Proprietary LLM builders need to experience a valuation haircut as open source LLMs take share from proprietary LLMs.
Proprietary LLM builders (OpenAI, Anthropic, Google, Microsoft, Amazon), have enjoyed lofty valuations over the past several years. Given the rise of open source competitors - which are on par with proprietary models from a performance standpoint and can be operated at a fraction of the cost - the proprietary model builders should suffer a valuation haircut.
I believe that open source LLM builders such as DeepSeek and META will win the day and that 80% of LLMs and SLMs in production 5 years from now will be open source language models.
https://open.substack.com/pub/tek2day/p/valuation-haircut-is-due-for-proprietary?r=1rp1p&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false
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Proprietary LLM builders need to experience a valuation haircut as open source LLMs take share from proprietary LLMs.
Proprietary LLM builders (OpenAI, Anthropic, Google, Microsoft, Amazon), have enjoyed lofty valuations over the past several years. Given the rise of open source competitors - which are on par with proprietary models from a performance standpoint and can be operated at a fraction of the cost - the proprietary model builders should suffer a valuation haircut.
I believe that open source LLM builders such as DeepSeek and META will win the day and that 80% of LLMs and SLMs in production 5 years from now will be open source language models.
https://open.substack.com/pub/tek2day/p/valuation-haircut-is-due-for-proprietary?r=1rp1p&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false
A CrowdStrike update that was pushed this past week took down Microsoft, which had a cascading effect across the real economy. MSFT could use M&A to mitigate that risk going forward.
Microsoft could acquire 100% of the equity or at least a meaningful equity stake in any technology company that strategically impacts Azure, Windows, and Microsoft in general in order to enforce a rigorous process around third-party software updates. Such an equity stake likely would have prevented this week’s CrowdStrike disaster.
In addition, owning a material equity stake in strategic technology partners would enable Microsoft to influence product strategy and direction.
The risk of a material, negative event caused by a third-party application is too great for MSFT to not want to take risk mitigation measures. Equity stakes are a great risk mitigation tool.
Watch the video version of this episode here: https://youtu.be/kyN4RMAWibs?feature=shared
TEK2day Podcast
Proprietary LLM builders need to experience a valuation haircut as open source LLMs take share from proprietary LLMs.
Proprietary LLM builders (OpenAI, Anthropic, Google, Microsoft, Amazon), have enjoyed lofty valuations over the past several years. Given the rise of open source competitors - which are on par with proprietary models from a performance standpoint and can be operated at a fraction of the cost - the proprietary model builders should suffer a valuation haircut.
I believe that open source LLM builders such as DeepSeek and META will win the day and that 80% of LLMs and SLMs in production 5 years from now will be open source language models.
https://open.substack.com/pub/tek2day/p/valuation-haircut-is-due-for-proprietary?r=1rp1p&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false
