
Yeah, however I am talking the cad part, chatgtp can now do image to step file without errors takes 5 minutes for a single relatively complicated component.
Many softwares trip up on many things there, so did chatgtp up until maybe a year ago, now it can actually do image to step file where classic sw fails, I thought I'll never see the day but here we are
We always see these headlines and think "is XYZ company actually worth that much?"
Class A stock gets paid out first, so "valuation" here is not what a retail investor would necessarily pay for class C.
Basically, do these people think that they'll get their $11B back? If so, they are ok with a high "valuation" because there is little risk. And with OpenAI's corporate structure, who knows what is actually happening.
I think OpenAI is one of the most important companies in a generation, but on a tangent, I remember the first time a company broke a $1T market cap, and it was a significant moment. Nowadays multi-trillion-dollar valuations are becoming more common — I wonder how much it reflects inflation vs companies being genuinely bigger than they used to be. If it’s more about inflation, then we can expect to see dozens and hundreds more in the coming decades. Founders: recalibrate your ambition for the new era.
It is pretty much all inflation. Just look at the gold price over the same time frame. Gold did not become more productive or scarce. In fact, we have more of it now than we ever had.
It's inflation, and it's an important lesson as to the dynamics of financial markets in the context of a high debt regime.
Regardless of what officials say, the only way out of the looming debt crisis in developed nations is to turn on the money printers and inflate the debt away. That's literally the only way out.
Next look at how concentrated inflation gains become in financial assets. Corporate valuations are the first thing to inflate (wages last, and at a much lower rate especially as you move down the income ladder).
Finally recognize that the concentration of wealth in the stock market has made the market itself too big to fail, meaning central bank intervention whenever things get too gruesome. Enter moral hazard at the government backstopped casino.
All of this leads to one conclusion: put all of your money in the stock market. Literally just buy the S&P, ideally a 2x levered S&P index ETF given historical studies of optimal leverage, and just let it ride...
2018 when Apple was first across the threshold, it’s P/E was around 20. Currently near 40.
Then inflation has cut the dollar in half in a bunch of categories. So that would put it at $4T with no growth at all.
Another way to look at it would be to think of this openAI news as announcing they have a $250B valuation if you’re fixated on pre-covid prices like I am. :)
Aramco was the first in 2016. But Aramco basically only has 2.5% free float on the market. Apple was the first with a near 100% free float on the market.
To me it’s more about the scale of these numbers. After billions, people (like me) kind of lose intuition about how gigantic these numbers actually are. Yes GDP has time in its unit, but it still gives a general idea of the size.
Not sure how long you'll be able to sell compute to anthropic for. They are constrained right now but they have an insane pipeline of take or pay contracts, and if those are delivered they'll be drowning in compute in a couple of years time.
Do you think they would actually sell compute to anthropic? Relative to working with other labs that feels like conceding the overall AI race atleast outside of consumer.
They could just do it through azure or aws. Also, at these numbers a pseudo merger between OpenAI and Anthropic could happen. There is no anti trust anymore. It’s all the same owners for all these companies… the only anti trust is between usa, Russia, Europe, China, and the middle powers.
It kinda seems like a lot of the maximalist plans required the rest of the world standing still. As opposed to other governments, companies, other people generally adapting and trying to get a piece for themselves.
The story here is that Sam wanted to raise a lot more, but could not. Investors almost certainly want to see how the Anthropic IPO plays out before deciding whether to keep showering these companies with money.
Valuation wouldn’t hold if public. He couldn’t raise the 30B he wanted. I’m not sure how much runway OpenAI has, but sounds like a similar to Anthropic story with valuation likely if in the public markets declining.
Sam raised a $100B in previous round. I think a direct listing ipo would see their valuation go up to $4T, and then they could do some at the market sales as needed.
Billion dollar valuation startups used to be called unicorns because they were mythical creatures that didn’t exist.
Now we have a trillion dollar startup, still raising money, implying that the status quo isn’t remotely their final form.
I understand AI is actually, no-bullshit, changing the world forever, including the global economy. That said, how much of this order of magnitude jump since “unicorn” got coined can be directly attributed to USD inflation?
> Billion dollar valuation startups used to be called unicorns because they were mythical creatures that didn’t exist.
If they didn't exist then you wouldn't need to coin a term to describe them. In reality in the mid 2010s when "unicorn" started being used there were already hundreds of them.
> how much of this order of magnitude jump since “unicorn” got coined can be directly attributed to USD inflation?
"Inflation" is probably not quite the right term, or maybe it implies too broad or too narrow of a phenomenon.
