Is it a “success” when your company rakes in an all-time record $6.6 billion venture capital round, but expects to lose nearly that same amount of money this year? Welcome to SF’s new AI economy, where OpenAI just raised the largest VC round of all time.

The SF-based artificial intelligence company OpenAI just completed a $6.6 billion venture capital round, according to Reuters, which Axios describes as the “largest VC round ever,” and values the company at $157 billion. It tops the $6 billion round that Elon Musk recently raised for xAI, which certainly makes the Sam Altman-Elon Musk pissing match much spicier, and surely portends that this glorious new AI technology will rescue the San Francisco office market and overall economy, right?

Maybe. But consider a CNBC report from just last week on the gobsmacking amounts of  money OpenAI is losing. That report notes that the maker of ChatGPT “expects about $5 billion in losses” this year, which almost equals the amount of money they just raised. Yes, they also expect $3.7 billion in revenue, but those are pretty rosy projections that expect Q4 to create more revenue than the three previous quarters this year. These are business fundamentals that might scare off traditional investors, but obviously, this batch of investors can’t get enough.

“We’ve raised $6.6B in new funding at a $157B post-money valuation to accelerate progress on our mission,” the company said in a Wednesday blog post. “The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems.”

The investors can also ask for their money back if OpenAI does not adequately transform from a nonprofit to a for-profit company within two years, as Axios reports. And OpenAI seems unlikely to miss that goal, considering if they were going to IPO, they would want to do so while the irrational exuberance was still as irrational as possible.

The funding comes from tech bigshots Microsoft, Nvidia, SoftBank, and Khosla Ventures, plus investor institutions like Altimeter Capital, Fidelity, MGX, Tiger Global, and Thrive Capital. Though the investment reportedly comes with the very odd request that the investors not invest with any other AI companies, which ties in with a certain amount of weirdness that seems to come with the territory at OpenAI.

And notably, Apple declined to participate, even though Apple is integrating Siri into ChatGPT. This may be because there has been an astonishing amount of executive turnover at OpenAI, for reasons that have never been acknowledged, and the press can only speculate as to why.

Is OpenAI, and the larger AI industry, all just a bubble? Anyone who’s lived in San Francisco for a decade or longer can tell you this has the appearance of a classic bubble. Investors are dying to hand over their money, and no one is anywhere near profitability, nor can these companies even articulate a feasible plan to get to profitability. The industry sure gets fawning media coverage from many sectors of the press, but the products the industry produces are little more than factories of factual inaccuracies and awkward language, or images where people have six fingers.

The race for funding is very easy for this industry to win, but their mainstream crossover successes are, so far, a short list — basically just ChatGPT.

Related: Some Upheaval at OpenAI as Company Announces Plan to Become a For-Profit Enterprise [SFist]

Image: SUN VALLEY, IDAHO - JULY 9: Sam Altman, chief executive officer of OpenAI, arrives at the Allen & Company Sun Valley Conference on July 9, 2024 in Sun Valley, Idaho. The annual gathering organized by the investment firm Allen & Co brings together some of the world's most wealthy and powerful figures from the media, finance, technology and political spheres at the Sun Valley Resort for the exclusive weeklong conference. (Photo by Kevork Djansezian/Getty Images)