Hey Everyone,
I’ve been waiting a long time for this, OpenAI has finally closed a $6.6 billion funding round with participation from the likes of Nvidia and Softbank. I believe Nvidia will be a winner of humanoid robotics and OpenAI will be involved.
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Commercial AGI might not turn out to mean what you think it means in 2024.
Recently we’ve seen the likes of Aleph Alpha and Character.AI basically being priced out of building LLMs, and while Liquid’s LFMs are impressive, the duopoly of OpenAI and Anthropic should continue being pursued by Google, xAI and increasingly fewer and fewer rivals and/or competitors. What’s becoming increasingly clear, is that few will be able to keep up with the scale OpenAI will achieve even as a vastly different company than it started out about a decade ago.
OpenAI is a monstrosity of scale. It’s also born and necessitates a period of a great datacenter push, compute acceleration and the nascent maturation of AI chips. Not so long ago these were just Nvidia gaming GPUs, we sometimes forget.
The Mechanics of Scale
Whether you think they have a bad business model, or their exodus of talent hurts their chances, I think even the critics and evangelists are getting a lot of stuff wrong in 2024 about OpenAI and what they can achieve in the corporate life-cycle. Even by the early 2030s, the situation will look very different. What remains is an unprecedented funding round of $6.6 billion and a very wild valuation that values the company at $157 billion and hardcodes it among the Monopoly firms that Silicon Valley has manufactured as one of the most valuable private companies in the world.
There are National Security and economic reasons why OpenAI was enabled here for the U.S. in the competitiveness vs. China. It’s not normal for Microsoft to invest this much in one team, one catalytic product like ChatGPT and these LLMs that have changed civilization in mere months.
While Anthropic is a very real competitor to OpenAI which will challenge them in Enterprise AI, coding and human alignment – OpenAI have an incredible first-mover advantage, better AI product diversification than Google, and more investment from Microsoft than Anthropic has combined from Amazon and Google. In the next few years we could even witness Anthropic and xAI being priced out of how large LLMs are going to get and how intensive the AI supercomputers and how expensive LLMs of the future will be.
Anthropic CEO Dario Amodei says by 2027 AI models will cost up to $100 billion to train and will be “better than most humans at most things”. His quote refers to $10 Bn in 2025 but maybe even $100 Bn. just two years later in 2027. So if you think OpenAI is asking for a lot of funding today, just watch what happens the next few years.
OpenAI’s valuation over time is a trajectory that’s hard to fathom:
⚫ July 2019 ~ $1 billion
🟣 April 2021 ~ $14 billion
⚪ January 2023 ~ $29 billion
🟢 February 2024 ~ $86 billion
🔴 October 2024 ~ $157 billion
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