Sam Altman Is Getting Desperate and It Is Starting to Show

Their about page:

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Basically HN but for financial folks.

Most likely some LLM thing creating an article by collating multiple sources.

It looked AI generated so I got curious because it looks like some kind of link sharing forum.

I think it is a blog post (you can see it here https://tickerfeed.net/articles), from something called the "free lunch blog".

Still not sure if it's ai generated or not.

It looks like it’s a HN-like for stocks / market opinions.

You don't typically get to be a successful politician by being skeptical of future industry profits. I suspect the people who run our country tend to be credulous rubes in this regard. Sam Altman is many things, but he appears very good at spelling a narrative about the future of computation and the relative competitive risk of not aggressively pursuing it. Google simply has not taken this approach.

I can see bailing out banks, you need to keep money flowing. Bailing out something like auto industry. Lot of employees with non-transferable skills and restructuring will be mess.

With AI? Well just sell the assets in bankruptcy. Models can be sold, hardware and infra can be sold, IP and brands too can be sold. Employees, they have mostly transferable skills and are mobile already.

Even if AI companies fall, other people can pick up the pieces if there is something valuable left. Market might be affected. But I don't think it is only domino.

Cause goverment loves them grifters and once they are bailed out they will gift things to the king personally.

Otherwise said, high level corruption that is not even hidden these days.

"oh the US cannot afford to lose the AI race to China, Mr President"

These “commitments” aren’t generally contractual obligations beyond some clawback or penalty for not fulfilling them. Don’t forget Microsoft and oracle retain the infrastructure built. It’s generally reserved capacity with minimum spend and a maximum spend as the quoted $1.5T. The spend also typically ramps and there are triggers and out clauses built in. These aren’t bonds or debt or what they imply as “coming due” in the article.

People keep drawing parallels to the housing crisis and ensuing financial crisis. Those were hundreds of millions of individual contracts spread across thousands of banks and debt holders. There was little understanding at any individual institution of the correlation risks with subprime or the systemic counterparty risk (I know I sat in the center of core risk at one of the big systemic banks at the time). In this the institutions are all large, know their counterparts well, know OpenAI, etc. Despite all outward appearances none of them are signing up for insolvency, and none expect a bailout, and none WANT a bailout. It’s not good for any CFO’s career to be the one forced to give up the companies ownership to the US government and they at minimum will avoid this at all costs.

I’m not saying this isn’t all a giant bubble, but it’s more akin to the dot com bubble which was more of a shakeout than long term consolidation. It’s hard to say the www isn’t an intensively valuable set of infrastructure and services even if pets.com went out of business (and its business model has turned out to be pretty viable since).

I doubt there’s an asset to write off yet.

Assuming normal accounting applies, OpenAI doesn’t owe them the money until they use the compute power. Then it becomes income, and accounts receivable goes up until they pay for it.

The stock market can anticipate income that hasn’t arrived yet, but that just affects the stock price.

(ChatGPT tells me that accounting rules are different for leases of an identifiable physical asset, though.)

I’m reminded of this because I’m not sure you just write off $500B.

Jerry: "So, we're gonna make the post office pay for my new stereo, now?"

Kramer: "It's a write-off for them."

Jerry: "How is it a write-off?"

Kramer: "They just write it off."

Jerry: "Write it off what?"

Kramer: "Jerry, all these big companies, they write off everything."

Jerry: "You don't even know what a write-off is."

Kramer: "Do you?"

Jerry: "No, I don't."

Kramer: "But they do. And they're the ones writing it off."

> If the government were to bail out, OpenAI wouldn’t that open up litigation from competitors like Google or anthropic?

No. Government has done lots of bailouts, and it is has never opened up litigation from conpetitors, even though a common result is that the government (1) stops their competitor from failing, and (2) becomes a major and active shareholder in their competitor.

The reason it doesn't open up litigation is that there is no law which prohibits would therefore provide a cause of action for that.

It will be probably be painted as a strategic move of "we need to do this in order to remain in front of the Chinese!", so Google trying to litigate all this will, first, put it in the same boat as China's supporters, a very bad position to be right now if you're a big company in the US, and second, put the US Government's sight on its (Alphabet's) own business, that's also a very bad place to be if you're a near-monopoly as Alphabet now is.

Government having a large AI farm goes towards one thing: using the AI to “guide” citizens with a firm and totally not-political arm.

Current AI could be run as a normal profit making business if they just charged users what it costs to run. I think the current drive to either provide it at zero cost or force it on people who don't even want it is a mistake, both financially and for the environment.

I didn’t flag it, but it looks like accounting nonsense. These advance commitments probably aren’t assets on the books and there is likely no debt between OpenAI and its vendors. So at most, it’s a stock market bubble.

If OpenAI doesn’t pay, its vendors have whatever data centers that they’ve built so far and can use them themselves or rent them to someone else.