Mark Cuban Says OpenAI's $1 Trillion Valuation Is a 'Trap' - Here's What Worries Him
Mark Cuban believes that artificial intelligence is growing at an exponential pace, and those who aren’t using tools like ChatGPT, Claude or Gemini are falling way behind. Despite his excitement around AI’s potential, Cuban is skeptical about valuations attached to today’s AI companies.
During a recent interview at the Big Technology Podcast discussing the future of AI, he said that companies are spending enormous amounts of money chasing dominance in a market that may never generate the returns they expect. His biggest target was OpenAI.
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OpenAI raised $110 billion in its latest funding round, approximately three times the largest IPO in history. The company is planning to spend $1 trillion on infrastructure over the coming years. According to Cuban, OpenAI is overspending.
“They'll never get it. They're just shitting away that money,” he said.
Here are the two things that worry him.
Hardware Depreciation
Cuban’s biggest concern is whether OpenAI can generate enough profit to justify the massive spending.
“There’s a lot of FUD being put out about the spending,” Cuban said. “We’re going to spend a trillion dollars because we need all this data center capacity.”
His argument is that the economics may not hold up long term because computing power keeps getting cheaper and faster. If hardware continues to improve rapidly, companies that overspend today could end up sitting on infrastructure that becomes less valuable much sooner than expected.
“The ability to process is going to get faster and cheaper. And it's going to happen faster and quicker than people expect,” the billionaire investor said. “I think a lot of the numbers that they're throwing out there aren't going to come to fruition.”
AI May Not End Up Being a Winner-Take-All Market
Another reason Cuban questions OpenAI’s trillion-dollar valuation is the uncertainty around how the AI market will eventually play out. He compared the situation to industries like streaming and search, where there’s one leader and a handful of players that survive long enough to see returns.
"We don't know if the business of foundational models — ChatGPT, Gemini, Grok, Claude — is going to be like the streaming industry, where there's one leader and a bunch of players that make money, or like search, where there's effectively one company," he said. If you go all-in and don't win, "you just spent a trillion dollars to be an app."
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