558 points by zlatkov 3 days ago | 591 comments on HN
| Mild positive Editorial · v3.7· 2026-02-28 11:57:56 0
Summary Technological Advancement Neutral
TechCrunch reports factually on OpenAI's $110B funding round from Amazon, Nvidia, and SoftBank with technical details of infrastructure partnerships and compute commitments. The article frames the funding positively in terms of scientific advancement and capability scaling but contains no explicit human rights analysis or engagement with rights frameworks. Notable absences include any discussion of labor welfare, data protection, or algorithmic fairness implications of the major infrastructure investment.
> Today we’re announcing $110B in new investment at a $730B pre-money valuation. This includes $30B from SoftBank, $30B from NVIDIA, and $50B from Amazon.
Without circular investments and valuations what would Open AI be worth? 100B? 300B? Entirely on revenue alone it seems like 20B. Current valuation appears to be two orders of magnitude off.
What would really help is knowing the details of such funding. The hierarchy of who gets paid first in event of going under is very illuminating and while I am not a banker I always wonder if there are caveats too complicated even for the large investors to understand
IMO this looks largely like another circular investment. Amazon's investment is tied to OpenAI using AWS for their Frontier product and I assume Nvidia's conditions are that OpenAI continue buying hardware from them. Then there's SoftBank though given that those are the same guys that invested heavily in WeWork, I assume this is just very brash bullishness on their part.
From my perspective, I hope that OpenAI survives and can pull of their IPO but I just have that nagging feeling in my gut that their IPO will be rejected in much the same way that the WeWork IPO was rejected.
On the one hand you can look at these companies investing and take it as a signal that there is something there (in OpenAI) that's worth investing in. On the other hand all these companies that are investing are basically getting that investment back through spending commitments and such and are just using OpenAI as a proxy for what is essentially buying more revenue for themselves.
When their IPO hits later this year I hope that it's the former case and there's actually some good underlying fundamentals to invest in. But based on everything I've read, my gut is telling me they will eventually implode under the weight of their business model and spending commitments.
There's this saying that if you owe the bank a million dollars, you have a big problem, but if you owe the bank 100 million dollars, the bank has a big problem.
Is the same thing true for corporations? At some point the numbers are so wild the entire economy must help you succeed? I don't mean "too big to fail" exactly, more like "so big eventual success is guaranteed at all costs"
So let´s see if I understood well this one:
Got 110 Billions with the promise that either AGI will happen soon (:) or going public before the end of the year.
Eitherway you get to double your 110 Billions no matter what (who will be left to pay the full bill after it, public or public)?
Very interesting, I will follow it closely, mostly to see how you ROI 110 Billions in a couple of years.
$730B pre-money for a company where each model is roughly 2x profitable on its own, but each next model costs 10x the last. The whole thing only works if scaling keeps delivering. Research (Sara Hooker et al.) is not encouraging on that front, compact models already outperform massive predecessors on downstream tasks while scaling laws only predict pre-training loss reliably.
Wrote about both the per-model math and the scaling question:
Someone please explain how OpenAI is not Netscape 2026. They had first mover advantage but no network effect, no moat, and are racing to stay ahead of infinitely resourced incumbents.
Amazon hedging $35 billion on an IPO (we know the odds of AGI with LLMs are vanishing small) is concerning. The hedge signals that they think it's a good "greater fool" investment, otherwise they should be happy to take equity in a company they think will be stable/profitable.
These are geopolitical activities akin to the arms buildup of the Cold War, but happening somewhat more openly through the guise of private sector investments. The names of the companies involved are ephemeral. The numbers "invested" are largely imaginary, just play money pumped into the system over the last few years, flowing around, searching for a place to park. The result will be a certain amount of tangible infrastructure in the form of datacenters, power plants, semiconductor fabs. It's a Hail Mary move to keep pace with a certain geopolitical competitor. This process may propel society to the next level or may collapse it, depending on how society chooses to use these resources and how successful the competitor is at its own similar endeavor.
e.g. it talks about running NVIDIA's systems (?) on AWS
> NVIDIA has long been one of our most important partners, and their chips are the foundation of AI computing. We are grateful for their continued trust in us, and excited to run their systems in AWS. Their upcoming generations should be great.