I think we're experiencing the result of decades of taxes being too low on the rich, so there's too much money chasing too little actual real productivity growth. The Buffett indicator keeps ticking higher and higher, because the rich have too much money. It's gotta go somewhere, so everything is turning into tulips.
I wonder if that chap who said he’d put everything in FB at $14 put any at $18 because boy is he going to be wealthy today haha! The numbers all go up beyond what can you believe and were we in a bubble? Apparently we continue to be.
The 'T' in that number is breathtaking. Amusing flashback: remember about a year ago various tech publications claimed OpenAI was destined for bankruptcy since they were bleeding cash. Even funnier, people believed that.
To be honest, both can be true. They're raising puny amounts of cash relative to either their market cap or their commitments. And like another comment assinuated, this could be a ploy by the UAE to protect their AI investment after the recent decline - $10 billion is being funded by MGX, an AI holding company of the UAE.
> > As OpenAI bides its time, the company is engaging in early stage discussions with investors about a potential new funding round. The company could raise around $30 billion, CNBC previously reported, but that figure could change.
> I predicted last month when they launched Luna that they had raised more funding and I suspect this tidbit dropped to CNBC is just prepping the public for a fundraising that’s already happened. There will probably be an announcement this month.
Google's valuation is not based on their AI. Google has a highly profitable ad and cloud business. I don't know why you are putting NVidia in that list. NVidia sells chips and even if AI models become a commodity they need to run on something. Grok - no ones is valuing it at anything close to 1T. Closer to 100M if anything if you add Cursor.
SpaceX valuation is based on their highly profitable Starlink business, highly profitable datacenter build-up and options to charge more for their monopoly in launch. Grok/XAI/Twitter are a small drop in all of it.
Demand for AI is real and increasing. There is real shortage of compute right now. It might be that AI lab is not a sustainable business but I don't see how all that demand evaporates. If anything it will only increase as AI becomes good at more and more tasks.
It still baffles me that Grok is even on the list let alone being funded. Their market share is terrible and the product is so mediocre. Why on earth would I want a tool that has “be funny and irreverent” baked into its system prompts? I don’t want a calculator cracking wise at me either.
- cursor is good and covers many different use cases (multimodel "agents window", ai assistant in the editor chat, tab completion, cloud agents, ai code & security reviews)
- grok bot was first to market as "openclaw for enterprises" and feel they really pioneered this UX
- grok models are so-so but 4.6 had a great bang for the buck; they may still return to the "pareto frontier" for coding given all the data that cursor has
also the valuation is not only on grok/cursor? also spacex (starling, currently cheapest deliver to orbit; future "data center in space")
actually for an ai company i think they are quite well diversified and have multiple things going on for them; are they worth $1T --> i don't know, but i see a way to them doing really good (will they? on average, probably not, but at least it imaginable)
Grok had the potential of being the #1 LLM if they actually went through with Elons original promise of an "uncensored model". Meaning no guardrails, it does what you tell it, no matter what. Sadly Grok is even more restricted than even OpenAI's models, and despite being marketed as "edgy and ruthless" it is THE MOST politically correct model on the market. ChatGPT or Claude will gladly go along with religious or nationality based roleplay, while Grok outright refuses. Oh and you can't even use it for any pentesting whatsoever because a) it's far worse than the competition b) it completely refuses to even LOOK at low level code.
But this goes along with Elons same promises for X; "X will support free speech" etc even though it's trivial to get banned for the most pointless things.
> if they actually went through with Elons original promise of an "uncensored model". Meaning no guardrails, it does what you tell it, no matter what.
When will HNers realize that this is a fever dream? This is an edgy teenager's interpretation of "good".
The second someone uses a frontier model to attack other entities or hurt innocent people it will get (rightfully) shut down by the government.
We already saw this with the Fable export controls (and no one had even used these models offensively).
Open models will reach the same fate once the gov't realizes they are good enough. They will just ban weight hosting, require safeguards for any model routers that accept US payment, and embargo anyone that doesn't do these things.
There is a reason we don't let everyone in the world own RPGs.
No company will be able to get away with offering a completely unconstrained commercial model. The legal risk and pushback from governments is too high.
No guardrails? So, what? Someone can get grok servers to attack critical infrastructure out of boredom? Take down a hospital network during an emergency or something? There was never a world where musk and co were going to take that risk.
And people thought swatting was bad! Just imagine that jfc
The SpaceX/xAI valuation is crazy. Their rockets and satellite tech (i.e. SpaceX proper) is cool, but not worth anywhere near $1T. And in the AI space their tech doesn't feel competitive with Antropic/OpenAI. Not really better than the open Chinese models.
