OpenAI's fall from grace as investors race to Anthropic

cmiles8

tl;dr nobody wants OpenAI shares and the secondary market has completely dried up. “We literally couldn’t find anyone in our pool of hundreds of institutional investors to take these shares“ This doesn’t bode well for an IPO. The market is smelling a stinker. Get your popcorn ready for a mad scramble to salvage investments if indeed the shark has been jumped.

brookst

I don’t know how OpenAI screwed this up. They had the best tech, the largest installed base, the best brand recognition. And somehow instead of prosecuting the lead in all areas, they got all hubristic and sloppy and just failed to iterate on the core product, while also failing to respond quickly when Anthropic showed that coding agents are the flywheel that makes the whole company faster. It’s like they thought they had an unassailable monopoly and speedran to the lazy incumbent position, all in a matter of months.

majormajor

> The large gap between OpenAI’s $852-billion valuation and Anthropic’s $380 billion has investors rushing to grab equity in the latter before it rises, according to Augment co-founder Adam Crawley. Interesting, so there are a lot of people still eager to invest in valuations of well greater than a-quarter-trillion, but OpenAI's latest raise has sucked up all the oxygen for enthusiasm of that valuation going even higher. Which could be a "dumb money" move ("competitor number lower, already-big-number is scary") or a "smart money" move ("Anthropic is gaining position-wise, and currently is lower valued, let's bet on the one we think is better positioned") or some mix of both. OpenAI just raised a shit-ton so clearly there is plenty of money out there who don't think there's a bubble or even a blown opportunity there. But the wider community doesn't think they have the competition in the bag, while still being willing to invest in big-AI-cos at absolutely enormous valuations. If local hardware/models get good enough to take 80%-90% of what people use subscriptions for today... hoo boy. Big-AI is a bet I wouldn't be confident placing billions on. Unless your horizon is more "wait for IPO or next raise or positive news, then get out ASAP" than "hold for 5+ years."

xhevahir

Odd timing...Everything I've read about Claude the last several days suggests that its users are disappointed, even furious at what's happened to its performance.

hgoel

I wonder how much of this is associated with Scam Altman's personal negative PR and Anthropic's recent PR wins. I'm inclined to think there isn't much of an association becauss investors don't seem very concerned with morality, but I know ~dozen developers that either switched to, or started using Claude in the past month or so, while not knowing anyone that uses Codex.

whoopdeepoo

Both of these valuations are absolutely absurd. I guess Anthropic looks good in comparison, but I don't want to hold that bag. The Chinese models are catching up in quality while being a fraction of the price. The market will speak, how many devices that contributed to this thread were made in the USA? Sure you can argue the Chinese companies are heavily subsidized, but no major LLM lab is remotely close to making a profit this decade.

mitchbob

https://archive.ph/ExQkj

the_cat_kittles

let me know when they scrap the data centers, id love to get some good deals on hvac equiptment. these companies cannot possibly make enough money when you can run something on your own computer that works mostly as good

yalogin

Anthropic is not meaningfully better. Their stance is “the good guys have to make money to be in the fight with the bad guys” and so they do all the things their perceived bad guys do. I don’t know how they can do any different, but we just trust them to be good? What is the difference?

epitrochoid413

OpenAI is being squeezed from both sides. ChatGPT's chat quality has recently dropped hard. While Claude is pricier, it actually takes the effort to think through complex tasks. All the while, Chinese models are providing cheaper alternatives.

naveen99

And x.ai is at $2T now, while qwen baba is under $200B…

dartharva

I am not a finance pro, but is it not normal and expected for secondary equity markets to be hesitant against large unloads of pre-money company stocks, even in cases where the company in question isn't in water like OpenAI is? Does this not say more about the failure of the investors themselves in balancing their portfolio properly than OpenAI itself?

binarysolo

My loose understanding as someone adjacent to the AI model space is that you have good models that are costly and cheap models that are decent, so a lot of the publicly visible fights where Claude and ChatGPT leapfrog each other is the companies doing cost-benefit of how much optimization to do on the models before your userbase revolts because the agent "used to be great and now kinda sucks". As a small business owner whose team is entirely in Google Workspace (Drive, Gmail, Chat -- so inbuilt RAG right there), I wonder if Gemini will be the darkhorse. As a user Gemini's a distinct third in "AI smarts", but most business owners aren't power users who are gonna setup Codex or Code to slurp up their work emails and internal docs/SOPs. The article feels a touch clickbait-y since people love a good fight between the top players and OAI's lost a buncha public goodwill over the past year.

BSOhealth

The latest Opus routinely tells me the latest GPT Pro responses are much better. The GPT responses cost 10x more than GPT at least. And GPT takes 10’s of minutes. So unless and until I’m needing and ready for a really expensive “math checker” it gets left alone.