If nobody invested in OpenAI how long could they keep the lights on? They're not profitable yet, and a lot of the wealth that Sam Altman seems to be making revolves around strange circular deals.
By comparison, Anthropic is projected to break even in 2028. Google's Gemini is already profitable.
>Without circular investments and valuations what would Open AI be worth? 100B? 300B? Entirely on revenue alone it seems like 20B. Current valuation appears to be two orders of magnitude off.
They just passed $20B in revenue, you can't really expect a company with this much hype and traction to have a 1x multiple.. that's not to say a 35x multiple makes sense either.
Nobody saw coming the huge demand for coding agents. Not even OpenAI or Anthropic themselves. Those were side projects just a year ago and now dominate token demand. And they keep rising.
I've seen this sentiment (OpenAI collapse imminent) a lot on Youtube and Reddit, but it somehow evaded me on here
Bad comments about OpenAI's long-term viability I've seen plenty here. But that's not the same as the people predicting one of the hottest companies right now will somehow suddenly run out of cash all on its own
Those are the same thing. The whole point of saying "too big to fail" is to evoke the moment in the housing crash where governments largely threw most of their citizens under the bus by bailing out banks rather than homeowners for the banks' wildly irresponsible decisions. "Too big to fail" means the government steps in and bails you out, and that phrase became popular because for many it was the final nail in the coffin for their trust in government
I wonder if there is "too big for IPO". Saudi Aramco in 2019 sold shares worth $25.6 billion in IPO. Even offering just 5% of OpenAI to public would shatter that record. Well, unless public isn't actually interested in investing such huge amounts.
I don't think they are going to collapse. But it was only a couple of years ago that many people thought OpenAI had a big (some thought insurmountable) lead in a race to dominate a winner take all markee. Some people did correctly state that OpenAI had no moat in those days so credit there where it's due.
Now it's looking like a competitive blood bath where ever increasing levels of investment is needed just to main market position. Their frontier models are SOTA for 4 weeks before a competitor comes and takes the crown. They are standing on much shakier ground than they were 2 years ago.
I'd assume the real trigger here is "reaching AGI," which would help OpenAI shrug off some of their Microsoft commitments thus making OpenAI models available on Amazon Bedrock. Which is what Amazon is really after.
It'd be interested in seeing how exactly the lawyers figured out how to define AGI. It must be a fairly mundane set of KPIs that they just arbitrarily call AGI, the term will probably devalue significantly in the coming years.
The actual quote is this though:
> hitting an AGI milestone or pursuing an IPO
So it seems softer than actually achieving AGI or finalising an IPO.
Very convenient to put "AGI" in all these agreements because the term is fundamentally undefinable. So throw out whatever numbers you want and fight about it and backtrack later.
> On the one hand you can look at these companies investing and take it as a signal that there is something there (in OpenAI) that's worth investing in. On the other hand all these companies that are investing are basically getting that investment back through spending commitments and such and are just using OpenAI as a proxy for what is essentially buying more revenue for themselves.
I don't understand how this is some kind of cheat code. Let's say I give you $100 on the condition that you buy $100 worth of product from me. And let's say that product cost me $80 to produce. Isn't that basically the same as me giving you $80? I don't see at all how that's me "basically getting that investment back".
It's not "continue" buying as much as this is NVIDIA fronting the money for (most of) the hardware OpenAI has already ordered from them. It's like borrowing rent money from your drug dealer.
I don't know that OpenAI specifically is the weak link but this definitely adds to the argument that the entire sector is a wash with the same three or four companies passing around the same $50B over and over. OpenAI is just the link that seems most likely to break first.
The "circular investment" is mostly start up companies using their stocks instead of cash to pay for server hardware and cloud computing. There is a few extra steps in between that make things look weird and convoluted, but the end results is really just big companies giving hardware and getting shares of ai companies in exchange for it.
Use these freebies/relatively cheap tools up 'whilst stocks last'.
I personally managed to create a very high quality marketing promo vid using grok. After spending weeks of enduring a lot of pain. But I saved myself tens of thousands.