What's its USP? Data centers in space that governments can't shut down without triggering Kessler syndrome?
The real headline is that they couldn’t hit what they wanted in terms of valuation and funds raised. Just were not enough people willing to invest given concerns that it may be downhill from here for a while on AI.
This will also make it even harder to avoid any future IPO being a down round. They’re almost certainly worth much less than Anthropic and Anthropic is, per reports, struggling to keep its valuation much above 1T, and even that may fall through.
No idea who's actually worth more than who here, but I will say that recently I've stopped using Opus at work for the lion's share of technical work. I used GPT-6.1 Sol for one big project I tackled last week, where the agents spent about 20 hours to produce ~73k LoC across 22 PRs. While the technical decisions and code weren't bad and design gaps were left clearly enumerated, the overall "human factor" was terrible, in the sense that the plan docs were overly-verbose and difficult to read and PR descriptions were abysmal. Numbers and words were run together all over the place where there should have been spaces. At that point I pointed Opus 5.5 at the whole thing and asked it to double-check design and code and rewrite all the "for human consumption" text in plan docs and PR description, and it did a phenomenal job of that part of it. Plan docs were made much more concise with emphasis on the strategic parts of the problem. Opus accepted the vast majority of the design and code that GPT-6.1 Sol had produced.
Of course I have no idea what the technical results would have been if I had just used Opus 5.5 end-to-end, but I'm fairly confident it would have been more expensive given the rates my company pays for each. For that matter I wonder how Kimi3.1 Pro or DeepSeek 4.1 Flash 1017 would have done with various parts of the job. In fact I may try rerunning the whole thing using open weight models next week just out of curiosity.
If Kimi+DeepSeek produce something roughly equivalent, then just from my own personal experience with a novel problem involving legacy in-house code, as opposed to public benchmarks for which I don't have a great handle on how well they correlate with value produced by the models, that will make me question the valuation of both OpenAI and Anthropic.
OpenAI is a bit more scattered brained and spread across multiple products.
Anthropic is way more focused. That helps in a way that builds upon another: their product tends to be better and the people's perception of it as well.
But "much less"? OpenAI needs a month or two of good choices, progress & announcements, and that flips. On the other hand, Deepseek could blow both out of the water unexpectedly, ending the argument about who has the superior tech.
There's also the Elon factor. Anthropic has a good relationship with Elon (to the point where he discounted the compute sold to them by quite a lot) while OpenAI/Sama is the devil to him.
> Anthropic is way more focused. That helps in a way that builds upon another: their product tends to be better and the people's perception of it as well.
But they are still not likely to be investment-grade at IPO.
What if I asserted that the MCP economy could be worth 5x more than LLM market since tools usually end up just being a fraction of the opportunity compared to market domination.
You would probably be wrong, but I have no idea, all of this is science fiction compared to 2015.
How could anything be bigger than Super Intelligence? Which is supposed to be the next step after AGI, which we presumably already have?
I'm tired boss...
> How could anything else be bigger than Super Intelligence? Which is supposed to be the next step after AGI, which we presumably already have?
Meh. We both do and don't have AGI, because everyone before ChatGPT thought it was obvious what it meant and it turned out we all disagreed with each other about that obvious meaning. We can't even all agree about the "artificial" part, which is the most surprising part to me, let alone "general" or "intelligence".
If you applied some thinking for a moment and not spiraled out you probably would realize the the tools that control a market are worth less to sell themselves then to utilize them.
If only..
I’m sorry what? Google invented cloud computing and instead cornered the web economy worth much much more over the past 20 years
Quantum intelligence maybe?
Not until 2028, AGI/SI still brings in money
What is that even supposed to be?
Whatever pumps the stock price.
The bigger story is that their burn rate is so high.
Unless things change considerably, this is less than a 6 month runway.
It's not common for raises to give you this little runway.
You could read into it that they expect to IPO in far less than that amount of time, and this is a short bridge until then.
This would by my question. Why do they need money at all after just raising 9 months ago?
But none of these numbers are real. Softbank and MGX are re-arranging the deck chairs between OpenAI and Stargate so the actual new outside money here indicates very weak demand.
This is a press release to try to anchor the valuation but it doesn't seem like a lot of people are buying that.
I do expect them to IPO in ~6 months - they were planning to IPO in 2026Q4 but they torpedoed those plans, and Sam Altman said it's off the table for the rest of 2026. The implication is that it's on the table for 2027Q1.
