Legendary investor George Noble says OpenAI is falling in realtime, writes 600-word long note saying why he thinks Sam Altman’s company is in deep trouble
Veteran investor George Noble has issued a stark warning about OpenAI, arguing the AI darling is “falling apart in real time” despite its eye-watering $500 billion valuation.In a scathing analysis on X, Noble highlighted what he calls unmistakable signs of trouble. The biggest red flag? OpenAI’s internal “Code Red” memo in December, where Sam Altman reportedly told employees to drop everything as Google’s Gemini eats into ChatGPT’s dominance. The threat isn’t hypothetical—ChatGPT traffic has dropped for two straight months while Gemini exploded to 650 million monthly users.The financial bleeding is worse. Noble points to Microsoft disclosures showing OpenAI burned through $12 billion in a single quarter. Deutsche Bank projects the company will rack up $143 billion in cumulative losses before seeing profit. OpenAI’s video tool Sora alone costs $15 million daily to run, with even its own lead engineer admitting the economics are “completely unsustainable.”Then there’s the talent exodus. CTO Mira Murati, Chief Scientist Ilya Sutskever, and half the AI safety team have all walked out the door. Meanwhile, GPT-5 flopped so badly that OpenAI had to restore GPT-4 within 24 hours after users revolted.Now Elon Musk’s $134 billion lawsuit heads to trial in April, with a federal judge finding solid evidence OpenAI broke promises about staying nonprofit.Noble’s bottom line: the AI hype is peaking just as reality catches up, and OpenAI needs to grow revenue 15x in five years while costs spiral out of control.
Read 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.
