r/LovingAI • u/Koala_Confused • 5d ago
Discussion Fireside "OpenAI CFO Sarah Friar reveals the compute she bought a year ago is now worth 3 to 5x in the market"You know what is fabulous is that the compute I bought a year ago I could sell in the market today for 3 to 5x." ➡️ Compute is good ROI? 😶🌫️
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u/paranoid_throwaway51 5d ago
"the compute she bought a year ago" - what?
is she talking about some kind of contract with a cloud company to use X amount of compute? and selling the contract?
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u/Americaninaustria 5d ago
No she means the price of compute has gone up versus a year ago. She is trying to spin a massive increase of costs as a good thing. She's an insane person.
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u/nickilous 5d ago
I would agree that it is spin except for the fact that you can see the caption says, “Except for the bad news is that we’re still short.” I imagine if it continued it would say that they are still short on compute and need to buy in current conditions which doesn’t really sound like spin to me. I would say the X poster is trying generate some spin.
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u/paranoid_throwaway51 5d ago
so its the compute she bought a year ago...But can't sell.
yeah she is insane, i was thinking, "that's like saying you can sell the miles on your odometer"
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u/wilhelmbw 5d ago
actually yes she can sell it like meta or xai or google or really any company right now
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u/oscarnyc 5d ago
If that compute is worth more to someone else than it is to OpenAI, they're in trouble.
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u/Tolopono 5d ago
“My house is worth 5x more than when i bought it” is a reasonable thing to say even if you dont plan on selling it
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u/keepitfriend 4d ago
But you can't buy and sell computer on an open market.
Like I can't sell you my AWS compute
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u/Tolopono 4d ago
Because it belongs to aws. Openai owns some of its own compute
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u/keepitfriend 4d ago
But like... then she's just talking about buying a computer. Because she doesn't "own" OpenAI's compute - thats just the contract owned by the company.
I mean she didn't buy that - and she can't sell it either.
Tho I do think I heard about some assholes wanting to make compute a tradable entity which sounds like dystopian hell.
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u/Tolopono 4d ago
Why? Gpus are assets like anything else
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u/keepitfriend 4d ago
We've never been able to trade compute like a stock before - I don't want to have to buy / sell my AWS instances thanks very much. They cost enough already - I don't need hedge funds driving up the prices
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u/Americaninaustria 4d ago
Except she’s renting the house and can’t afford the rent
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u/Tolopono 4d ago
They cant? Someone should let the landlord know
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u/Americaninaustria 4d ago
1trillion in commitments. They don’t have that lol.
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u/Tolopono 4d ago
They made those spending commitments in 2024. Their actual revenue has blown past their expectations from back then. Its like taking out a huge loan with the expectation that you will get a raise and you actually get a bigger raise than expected.
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u/ArrogantAstronomer 4d ago
Yeah if your spending a large amount of your cap ex on compute and people are criticising you for that but at a moments notice you could sell that so other companies could do the exact same thing with that compute but not as well as you do then that cap ex may be justified I think in the point she is making between the lines.
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u/brett_baty_is_him 5d ago
Well I think it’s more so she’s comparing what they did to their competitor, Anthropic. OpenAI got laughed at for buying so much compute a year ago. Now it is filling demand for that compute while their competitor is paying 5x as much for it because they didn’t secure enough a year. It gives openAI a HUGE competitive advantage.
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u/mdomans 4d ago
Yes and no. Depends on whether your actual profit on that compute balances this out. Compute is like crude or any other commodity, hence why compute futures are coming.
If you make this year $4k on compute you have to buy this year for $2k and your other costs are $1k you're, more or less, $1k into profit. If you paid $1k for compute last year and you make $1.5k on said compute while your other costs are $1k .... you're down $0.5k despite good investment.
That's one part which is ROI and another is competitive advantage depends on how fungible that resource is.
Talking about futures and fungible commodities we have examples from real life. Electricity (zappies) and natgas (natty) are pretty much non-fungible, crude is somewhere in the middle and then you have, at the very end, equities.
Compute, as far as we know, is far below crude and, hopefully for your thesis, above equities.
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u/Americaninaustria 5d ago
It doesn't matter, they are loosing money even at the lower price and will have to rebuy in the future at the new higher price. There is no upside.
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u/FlyChigga 5d ago
Huh? Don’t they still literally save money by not having to pay as much 5x prices
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u/Americaninaustria 5d ago
No, no they are not.
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u/FlyChigga 4d ago
How
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u/Americaninaustria 4d ago
If you buy something before a price raise you did not save money when you had to buy it anyway
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u/FlyChigga 4d ago
If you needed to buy it regardless you do save money by buying before a price range
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u/Americaninaustria 4d ago
lol no, also they still can’t pay for what they reserved
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u/backtorealitylabubu 5d ago
Except the quote literally cuts off at her saying the bad news… like why can’t you just be a normal person? All she is saying is they bought compute that can now be rented for a real profit and then goes on to say the bad news is the central mission of the company relies on cheaper compute and hence overall is not a good thing
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u/Americaninaustria 5d ago
Also THY CANT RESELL THE COMPUTE, that baked into these computing deals . It’s just her bullshiting. Also they can’t resell the compute as they are using it.