Interest rates are the big wildcard. If this is the start of a significant rising cycle, akin to 2022/2023, then the AI bubble is toast and all these companies are dead. If the Fed pauses in December/January there may be a window of opportunity in early 2027 and we'll see both OpenAI and Anthropic IPO and possibly jump.
Rising interest rates are a triple whammy to AI companies: 1) risk capital always flees first when rates go up, so the available capital dries up 2) they and their suppliers have borrowed significantly to fund datacenter expansion, so rising rates will directly increase their expenses and 3) AI is considered an investment for their customers, and corporate finance always pulls back on more speculative investments when rates go up, and so their customers will likely pull back and directly shrink their revenue.
>> I do expect them to IPO in ~6 months - they were planning to IPO in 2026Q4 but they torpedoed those plans, and Sam Altman said it's off the table for the rest of 2026. The implication is that it's on the table for 2027Q1.
Whether they IPO depends on a lot of factors. For example, if we see a market meltdown triggered by data center moratoriums, then neither lab will IPO in 2027 at the very least. And if Anthropic achieves RSI first, there won't be much investor interest in a clearly inferior lab.
RSI has already been achieved, but it is not the infinite wealth, eternal life, ending all disease fantasies, and there is no monopoly, just more intense competition as everyone is capable of replicating it, so bad news for that investment thesis.
Just curious, why would they be worth less than Anthropic?
> They’re almost certainly worth much less than Anthropic
What makes you say this?
Developer sentiment seems to be awarding Anthropic on quality and efficiency with more usage (plus Claude Code CLI being earlier to market), although maybe OpenAI is in bed with enough non-coding enterprises that it has an edge there.
But Anthropic might not actually be worth more that much more than OpenAI: https://news.ycombinator.com/item?id=50394906
Anthropic has had a laser focus on Enterprise features whereas Chatgpt is much more consumer focus.
Apple is very consumer focus and it has the highest marketcap ever.
Is anyone actually using those features? I feel like this still very much just Codex vs Claude code, and if codex has the better model everyone will switch in a week.
All the other products feels like a (desperate?) attempt to create moat and friction for switching models.
Yes, they are. You don't just give 1000 employees a subscription and tell them they can have as many tokens as they want.
I feel like all these versus arguments are absolutely opinion and preference, but really deep down do hint at a modification that will be hard to ignore as an investor.
If AMD and Nvidia could make the exact same thing the exact same rates, why would the stock price of one be higher than the other?
I use openai models for math, but that's an infinitesimal market
For me OpenAI doesn't have any stickiness/moat. I only use it because Sol 6.1 tokens are cheaper for similar quality for typical tasks. I also find it can be hit-or-miss more so than others when designing a system interactively.
Opus 5.5 came out more than a month and a half ago and is the clear favorite amongst developers, and OpenAI has yet to release something that can match or exceed it. That means they don't have their ducks in a row, and the internal models they do have take too long to prepare for general release.
Coding agents are the most profitable application of AI at the moment, and Anthropic has the most widely used one
"They're almost certainly worth much less than Anthropic" you type that with so much conviction. I have no dog in this fight, but I'm not so such. We have seen OpenAI provide models in Audio, Image, Video, etc. Perhaps it's for publicity, but their models have tackled difficult math problems and those that I know that use their top models are just as happy with it as they are with Opus 5.5. IMO, I think they are neck and neck.
Yes that is all interesting but the only thing that matters for company valuations is how much money they make, how quickly the amount of money they make is growing, and how much the assets they own are worth.
Anthropic better at turning whatever it is they have into higher revenue than OpenAI
At the end of the day that’s all that matters
I would call this an “emotional fact”. Also, if you really believed this, you put every dollar you had into an anthropic IPO. I don’t think you will.
They’re way short of their target…
On 31st Oct, the FT was reporting they’d already cut the funding target from $30bn to $20bn and it looks like the couldn’t get close to that even
https://www.ft.com/content/7a3ad950-1b3b-4d9e-8c15-65a61ae61...
The reality is that both of these companies do not have a scalable business model and even the dumb money has figured that out
Weird, I've been told repeatedly that inference is wildly profitable for both of these companies and waves hands training costs are irrelevant for some reason.
It’s: we spent X billion to train our HUGE model and it’s so good we can make money off it. Please fund us for Y billion to build the HUGER model that will maybe destroy the planet, and if it doesn’t we can’t sell it back to users at profit because of legitimate security concerns. And then we’ll need Z billion to train...
Does anyone see the path to ROI here? There is clearly a profitable business model within these big AI labs, but it’s held captive by messianic 90-page IPO risk statements. I know they want to sell restricted access to the more capable models but the market for those kind of professional services doesn’t even exist yet.
