As OpenAI is ‘about to fall apart’ predictions make headlines, Sam Altman goes to Middle East to participate in …
OpenAI CEO Sam Altman is now seeking funding from a new market: the Middle East. This comes after veteran investor George Noble warned that the AI company is “falling apart in real time” despite its $500 billion valuation. According to a Bloomberg report, OpenAI is in talks with Middle Eastern sovereign wealth funds to secure investments for a new multibillion-dollar funding round. The report cited a source familiar with the discussions who asked not to be named because the details are confidential to claim that this investment round is expected to total around $50 billion, though the numbers could change. Moreover, term sheets have also not been signed. Altman is currently visiting the United Arab Emirates to take part in the investment discussions, the person added. The round is expected to close by the first quarter of the year.OpenAI started the AI boom by launching its AI chatbot ChatGPT in 2022. The company has since become one of the fastest-growing commercial companies in the world. The company has raised billions of dollars from investors as it has expanded and developed new models and rolled out new features.Last year, OpenAI closed a $40 billion financing round led by SoftBank, the largest private tech funding round on record. The round included participation from core investor Microsoft, as well as Coatue, Altimeter and Thrive. Additionally, OpenAI sold $6.6 billion worth of shares in October, increasing its valuation to $500 billion.
What investor George Noble warned about OpenAI
Noble’s warning brought to light a number of alarming indicators, such as OpenAI’s internal “Code Red” memo from December 2025, in which Sam Altman allegedly instructed staff to abandon everything as Google’s Gemini challenged ChatGPT’s hegemony. The threat has materialised, as ChatGPT traffic has fallen for two straight months, while Gemini reached 650 million monthly users.The financial problems are severe. Noble points to Microsoft disclosures showing OpenAI spent $12 billion in a single quarter. Deutsche Bank projects the company will accumulate $143 billion in total losses before making a profit. OpenAI’s video tool, Sora, alone costs $15 million a day to run, and even its own lead engineer has admitted the economics are “completely unsustainable.”The talent exodus is another issue. Chief Scientist Ilya Sutskever, CTO Mira Murati, and half of the AI safety team have all departed the company. Meanwhile, GPT-5 performed so poorly that OpenAI had to bring back GPT-4 within 24 hours after users complained.Now Elon Musk‘s $134 billion lawsuit heads to trial in April, after a federal judge found solid evidence that OpenAI broke promises to remain nonprofit.Noble’s conclusion: the AI hype is reaching its peak just as reality catches up, and OpenAI needs to grow revenue 15 times in five years while costs continue to rise.
Here’s George Noble’s full note on OpenAI
“OPENAI IS FALLING APART IN REAL TIMEI’ve watched companies implode for decades.This one has all the warning signs.OpenAI declared “Code Red” in December.Altman sent an internal memo telling employees to drop everything because Google’s Gemini 3 is eating their lunch. Salesforce CEO Marc Benioff publicly ditched ChatGPT for Gemini after using it for two hours.ChatGPT traffic fell in November. Second month-over-month decline of 2025. Meanwhile Gemini jumped to 650 million monthly active users.The company that was supposed to build AGI can’t keep its chatbot competitive.But the real story is the money…OpenAI lost $12 BILLION in a single quarter according to Microsoft’s own fiscal disclosures.Deutsche Bank estimates $143 billion in cumulative negative cash flow before the company turns profitable.Their analysts put it bluntly: “No startup in history has operated with losses on anything approaching this scale.”They’re burning $15 million per day on Sora alone.$5 billion annually to generate copyright-infringing memes.Even Sora’s lead engineer admitted the “economics are currently completely unsustainable.”Here’s the big math problem nobody wants to discuss:It’s going to cost 5x the energy and money to make these models 2x better.The low-hanging fruit is gone.Every incremental improvement now requires exponentially more compute, more data centers, more power.Reports suggest OpenAI’s large training runs in 2025 failed to produce models better than prior versions.GPT-5 launched to widespread disappointment. Users called it “underwhelming” and “horrible.” OpenAI had to restore GPT-4o within 24 hours because users preferred the old model.Altman had promised GPT-5 would make GPT-4 feel “mildly embarrassing.” Instead, users complained it was worse at basic math and geography.They’ve released GPT-5.1, GPT-5.2 since.Same complaints each time: too corporate, too safe, robotic, boring.The talent exodus makes this even worse:CTO Mira Murati. Gone.Chief Research Officer Bob McGrew. Gone.Chief Scientist Ilya Sutskever. Gone.President Greg Brockman. Gone.Half the AI safety team departed. Multiple executives reportedly cited “psychological abuse” under Altman’s leadership.And now Elon Musk is suing for up to $134 billion.A federal judge just ruled the case goes to jury trial in April. There’s “plenty of evidence” that OpenAI’s leaders promised to maintain the nonprofit structure that Musk funded.Musk provided $38 million in early funding based on those assurances. Now he wants his share of the $500 billion valuation.OpenAI called it “harassment.” But the judge disagreed.Here’s what I think happens next:The AI hype cycle is peaking.The diminishing returns are becoming impossible to hide.Competitors are catching up.The lawsuits are piling up.OpenAI needs to generate $200 billion in annual revenue by 2030 to justify their projections.That’s 15x growth in five years while costs keep exploding.Even Sam Altman admitted investors are “overexcited” about AI.His exact words: “Someone is going to lose a phenomenal amount of money.”If I were running an AI startup with good traction right now, I’d be looking for an exit. Sell into the hype before the music stops.My positioning:I’m not touching OpenAI-adjacent plays at these valuations. The risk profile is astronomical.If you’re exposed to the Magnificent 7 through AI infrastructure bets, consider trimming. The gap between promised revolution and delivered reality has never been wider.The smart money is rotating into sectors where valuations actually reflect fundamentals.Small and mid-caps are trading near decade lows relative to Big Tech while earnings growth is only marginally lower.Markets can price risk. But they can’t price chaos.And OpenAI is chaos dressed up in a $500 billion valuation.”
