ChatGPT has a phenomenal brand. That's worth 100x more than "product stickiness". They have 700 million weekly users and growing much faster than Google.

I think your points on Google being well positioned are apt for capitalization reasons, but only one company has consumer mindshare on "AI" and its the one with "ai" in its name.

Would have agreed with you untill I saw the meltdown of people losing their "friend" when chatgpt 5 was released. Somehow openai has fallen into a "sticky" userbase.

My non-tech friend said she prefer ChatGPT more than Gemini, most due to its tone.

So non-tech people may not know the different in technical detail, but they sure can have bias.

The teens, they don't know what is OpenAI, they don't know what is Gemini. They sure know what is ChatGPT.

You vastly underestimate the power of habit and branding combined together. Just like then, the vast majority of people equate ChatGPT with AI chatbot, there is no concept of alternative AI chatbot. Sure people might have seen some AI looking thing called Copilot and some weird widget in the Google Search results but so far ChatGPT is winning the marketing game even if the offerings from rivals might be the same or even superior sometimes

If normal people start saying "ChatGPT" to refer to AI they win, just like how google became a verb for search.

It seems to be the case.

That's all that matters now. We've passed the "good enough" bar for llms for the majority of consumer use cases.

From here out it's like selling cellphones and laptops

When I think as a “normal” user, I can definitely see difference between them all.

Very few of those 700,000,000 active users have ever heard of Claude or DeepSeek or ________. Gemini maybe.

Google have never had a viable competitor. Their moat on Search and Ads has been so incredibly hard to beat that no one has even come close. That has given them an immense amount of money from search ads. That means they've appeared to be impossible to beat, but if you look at literally all their other products they aren't top in anything else despite essentially unlimited resources.

A company becoming a viable competitor to Google Search and/or Ads is not something we can easily predict the outcome of. Many companies in the past who have had a 'monopoly' have utterly fallen apart at the first sign of real competition. We even have a term for it that YC companies love to scatter around their pitch decks - 'disruption'. If OpenAI takes even just 5% of the market Google will need to either increase their revenue by $13bn (hard, or they'd have done that already) or they'll need to start cutting things. Or just make $13bn less profit I guess. I don't think that would go down well though.

Between Android, Chrome, YouTube, Gmail (including mx.google.com), Docs/Drive, Meet/Chat, and Google Search, claiming that Google "isn't more trusted" is just ludicrous. People may not be happy they have to trust Alphabet. But they certainly do.

And even when they insist they're Stallman, their friends do, their family does, their coworkers do, the businesses they interact with do, the schools they send their children to do.

Complete and unfounded speculation.

That's when services start to insert ads into their product.

Are they though? I have the best consumer hardware and can run most open models, and they are all unusable beyond basic text generation. I'm talking 90%+ hallucination rate.

Do you currently pay for it?

https://www.statista.com/statistics/248004/percentage-added-...

You can imagine a future world where producing real goods and services is ~free (AI compute infinite etc.)

In this world, the entire economy will be ~advertising only so you can charge people anything at all instead of giving it away for free.

Can any AI be sensibly and reliably instructed not to do product placement in inappropriate contexts?

The pop of this bubble is going to be painful for a lot of people. Being too early to a market is just as bad as being too late, especially for something that can become a commodity due to a lack of moat.

From what I understand he was the only one crazy enough to demand hundreds of GPUs for months to get ChatGPT going. Which at the time sounded crazy.

So yeah Sam is the guy with the guts and vision to stay ahead.

I definitely don't think compute is anything like railroads and fibre, but I'm not so sure compute will continue it's efficiency gains of the past. Power consumption for these chips is climbing fast, lots of gains are from better hardware support for 8bit/4bit precision, I believe yields are getting harder to achieve as things get much smaller.

Betting against compute getting better/cheaper/faster is probably a bad idea, but fundamental improvements I think will be a lot slower over the next decade as shrinking gets a lot harder.

Effectively every single H100 in existence now will be e-waste in 5 years or less. Not exactly railroad infrastructure here, or even dark fiber.

The financials here are so ugly: you have to light truckloads of money on fire forever just to jog in place.

Oh wait, the computer I'm typing this on was manufactured in 2020...

If you discount R&D and "sales and marketing", they've got a net loss of "only" $500 million.

They're trying to land grab as much surface area as they can. They're trying to magic themselves into a trillion dollar FAANG and kill their peers. At some point, you won't be able to train a model to compete with their core products, and they'll have a thousand times the distribution advantage.

ChatGPT is already a new default "pane of glass" for normal people.

Is this all really so unreasonable?

I certainly want exposure to their stock.

With the marginal gains diminishing, do we really think they're (all of them) are going to continue spending that much more for each generation? Even the big guys with the money like google can't justify increasing spending forever given this. The models are good enough for a lot of useful tasks for a lot of people. With all due respect to the amazing science and engineering, OpenAI (and probably the rest) have arrived at their performance with at least half of the credit going to brute-force compute, hence the cost. I don't think they'll continue that in the face of diminishing returns. Someone will ramp down and get much closer to making money, focusing on maximizing token cost efficiency to serve and utility to users with a fixed model(s). GPT-5 with it's auto-routing between different performance models seems like a clear move in this direction. I bet their cost to serve the same performance as say gemini 2.5 is much lower.