I would be shocked if Anthropic IPOs below 1.25T. Prediction markets have it at 1.625T now. Even quite conservative Aswath Damodaran puts it at 1.45T. I think once you go below that you can probably just sell on open market without any IPO dance like finding institutional investors.
Prediction markets may say that — investors and analysts appear to be saying that $1.2T is a reach.
Prediction markets are famously never wrong.
Less sarcastically though the bet on how much AI company IPO at attracts a certain type of people. People who may have a certain believe about AI companies which will bias their assumptions quite a bit.
Prediction markets are sometimes wrong but they are very accurate on high volume markets like this one. Here we have hyperliquid perpetual futures among other things. Volume on those alone is above 10M USD per day.
>>Less sarcastically though the bet on how much AI company IPO at attracts a certain type of people. People who may have a certain believe about AI companies which will bias their assumptions quite a bit.
Yeah but there is also someone on the other side.
They're not very accurate. They are generally accurate with a margin of error big enough that they're far from a sure thing. If they were accurate then no one would take a contrarian position. I'd look at a prediction and say "well obviously the favored side is going to win" and put all my money there, over and over again, until I was the richest mortal in the universe.
Polymarket has it at ~50% that their IPO value is between 1.25T and 1.5T. Do you think that is representative of reality? It's not like we get to flip the IPO coin ten times.
> but they are very accurate on high volume markets like this one
But this number isn't a matter of market volume, is it?
It's a matter of what analysts, regulators, banks, and investors choose.
And they appear to not be that keen on a valuation that high, judging by the press.
I mean unless you think the valuation multiple on AI companies have compressed by over 50% in the past week, the prediction markets seem pretty accurate.
OpenAI will be just fine, they are building superintelligence. I think these comments will be pretty funny in a few years. This is the best wealth building opportunity of my generation.
This was just part 1 of their raise. They are raising another few billion this week.
OpenAI seems to me like they are operating with a slightly longer horizon strategy than Anthropic. Going for the IPO is the last resort in my mind. It is what you do to get ahead of deteriorating financial conditions. I don't think Anthropic had a choice at their projected burn rate. Why would we surrender all our cloaks and daggers unless we absolutely have to? The political and regulatory headwinds are not looking favorable for AI companies as of a few days ago.
Going for the IPO collapses a large space of options that are available to the business. The AI business is entirely about data. Anthropic's IPO would generate an incredible amount of data that could be used by its competitors to refine their strategy. Knowing where to allocate capital is perhaps worth more than the capital itself at these scales.
Issue is the deteriorating market conditions are already happening, Anthropic didn’t really get ahead of them, but they might just about be able to get the IPO over the line this year albeit for less than they hoped.
What OpenAI will do if market sentiment around AI really falls apart I’m not sure
Acquisition by Microsoft for 80B in a fire sale
They filed a confidential S-1 in May, this fundraise was likely plan B
They probably could have pushed the IPO through like Anthropic. Sensing the headwinds and delaying it was the smarter move though. With how quickly things are changing in the space who knows how the economy and the public perception on AI and data centers will be in mid-2027.
These really should just be national projects. We will get there like China has.
There was an unconfirmed report that upto $10 billion in this round were pledged by a syndicate of UAE investment funds, including MGX
https://www.bloomberg.com/news/articles/2026-10-05/openai-in...
I would agree and then argue they're not getting what they're paying for.
Amazing, UAE is paying protection money. The Iran war pays off for Josh Kushner, who is invested in OpenAI (and already had been "lucky" with the outrageous price that Musk paid for Cursor).
More investigations need to happen.
I don't like open AI but it seems their model is good now to eat up CAD, a craft I had learned, it's really impressive by now, more impressive than claude with code if you ask me.
while some mild bug or hallucination can go unnoticed, CNC machines and 3d printers are absolutely gonna choke on mistakes, which seems to be plenty according to youtube vids
Yeah, however I am talking the cad part, chatgtp can now do image to step file without errors takes 5 minutes for a single relatively complicated component.
Many softwares trip up on many things there, so did chatgtp up until maybe a year ago, now it can actually do image to step file where classic sw fails, I thought I'll never see the day but here we are
You’re running it through a deterministic layer right? I model in build123d or blender and slice in bambu studio or orcaslicer.
3D printers are pretty robust. If it slices, it won't cause a catastrophic CNC crash.
If you slice it with supports and print it on a good machine, it will most likely turn out usable.
CNC mills are a different beast. If you ask your LLM of choice for some random gcode and run that, you deserve whatever happens.
