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OpenAI is raising money at a pace Silicon Valley has rarely seen before, but billionaire investor Mark Cuban is not convinced the economics will work and says the industry may never generate returns strong enough to justify the massive spending.

Speaking on the “Big Technology” podcast with Alex Kantrowitz last month, Cuban said massive AI infrastructure spending may not deliver the expected returns. He was blunt when asked about OpenAI’s huge funding rounds and whether the company would ever generate returns that justify it all.

“They’ll never get it,” Cuban said. “They’re just sh****g away that money. It’s not that AI is not going to work; I think a lot of the numbers that they’re throwing out there aren’t going to come to fruition. I’m not convinced that for all of them it’s going to work.”

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OpenAI, led by Sam Altman, said in March it raised $122 billion in a funding round at an $852 billion valuation, one of the largest private raises in tech history.

‘Deeper Trouble’

Cuban said it’s still unclear whether the AI large language models industry turns into a winner-takes-all market dominated by a few players or a more crowded space where models become a commodity and competition slowly erodes differentiation.

LLM companies focusing on niches like finance, programming, and healthcare may struggle to build lasting moats because the underlying data can ultimately be accessed and trained on by multiple models, Cuban said. He thinks AI companies are now in a cycle where they must keep raising money and spending at scale or risk falling behind in a race with no clear winner.

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“They need to kiss around the world in hopes of being the one,” Cuban told Kantrowitz. “You. can’t keep on raising money because as it zigs and zags and you don’t know where it’s all going to go, if you’re not still raising money, you’re in deeper trouble because you don’t know if you know if you’re not the winner, then you’ve got problems.”

Dario Out to ‘Scare’ Everybody

Leading AI companies are fueling hype and fear around AI, overstating its risks and impact on jobs to raise capital, Cuban said. He pointed to Anthropic co-founder Dario Amodei, who warned earlier this year that AI could displace half of all entry-level white-collar jobs in the next five years.

“Dario now is trying to scare the s**t out of everybody,” Cuban told Kantrowitz. “But that’s part of raising money. Like when we had Broadcast.com back in the day, I would say, ‘We’re just going to replace cable and satellite and all that.'”

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This article Numbers They’re ‘Throwing Out’ Won’t Come to ‘Fruition’: Mark Cuban Predicts Sam Altman’s OpenAI Will ‘Never’ Make Back Massive AI Spending originally appeared on Benzinga.com

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