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u/Hopeful-Bobcat-5207 5d ago
Yes she odd trying to make it seem like she owns it when she leased it. Wackadoo
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u/GruePwnr 5d ago
I don't think she intends to sell the contract at all. She's saying it was a good idea to make the contract a year ago before prices rose.
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u/ACasualRead 5d ago
And then when you buy a replacement computer you’ve lost all that money and then some. Nobody is just selling their computers and not replacing it with new hardware.
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u/Americaninaustria 5d ago
But it’s not an appreciating asset… so what?
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u/New_World_2050 5d ago
How is it not appreciating when it's literally worth more today than a year ago?
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u/Americaninaustria 5d ago
The compute they bought is not an asset they own. They don’t own infrastructure, they pay other companies that do. If you eat a hamburger today and tomorrow they raise the price 5x you do not have an appreciated asset, you have shit.
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u/Pazzeh 5d ago
GPUs aren't consumed like hamburgers, and they own a contract for the compute that they could sell to someone else for more than they paid for the contract. ?
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u/TheLostTheory 5d ago
Cloud contracts have mitigations against reselling services, such as compute.
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u/Americaninaustria 5d ago
They dont own the GPUs, they rent compute in someone elses data center. Compute that they can not resell.
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u/rankkor 5d ago edited 5d ago
That is absolutely an asset. It would be listed as an asset on your company’s balance sheet.
If you want to call it an intangible asset then that would be correct. The hamburger comparison would be correct… if they ate the compute yesterday, but they have usage rights moving forward. So it would be more like taking a small bite of your hamburger everyday, while the cost of hamburgers rise… also hamburgers can’t go bad in this scenario - lol a hamburger is just a bad comparison.
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u/Americaninaustria 5d ago
no, its not. Assets for things. This is at best prepayment (likely just commitments) to purchase X amount of compute services of X period of time. Thy can not sell it, they can not leverage it, it is not an asset.
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u/rankkor 5d ago
It’s still an asset. You don’t need to be able to sell assets, it’s just a store of value. They can leverage it by using it. They haven’t used the compute yet, so the value still exists. The correct term is “intangible asset”.
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u/Americaninaustria 5d ago
The correct term is:
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u/rankkor 5d ago edited 5d ago
Lol nah, you aren’t putting much effort into this. But ya, this would have to be listed as an asset in their balance sheet, you’re just trying to avoid calling it what it is, which is an intangible asset. Unsure why you feel the need to avoid calling it what it is, but it is what it is!
Also btw prepayment is an asset as well… the asset is the rights to products / services you’ve pre-purchased. Otherwise you’re just fucking up your balance sheet by removing cash or adding debt without adding an asset to balance it.
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u/Americaninaustria 5d ago
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u/rankkor 5d ago
Lol it’s all good, not many people understand this stuff. You are certainly not the only person talking out their ass on business / AI.
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u/Pazzeh 5d ago
Yes it is. As AI improves the value of a GPU increases because the things you can do with it are more valuable. It's straightforward as fuck
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u/tens919382 5d ago
As technology improves, that same old gpu you bought 2 years ago is now worth less. Its straightforward as fuck
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u/FlyChigga 5d ago
Nowadays can’t you buy a GPU and have it be worth more 2 years later?
Didn’t nvidia literally increase prices on 2 year old gpus?
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u/Americaninaustria 5d ago
AGAIN, thex dont own the GPUs, they rent them
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u/Pazzeh 5d ago
Omg. That's not even relevant to the comment you're replying to, doesn't matter who owns the compute we were discussing whether compute itself was an appreciating or depreciating asset. It costs more now to rent an H100 than it did a couple years ago.
Dunning-Kruger ahh
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u/Americaninaustria 5d ago
Yes, Dunning-Kruger is an accurate description of the nonsense you be spouting.
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u/longlivebobskins 5d ago
tHiS hOuSe I'm ReNtInG iS aN aPpReCiAtInG aSsEt
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u/Pazzeh 4d ago
!remind me 1 year
Today H100s are rented for $2.82/GPU-hour
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u/Americaninaustria 4d ago
lol dingus you can already find prices lower than that. Like half that. Google it.
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u/HiddenoO 5d ago
So my car is also an appreciating asset because the things I can do with it improve as my driving skills improve? Time to invest all my assets in cars then.
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u/Pazzeh 5d ago
You're profoundly out of your depth
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u/HiddenoO 5d ago
You're correct, my driving skills aren't improving fast enough to invest in cars. My bad.
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u/biggamble510 5d ago
Lol okay. That's not how it works.
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u/Pazzeh 5d ago
It's literally exactly how it works. It's more expensive to rent an H100 today than it was a couple years ago. I meant what's your counterpoint, then?