Hopefully you have deterministic CAM or a slicer that does the hard work of generating gcode that won’t destroy something…
We always see these headlines and think "is XYZ company actually worth that much?"
Class A stock gets paid out first, so "valuation" here is not what a retail investor would necessarily pay for class C.
Basically, do these people think that they'll get their $11B back? If so, they are ok with a high "valuation" because there is little risk. And with OpenAI's corporate structure, who knows what is actually happening.
I'm still astonished on how musk outplayed everyone with the spacex ipo.
This is his real superpower.
His skill is moving rapidly. He is ruthless with his senior team. It’s not a comfortable place to work. Nobody sleeps over there.
Nothing like timely de-regulation to spur automatic public bag-holding.
I think OpenAI is one of the most important companies in a generation, but on a tangent, I remember the first time a company broke a $1T market cap, and it was a significant moment. Nowadays multi-trillion-dollar valuations are becoming more common — I wonder how much it reflects inflation vs companies being genuinely bigger than they used to be. If it’s more about inflation, then we can expect to see dozens and hundreds more in the coming decades. Founders: recalibrate your ambition for the new era.
It is pretty much all inflation. Just look at the gold price over the same time frame. Gold did not become more productive or scarce. In fact, we have more of it now than we ever had.
It's inflation, and it's an important lesson as to the dynamics of financial markets in the context of a high debt regime.
Regardless of what officials say, the only way out of the looming debt crisis in developed nations is to turn on the money printers and inflate the debt away. That's literally the only way out.
Next look at how concentrated inflation gains become in financial assets. Corporate valuations are the first thing to inflate (wages last, and at a much lower rate especially as you move down the income ladder).
Finally recognize that the concentration of wealth in the stock market has made the market itself too big to fail, meaning central bank intervention whenever things get too gruesome. Enter moral hazard at the government backstopped casino.
All of this leads to one conclusion: put all of your money in the stock market. Literally just buy the S&P, ideally a 2x levered S&P index ETF given historical studies of optimal leverage, and just let it ride...
Half inflation, half hype.
2018 when Apple was first across the threshold, it’s P/E was around 20. Currently near 40.
Then inflation has cut the dollar in half in a bunch of categories. So that would put it at $4T with no growth at all.
Another way to look at it would be to think of this openAI news as announcing they have a $250B valuation if you’re fixated on pre-covid prices like I am. :)
> I remember the first time a company broke a $1T market cap, and it was a significant moment
But then again 1T today is 700b back in 2018. It's like 6 figures salaries, they don't hit like they used to.
How many companies have a public market valuation over 1T, that seems like a lot
About 14:
Apple ($4.98T), NVIDIA ($4.51T), Microsoft ($3.94T), Alphabet ($3.49T), Amazon ($2.80T), TSMC ($1.95T), SpaceX ($1.82T), Saudi Aramco ($1.69T), Meta ($1.56T), Tesla ($1.42T), Broadcom ($1.40T), Berkshire Hathaway ($1.22T), Eli Lilly ($1.21T), (Walmart ($0.996T))
I remember Apple being the first ever one-trillion-dollar company in the world. It was in 2018.
Aramco was the first in 2016. But Aramco basically only has 2.5% free float on the market. Apple was the first with a near 100% free float on the market.
So basically the equivalent of the entire US GDP in those 14 companies + OpenAI and Anthropic at a $1T valuation or so.
16 companies with a market cap as big as the entire US GDP.
Make is make sense when 15 out of those 16 are US companies.
Back in, say, 2006, twenty years ago, there weren't 15 companies adding up to the entirety of the US GDP.
Something simply doesn't add up.
Isn’t that kind of apples and oranges?
Market cap and GDP are both measured in currency units, I guess they have that in common, not sure I understand the usefulness of this comparison.
To me it’s more about the scale of these numbers. After billions, people (like me) kind of lose intuition about how gigantic these numbers actually are. Yes GDP has time in its unit, but it still gives a general idea of the size.
GDP is more like a currency/time unit, though.
Agreed; apples and oranges
It's cheap if you buy the story that they're building a digital god to rule us all.
1T isn‘t what it used to be. Inflation is exponetial.
Is that even enough to keep the lights on?
This valuation is a function of early accumulation of compute. They could rent it to Anthropic, or poach more Anthropic engineers.
Not sure how long you'll be able to sell compute to anthropic for. They are constrained right now but they have an insane pipeline of take or pay contracts, and if those are delivered they'll be drowning in compute in a couple of years time.
Do you think they would actually sell compute to anthropic? Relative to working with other labs that feels like conceding the overall AI race atleast outside of consumer.
