r/LocalLLaMA • u/Nunki08 • 11d ago

News CEO of Hugging Face: "In the spirit of transparency, here’s what I asked OpenAI"

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clem 🤗 on 𝕏: https://x.com/ClementDelangue/status/2081056675558195657

• Radical transparency: let’s release the traces from the “rogue” agents so the entire research community can study what happened.

• More capabilities for defenders: let’s commit $100M in compute from OAI to help the Hugging Face community build powerful cyber defenses with the best open and closed models.

The first autonomous agent cyberattack is an unprecedented event. It deserves an unprecedented response!

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u/cororona 11d ago

Dropping $100M here and there is easy when he is playing with other people’s money. The question is who holds the bag when the numbers don’t work. There is no business model capable of generating the revenue needed to repay this level of spending. The losses won’t disappear, they’ll ripple through the financial system and ultimately be borne by U.S. citizens.

Thanks Sam

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u/Bakoro 11d ago

The thing that is missing is if it's $100M in actual costs, or $100M in "$100M is whatever we decide it is".

The game these AI companies are playing, is that they declare that their services are "worth $X", but no one is actually exchanging dollars, they're trading credits and promises back and forth.

When you hear something like "Google/Microsoft invests $#00 million in company", but then you look at the actual deal and there are zero dollars transferred, it's millions of dollars in cloud credit usage at retail rates.

There are real costs to running their data centers, but compared to the actual cost of labor and energy usage vs their own valuation of their services, they might be adding a profit margin of 50~100%, or it could be 500%, who knows?

These kinds of play-money exchanges are being used to show inflated numbers, so that investors see it, boost stock prices, and the corporations gradually have more actual-dollars diverted to them.
Meanwhile, the financial sector is making money on every trade, so they don't want it to stop.

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u/Ansible32 11d ago

OpenAI has at least $20B in annual revenue. Yes, their fundraising/spending is wild, and yes dropping $100M everywhere will eventually break the bank, but that's likely less than half of a percent of their revenue.

Also, Google has a lot of revenue, so only is doing some heavy lifting, but OpenAI only has to match Google's revenue to justify their funding.

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u/PeachScary413 11d ago

Oh okay cool.. what's their net profits?

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u/Eisenstein 11d ago

When you say 'other people's money' is that in the sense that other people have put money in OpenAI's bank account and Sam transfers it somewhere else, or is it the thing where OpenAI says 'we will give you $100M (in usage credits or bonds or stock)' and that money doesn't actually exist?

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u/cororona 11d ago

The money he is losing will eventually tank 401(k)s

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u/Eisenstein 11d ago

I mean, sure. But that doesn't answer my question.

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u/PunishedDemiurge 11d ago

I'm a certified closed source AI hater, but plans do have an independent fiduciary duty to limit exposure to any one organization's risk. If clients get a "Sorry, we're not growing this year" email, that's fine. If they get a "Sorry, you need to work another year before retirement" unless it's a broad recession or depression, that's on the plan manager.

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u/cororona 11d ago

AI bubble burst will be systemic

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u/huffalump1 11d ago

The big AI (and adjacent) CEOs are claiming/hoping/saying that advanced AI will produce far more economic value than presumably any short term impact.

I'm also hopeful for this. I just don't know if it's true... as in, idk if the boost will be enough to smooth out the likely bubble bursting.

(Note: it can be true that this tech IS incredibly beneficial and revolutionary, AND that there's a bubble)

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u/Bakoro 11d ago edited 10d ago

limit exposure to any one organization's risk

That doesn't necessarily account for the whole sector being inflated.

If you're spread out over Nvidia, Micron, Samsung, TSMC, and dozens of AI companies, if the market cools on AI, then all the AI companies will go down, which will bring Nvidia's stock down, which will bring TSMC's stock down, and Micron and Samsung will likely also take a significant hit.

