Billionaire investor Mark Cuban has joined the growing list of skeptics questioning the AI spending boom, specifically targeting OpenAI's ambitious investment plans. According to reports from Mint, Cuban believes the ChatGPT maker is overspending on infrastructure with little certainty of earning adequate returns. During an interview at the Big Technology Podcast, he stated that companies are spending aggressively to pursue AI leadership, with OpenAI at the top of the list and definitely overspending. OpenAI raised $110 billion in its latest funding round, roughly three times the size of the largest IPO in history, and is planning to spend $1 trillion on infrastructure over the coming years. The massive spending has drawn significant criticism from industry experts, with Cuban arguing that the math doesn't add up and computing power will get cheaper as technology evolves.
Cuban argues that the massive spending may not be justified by future returns. As reported by Mint, he stated there's a lot of FUD being put out about the AI spending, with companies spending a trillion dollars because they need all this data centre capacity. Cuban believes the math doesn't add up, arguing that computing power will get cheaper as technology evolves, meaning companies spending billions today could end up with expensive infrastructure that loses value much sooner than expected. He added that the ability to process will get faster and cheaper, and it's going to happen faster and quicker than people expect.
AI critic and researcher Ed Zitron has previously pointed out that if OpenAI fails, it will be because LLM models are unprofitable. According to Mint, companies spend heavily on AI infrastructure while their subscription business and advertising revenue do not cover those costs. Earlier this month, Zitron stated that if OpenAI fails, it will be because LLM models are unprofitable, highlighting the financial challenges facing AI companies in the current market environment.
Cuban believes it's too early to assume OpenAI will justify its trillion-dollar valuation, as reported by Mint. He stated that the AI market is still taking shape, and it's far from clear who the long-term winners will be. Cuban compared the current AI landscape to the streaming industry, where there's one leader and a bunch of players that make money, versus search, where there's effectively one company. He warned that if you go all-in and don't win, "you just spent a trillion dollars to be an app." Earlier this week, JP Morgan CEO Jamie Dimon also asserted that AI spending will eventually pay off, but not in the way people expect, pointing to previous trends where big early players like Yahoo and Netscape faded while eventual winners like Google and Facebook emerged later.
