A prominent AI researcher known for his contrarian calls believes that OpenAI is the most vulnerable company in the race amid a sky-high valuation and no profits.
In a new interview with Big Short investor Steve Eisman, Gary Marcus highlights OpenAI’s $1.4 trillion in spending commitments, even though the ChatGPT creator has never been profitable.
“OpenAI has, you know, trillion-plus dollars in outstanding commitments, has never made a profit. They’re now in a commodity market. Their biggest competitor, Google, caught up, and not only have they caught up, but they got the Apple deal, which is a really big deal. Yes. And so, I think that they’re flailing. I don’t see how they’re going to warrant their valuation.”
Last week, reports surfaced that Apple picked Google’s Gemini as the foundational model to help power future Apple Intelligence features.
According to Marcus, he sees a scenario where OpenAI runs out of cash to burn, opening the door for Microsoft to acquire the firm.
“I think in the end, OpenAI maybe gets absorbed by Microsoft… I’ve been saying for a couple of years. I think they’re going to be viewed as the WeWork of AI… OpenAI’s revenue is a few billion dollars, and they’re losing billions of dollars every month. They have all these competitors… And if people pull out of OpenAI or just don’t put more money in, then they’re in deep trouble. So they’re losing whatever is $3 billion a month. That’s $30-some billion dollars a year, something like that. And they just got a $40 billion funding round that gives them like a year’s runway. That’s it.”
Marcus notes that he believes Google, with its vertically integrated AI approach, will come out on top.
“They’ve actually caught up. If it’s only scale, Google wins, hands down. How could they not? Google can make the commitments. Google doesn’t even need Nvidia because they’re making their own Tensor Processing Units (TPUs) that do kind of the same work. They’re less vulnerable. They have a financial pipeline. They’re gonna win…
OpenAI is in a position where the check size that they need to stay afloat is just massive. They’re next going to need like a hundred billion-dollar check. Not many people can write you a hundred billion-dollar check.”
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