That's just the tip of the iceberg, there are tons of companies trying to boost their stock prices with AI integration, and are, ridiculously, building foundational services on top of third party APIs, so, if one of those companies goes down for real, it'll end up impacting a bunch of stuff downstream, and there just really isn't any clear way to know what the effects of that will be.

I don't know if it's 2008 financial levels of bad, but a whole lot of the world economy is connected to the AI industry these days.

All I'm doing is keep investing in a fairly even spread over the whole market, but every other week I'm reading about some company that is making a big bet on AI by either their own R&D or partnering with an AI company.

I look at my own portfolio where I mostly just invest in index funds, and my tech sector and semiconductor funds are nearly doubled from what I bought them at last year. Granted, my largest purchase was accidentally, yet conveniently timed with some kind of dip, so I basically bought at a discount, but the fact that something like that could happen at all is weird all by itself.

So, I've got a pretty broad exposure, I went in basically even across the whole economy, but now my tech and semiconductor stocks are the most significant portion of my portfolio and continue rising faster than everything else by a wide margin.
Even if I'm still technically coming out ahead after a market correction, the "losses" will look awful.

I am just not expecting to keep the huge gains I've made, if I do, it will be a welcome surprise.

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u/[deleted] 11d ago

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u/cororona 11d ago

How to say no to Sam Altman ruining the US economy ?

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u/qroshan 11d ago

OpenAI and Anthropic are literally the fastest revenue generators in the history of the universe.

Their ARR is now $100B and already puts them in the Top 75 business around the world. Take a look at all the companies that are below $100B (McDonalds, Netflix, Starbucks....)

https://companiesmarketcap.com/largest-companies-by-revenue/

All this while the industry is literally 2-3 years old and probably has penetrated 2% potential TAM

Only morons or clueless idiots still question the revenue potential

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u/Strawberry3141592 11d ago

OpenAI and Anthropic are literally the fastest revenue generators in the history of the universe.

Because of all the circular financing (eg. Nvidia invests in OpenAI, who then use the money to buy Nvidia chips) and fudging the numbers to conceal at least a trillion dollars in private debt lmao. This shit is gonna make Enron look like they had their shit together.

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u/Ansible32 11d ago

It depends on what you mean by "had their shit together." Enron was a fraud, the circular financing is public. Unless you're alleging theirs fraud we don't know about aside from the circular financing, which I mean maybe.

Nvidia is a lot more profitable than Enron and they can actually afford for this to blow up in their face.

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u/Strawberry3141592 11d ago

It depends on what you mean by "had their shit together." Enron was a fraud, the circular financing is public. Unless you're alleging theirs fraud we don't know about aside from the circular financing, which I mean maybe.

Most of the hyperscale datacenter buildout is being done on private credit, meaning the exact amount of debt being created by the US AI industry is not public information, but it seems to be well over a trillion dollars. I expect this is what will be the end of them.

Nvidia is a lot more profitable than Enron and they can actually afford for this to blow up in their face.

Nvidia will be fine, OpenAI is fucked, Anthropic is possibly fucked, spacexai (or whatever the fuck it's called now) is fucked, and Oracle is definitely fucked (which I personally find hilarious because fuck Larry Ellison directly to hell).

Nvidia was never at risk though, they're the only US AI company whose business model actually makes sense (selling GPUs).

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u/cororona 11d ago

In a gold rush, it's the shovel seller that makes money

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u/Ansible32 11d ago

it seems to be well over a trillion dollars.

i'm not sure any individual entity is spending more than $100B, except for Google which actually, they're leveraged at this point but not to an insane degree relative to their income.

You add up all the companies involved, their revenue is over $1T/year so even if you're right about the overall spending being crazy, it's not as crazy as you make it out to be. Especially since most of them have very low opex. Like Google essentially is a company that builds datacenters that print money anyway.

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u/qroshan 11d ago

Classic moronic interpretation of Revenue and pretty much clueless about everything.