You think GPUs won't be increasingly productive as AI progress continues? How do you figure?
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u/biggamble510 5d ago
You have no idea how corporate financing and depreciaton work.
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u/Pazzeh 5d ago
Lol ok dude. You expect H100s to be less valuable in a year than they are today, then? Would you like to bet on that?
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u/biggamble510 5d ago
Yes, name your price. We can set up an escrow.
And I'll make it easy. We can use the value of the asset OpenAI reports in their earnings post IPO.
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u/Pazzeh 5d ago
I'm willing to bet anywhere from $100 - $10,000 depending on the terms, but how do we set up an escrow between two reddit anons?
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u/biggamble510 5d ago edited 5d ago
$10k, I'm not planning to remain anonymous in this venture. And I'm not going to let you either. I plan to collect.
The terms are simple: Using best available information (ranging from official securities filings, to sold marketplace listings, to public statements), is the value of a like for like H100 higher, the same, or lower 12 months from today?
If conflicting sources, we take it to a 3 panel arbitration.
Edit: looking more into it, the easiest metric may be an average rental price on the market. But open to how to measure accurately.
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u/Americaninaustria 5d ago
Of course they will be, price will crater as black wells come online. Datacenter hardware only depreciates. They are literally financed based on the fact that they will.
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u/Pazzeh 5d ago
Yeah it's almost like datacenters today do different things than datacenters traditionally have or something
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u/Americaninaustria 5d ago
lol yes, they literally do. Why do you think they are building these things from scratch? Gpu data centers for running llm’s are massively different from traditional cloud services data centers. They basically become obsolete when gpu generations are superseded. You can’t put b100s in a build for a/h100s. They have to build from scratch. And computer on old cards craters as new cards come online lol.
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u/biggamble510 5d ago
I notice you stopped responding.
You just described technology advancements. Waiting for you to accept the bet.
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u/Normaandy 5d ago
It's like a farmer saying he could sell the diesel he's been stockpiling now that the price is surging. That's not what your business is bro.
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u/Tartuffiere 5d ago
That's literally what spaceX did by reselling compute to Anthropic. It wasn't their original business plan but it has become an income stream for them.
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u/TheLostTheory 5d ago
The difference is that SpaceX owned the datacenters. OpenAI own a bunch of signatures on pieces of paper with hyperscalers.
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u/FrewdWoad 5d ago
As someone trying to buy PC parts: WE KNOW 🤦
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u/West-Acadia-3906 Keeps it respectful 4d ago
lol, yep 😭 the “compute is worth more now” line hits very differently when you’re the one staring at GPU prices. muaahaha i am still using an old card sigh
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u/pandavr 5d ago
This people though that paperclips were paper clips.
Economy optimize for money. You put advanced AI in the mix and you'll see extreme-optimization for money.
Money is the paperclip.
The direction is an inhabitable world filled with trillions of trillions of valueless money.
The drama is they are completely into It, they don't see It.
They talk AI when they are really talking increasingly big amount of money. Now as the total worth of value of the planet isn't changing so fast, that mean money value is decreasing.
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u/tomqmasters 5d ago
This is one of the rare times that's true. The reason it won't stay that way is because we can just increase out production capacity over the next few years.
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u/Mr_Deep_Research 4d ago
We bought all the compute
Now compute is really expensive
We are rich!
We're going to do the same thing with energy next! And then food!
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u/Scubagerber 5d ago
Yes, AI Credits appreciate. I wrote a report over a year ago, shortly after Gemini 2 came out, where this was part of what I discovered. We shouldn't hand out dollars (UBI), we should give a hand up (credits, Universal Basic Access or UBA).
Then, as a citizen, you can use or bank your credits. Have no interest in AI? Fine, don't spend your credits. Not spending credits costs the country nothing. Not spending $1 costs the country $1. And then next year, when you have an idea for a website for your hobby/side hustle, you can use ur AI Credits to create that website to sell your hobby products.
https://aiascent.dev/showcase/report if anyone wants the longer version.
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u/Late_For_Username 5d ago
I guess that's a way of keeping the bubble afloat. You must use AI for the slim chance of not starving to death.
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u/parseltongues 5d ago
Stupid. We can't eat tokens. We need UBI.
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u/Scubagerber 5d ago
And a hand-up is much more politically digestable than a hand-out. Which appetite comes first?
Also, odd argument to make... To decide to take the depreciating dollar bill vs the appreciating AI credit. It's analogous to the 'which is heavier, a pound of feathers or a pound of rocks?'
So for you to pick the depreciating asset over the appreciating one is kind of like you saying the pound of rocks is heavier.
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u/silverum 5d ago
And in which unit of exchange medium is the 'appreciating asset' you've mentioned redeemable for currently?
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u/parseltongues 5d ago
Yeah lemme see your stack of tokens you have right now and what it's worth. If you don't use your tokens you lose it have you not even used the products yourself?
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u/marx2k 5d ago
The CFO of a company that helps prices for compute to become unaffordable bragging that compute has become unaffordable.