I took advantage of 30 Grok premium subscriptions that were given to me via a free trial. There's no doubt the cost of services I took advantage of is in the tens of thousands.
But what do I care? I get what I want and then I get out before the freebies disappear.
LOL at the cry babys down-voting. Get mad bruh, get mad.
Has OpenAI laid out the specific definition of what an AGI is for this case? The one from their mission is quite vague and the general community has nothing close to a universal common definition... which means they will most likely just define it as what they already have when the timing is right.
Comparing OpenAI and WeWork is a nonsensical perspective. OpenAI is shipping the most revolutionary product in a generation, with 800 million monthly active users. It's the fastest revenue ramp ever, at incredible scale -- $20B+ ARR. These are real fundamentals. They matter. And the cost of inference is coming down all the time.
WeWork was a short-term/long-term lease arbitrage business. The two are nothing alike.
Article explicitly frames OpenAI's work as 'frontier AI' research and development with emphasis on scientific advancement and technological progress at scale; directly reports on participation in scientific and technological innovation
FW Ratio: 60%
Observable Facts
Article explicitly mentions 'frontier AI' development and research advancement
Article describes scaling of AI research into 'daily use at global scale'
Article discusses infrastructure for 'training on Vera Rubin systems' and dedicated compute for research
Inferences
The explicit focus on frontier AI research and scientific advancement directly supports rights to participate in scientific and cultural life
Infrastructure commitments for training and inference support continuation of scientific research participation
Article reports on expansion of AI infrastructure and capability scaling toward 'daily use at global scale', framing which suggests potential democratization of information processing and expression tools; no explicit discussion of impact on free speech or information access
FW Ratio: 60%
Observable Facts
Article states OpenAI models will 'move from research into daily use at global scale'
Article describes expanding AWS partnership and stateful runtime environments for developers
Article is published freely without paywall restrictions on TechCrunch
Inferences
Broad distribution of AI models at scale could potentially enable wider participation in information generation and expression
The framing of AI as moving to 'daily use' suggests accessibility expansion that could support expression rights
Article reports on formal partnerships between OpenAI, Amazon, Nvidia, and SoftBank, demonstrating freedom of association and collaborative arrangements between major institutional actors
FW Ratio: 60%
Observable Facts
Article describes 'unique collaboration' between OpenAI and Amazon on Bedrock platform
Article reports formal investment commitments from three separate companies ($50B Amazon, $30B each Nvidia and SoftBank)
Article mentions custom models developed for Amazon consumer products as part of partnership
Inferences
The multi-party corporate partnerships demonstrate observable freedom of association among major institutions
Detailed partnership disclosure reflects transparent coordination and contractual arrangements
Article mentions development of products and services that 'people rely on' as part of infrastructure scaling, with implicit connection to consumer welfare, though no explicit discussion of adequate living standards or service access equity
FW Ratio: 67%
Observable Facts
Article quotes company: 'turn that capacity into products people rely on'
Article describes custom models for Amazon consumer products as partnership outcome
Inferences
The focus on products for consumer reliance suggests implicit connection to welfare provision, though not explicitly framed in terms of living standards
Article frames technological advancement in positive terms consistent with human progress and capability development, though does not explicitly reference human dignity or universal rights principles
FW Ratio: 67%
Observable Facts
Article describes OpenAI raising $110B and scaling 'frontier AI' infrastructure at 'global scale'
Article quotes company stating AI 'moves from research into daily use at global scale'
Inferences
Framing of technological advancement as progressing toward human benefit is consistent with preamble's emphasis on human progress
Article reports on major compute infrastructure investment and scaling operations without discussing workforce, employment practices, labor conditions, or wage equity implications; the absence of labor consideration in coverage of significant infrastructure project represents a notable gap
Article does not mention workforce, employment, labor standards, wages, or worker welfare in any context
Inferences
The omission of any labor or employment discussion in reporting a major infrastructure project suggests limited editorial consideration of worker rights and welfare implications
TechCrunch editorial structure provides transparent attribution and professional journalistic standards, neutral signal for rights-respecting governance