They could just do it through azure or aws. Also, at these numbers a pseudo merger between OpenAI and Anthropic could happen. There is no anti trust anymore. It’s all the same owners for all these companies… the only anti trust is between usa, Russia, Europe, China, and the middle powers.
Anthropic has a higher valuation than OpenAI.
There was news just yesterday that investors are lowering Anthropic's IPO target to around $1.1T, so no.
Not for long.
? Are you implying there will be something that affects investors' confidence to Anthropic, and somehow OpenAI will be immune to that?
That's a lot of money.
It kinda seems like a lot of the maximalist plans required the rest of the world standing still. As opposed to other governments, companies, other people generally adapting and trying to get a piece for themselves.
The story here is that Sam wanted to raise a lot more, but could not. Investors almost certainly want to see how the Anthropic IPO plays out before deciding whether to keep showering these companies with money.
Valuation wouldn’t hold if public. He couldn’t raise the 30B he wanted. I’m not sure how much runway OpenAI has, but sounds like a similar to Anthropic story with valuation likely if in the public markets declining.
Sam raised a $100B in previous round. I think a direct listing ipo would see their valuation go up to $4T, and then they could do some at the market sales as needed.
They didn't actually raise that 100 billion fully, tranches were contingent on different factors, some of which haven't even been hit yet.
why not just value it at 40T if we're all just throwing numbers randomly
The first $1 bajillion company
Billion dollar valuation startups used to be called unicorns because they were mythical creatures that didn’t exist.
Now we have a trillion dollar startup, still raising money, implying that the status quo isn’t remotely their final form.
I understand AI is actually, no-bullshit, changing the world forever, including the global economy. That said, how much of this order of magnitude jump since “unicorn” got coined can be directly attributed to USD inflation?
> Billion dollar valuation startups used to be called unicorns because they were mythical creatures that didn’t exist.
If they didn't exist then you wouldn't need to coin a term to describe them. In reality in the mid 2010s when "unicorn" started being used there were already hundreds of them.
> how much of this order of magnitude jump since “unicorn” got coined can be directly attributed to USD inflation?
"Inflation" is probably not quite the right term, or maybe it implies too broad or too narrow of a phenomenon.
I think we're experiencing the result of decades of taxes being too low on the rich, so there's too much money chasing too little actual real productivity growth. The Buffett indicator keeps ticking higher and higher, because the rich have too much money. It's gotta go somewhere, so everything is turning into tulips.
https://en.wikipedia.org/wiki/Buffett_indicator
Haha, all these discussions are all the same. I enjoyed the diversity of opinions in 2012 for Facebook: https://news.ycombinator.com/item?id=4021957
Similarly in 2018: https://news.ycombinator.com/item?id=17613442
I wonder if that chap who said he’d put everything in FB at $14 put any at $18 because boy is he going to be wealthy today haha! The numbers all go up beyond what can you believe and were we in a bubble? Apparently we continue to be.
They wanted to raise 20 billion "from family offices and high net-worth individuals", i.e., fleece the Saudis again but failed:
https://www.wheresyoured.at/running-dry/
They got a bit of pocket change at this insane valuation.
The Saudis have one or two other things on their minds right now that take precedence over Sam Altman
Who knew that a drone rammed into Saudi Aramco headquarters would be so distracting.
The 'T' in that number is breathtaking. Amusing flashback: remember about a year ago various tech publications claimed OpenAI was destined for bankruptcy since they were bleeding cash. Even funnier, people believed that.
To be honest, both can be true. They're raising puny amounts of cash relative to either their market cap or their commitments. And like another comment assinuated, this could be a ploy by the UAE to protect their AI investment after the recent decline - $10 billion is being funded by MGX, an AI holding company of the UAE.
> Asked about the election, she said, “The demand for AI is real.”
"Give me some quick soundbites for my meeting with the press."
Called it months ago when they released Luna etc. and started subsidizing prices even more.
https://news.ycombinator.com/item?id=49117798
> I bet they’ll announce new fundraising soon. Someone gave them a top up to try and corner the market.
https://news.ycombinator.com/item?id=50012065
> > As OpenAI bides its time, the company is engaging in early stage discussions with investors about a potential new funding round. The company could raise around $30 billion, CNBC previously reported, but that figure could change.
> I predicted last month when they launched Luna that they had raised more funding and I suspect this tidbit dropped to CNBC is just prepping the public for a fundraising that’s already happened. There will probably be an announcement this month.
For all the naysayers, remember that OpenAI is just one model release away from a spectacular valuation increase.