Naively, my view is that there's some threshold raw performance that's good enough for 80% of users, and we're near it. There's always going to be demand for bleeding edge, but money is in mass market. So if you hit that threshold, you ramp down training costs and focus on tooling + ease of use and token generation efficiency to match 80% of use cases. Those 80% of users will be happy with slowly increasing performance past the threshold, like iphone updates. Except they probably won't charge that much more since the competition is still there. But anyway, now they're spending way less on R&D and training, and the cost to serve tokens @ the same performance continues to drop.

All of this is to say, I don't think they're in that dreadful of a position. I can't even remember why I chose you to reply to, I think the "10x cheaper models in 3-6 months" caught me. I'm not saying they can drop R&D/training to 0. You wouldn't want to miss out on the efficiency of distillation, or whatever the latest innovations I don't know about are. Oh and also, I am confident that whatever the real number N is for NX cheaper in 3-6 months, a large fraction of that will come from hardware gains that are common to all of the labs.

t. perplexity ai

Fascist corporatism will throw them in for whatever Intel rescue plan Nvidia is forced to participate in. If the midterms flip congress or if we have another presidential election, maybe something will change.

It’s so easy for people to shout bubble on the internet without actually putting their own money on the line. Talk is cheap - it doesn’t matter how many times you say it, I think you don’t have conviction if you’re not willing to put your own skin in the game. (Which is fine, you don’t have to put your money on the line. But it just annoys me when everyone cries “bubble” from the sidelines without actually getting in the ring.)

After all, “a bubble is just a bull market you don’t have a position in.”

2 generations of cards that amount to “just more of a fire hazard” and “idk bro just tell them to use more DLSS slop” to paper over actual card performance deficiencies.

We have 3 generations of cards where 99% of games fall approximately into one of 2 categories:

- indie game that runs on a potato

- awfully optimised AAA-shitshow, which isn’t GPU bottlenecked most of the time anyway.

There is the rare exception (Cyberpunk 2077), but they’re few and far between.

Then they can stop burning cash on enormous training runs and have a shot at becoming profitable.

> AI has gotten good enough that next year people can continue to use the current gen AI

This is problematic because by next year, an OSS model will be as good. If they don't keep pushing the frontier, what competitive moat do they have to extract a 70% gross margin?

If ChatGPT slows the pace of improvement, someone will certainly fund a competitor to build a clone that uses an OSS model and sets pricing at 70% less than ChatGPT. The curse of betting on being a tech leader is that your business can implode if you stop leading.

Similarly, this is very similar to the argument that PCs were "good enough" in any given year and that R&D could come down. The one constant seems to be people always want more.

> Not unlike the Uber/Lyft wars

Uber & Lyft both push CapEx onto their drivers. I think a more apt model might be AWS MySQL vs Oracle MySQL, or something similar. If the frontier providers stagnate, I fully expect people to switch to e.g. DeepSeek 6 for 10% the price.

The exception is datacenter spend since that has a more severe and more real depreciation risk, but again, if the Coreweave of the world run into to hardship, it's the leading consolidators like OpenAI that usually clean up (monetizing their comparatively rich equity for the distressed players at firesale prices).

Plenty of companies have high burn rates due to high R&D costs. It can make them look unprofitable on paper, but it's a tactic used to scale quicker, get economies of scale, higher leverage in negotiating, etc. It's not a requirement that they invest in R&D indefinitely. In contrast, if a company is paying a heavy amount of interest on loans (think: WeWork), it's not nearly as practical for them to cut away at their spending to find profitability.

Does Google? What about Meta? Claude is popular with developers, too.

Amazon? There I am not sure what they are doing with the LLMs. ("Alexa, are you there?"). I guess they are just happy selling shovels, that's good enough too.

The point is not that everyone is throwing away their ChatGPT subscriptions and getting DeepSeek, the point is that DeepSeek was the first indication the moat was not as big as everyone thought

They have the name brand for sure. And that is worth a lot.

Notice how Deepseek went from a nobody to making mainstream news though. The only thing people like more than a trusted thing is being able to tell their friends about this amazing cheap good alternative they "discovered".

It's good to be #1 mind share wise but without network effect that still leave you vulnerable

- OpenAI,etc will go bankrupt (unless one manages to capture search from a struggling Google)

- We will have a new AI winter with corresponding research slowdown like in the 1980s when funding dries up

- Opensource LLM instances will be deployed to properly manage privacy concerns.

Distribution isn't a moat if the thing being distributed is easily substitutable. Everything under the sun is OAI API compatible these days.

700 WAU are fickle AF when a competitor offers a comparable product for half the price.

Moat needs to be something more durable. Cheaper, Better, some other value added tie in (hardware / better UI / memory). There needs to be some edge here. And their obvious edge - raw tech superiority...is looking slim.

Not saying that will happen, but it's always good to rewatch just as a reminder how bad things can get.