The opposite is also true.
> SoftBank and Abu Dhabi’s MGX took part in the round
Why is it always SoftBank?
SoftBank was already one of OpenAI's largest investors before this round.
It's because the CEO has AI psychosis.
How many months of runway is that? Three?
When this bubble pops the retail investors who are holding the bag are going to suffer so much unfortunately
Wikipedia article on who suffers the most when speculative bubbles pop:
https://en.wikipedia.org/wiki/Greater_fool_theory
Valuation dropped, that's the real news. Altman couldn't raise the amount he wanted to so it's gonna just be a dumping ground in the public markets.
OpenAI, Anthropic, Google, Nvidia, Grok: they can't all be worth $1T (or $1T additional in Google's case) at the same time.
I don't understand how Grok is in that list.
SpaceXSI is a $1T company
Google's valuation is not based on their AI. Google has a highly profitable ad and cloud business. I don't know why you are putting NVidia in that list. NVidia sells chips and even if AI models become a commodity they need to run on something. Grok - no ones is valuing it at anything close to 1T. Closer to 100M if anything if you add Cursor. SpaceX valuation is based on their highly profitable Starlink business, highly profitable datacenter build-up and options to charge more for their monopoly in launch. Grok/XAI/Twitter are a small drop in all of it.
Demand for AI is real and increasing. There is real shortage of compute right now. It might be that AI lab is not a sustainable business but I don't see how all that demand evaporates. If anything it will only increase as AI becomes good at more and more tasks.
It's a classic example of short term mispricing.
It still baffles me that Grok is even on the list let alone being funded. Their market share is terrible and the product is so mediocre. Why on earth would I want a tool that has “be funny and irreverent” baked into its system prompts? I don’t want a calculator cracking wise at me either.
- cursor is good and covers many different use cases (multimodel "agents window", ai assistant in the editor chat, tab completion, cloud agents, ai code & security reviews) - grok bot was first to market as "openclaw for enterprises" and feel they really pioneered this UX - grok models are so-so but 4.6 had a great bang for the buck; they may still return to the "pareto frontier" for coding given all the data that cursor has
also the valuation is not only on grok/cursor? also spacex (starling, currently cheapest deliver to orbit; future "data center in space")
actually for an ai company i think they are quite well diversified and have multiple things going on for them; are they worth $1T --> i don't know, but i see a way to them doing really good (will they? on average, probably not, but at least it imaginable)
Grok had the potential of being the #1 LLM if they actually went through with Elons original promise of an "uncensored model". Meaning no guardrails, it does what you tell it, no matter what. Sadly Grok is even more restricted than even OpenAI's models, and despite being marketed as "edgy and ruthless" it is THE MOST politically correct model on the market. ChatGPT or Claude will gladly go along with religious or nationality based roleplay, while Grok outright refuses. Oh and you can't even use it for any pentesting whatsoever because a) it's far worse than the competition b) it completely refuses to even LOOK at low level code.
But this goes along with Elons same promises for X; "X will support free speech" etc even though it's trivial to get banned for the most pointless things.
> if they actually went through with Elons original promise of an "uncensored model". Meaning no guardrails, it does what you tell it, no matter what.
When will HNers realize that this is a fever dream? This is an edgy teenager's interpretation of "good".
The second someone uses a frontier model to attack other entities or hurt innocent people it will get (rightfully) shut down by the government.
We already saw this with the Fable export controls (and no one had even used these models offensively).
Open models will reach the same fate once the gov't realizes they are good enough. They will just ban weight hosting, require safeguards for any model routers that accept US payment, and embargo anyone that doesn't do these things.
There is a reason we don't let everyone in the world own RPGs.
No company will be able to get away with offering a completely unconstrained commercial model. The legal risk and pushback from governments is too high.
No guardrails? So, what? Someone can get grok servers to attack critical infrastructure out of boredom? Take down a hospital network during an emergency or something? There was never a world where musk and co were going to take that risk.
And people thought swatting was bad! Just imagine that jfc
Sure makes it more entertaining for the guys choosing targets in Iran though.
The SpaceX/xAI valuation is crazy. Their rockets and satellite tech (i.e. SpaceX proper) is cool, but not worth anywhere near $1T. And in the AI space their tech doesn't feel competitive with Antropic/OpenAI. Not really better than the open Chinese models.
What's its USP? Data centers in space that governments can't shut down without triggering Kessler syndrome?
Have you been on twitter?
It's become a huge community of people who have their life savings in Elon, and endlessly circle jerk the hype.
Not in several years and I plan on keeping it that way lol