Legendary investor George Noble, who has more than four decades of investment experience to the asset management business, has warned of chaos at OpenAI and said that 'low-hanging fruit is gone'. 'OpenAI is chaos dressed up in a $500 billion valuation,' George Noble said, calling out major issues with the ChatGPT owner in a viral post. Despite OpenAI has laid out some ambitious plans in 2026, George Noble thinks the ChatGPT maker is a cautionary tale for the wider AI theme. The hedge fund investor and former director of the Fidelity Overseas Fund in a scathing analysis on X, Noble warned "OpenAI is warning apart in real time" and cited "Code Red" alerts, declining ChatGPT traffic, huge quarterly losses of $12 billion and unsustainable costs for tools like Sora.
The veteran investor laid out his thesis on OpenAI's red flags in a detailed X post on Tuesday, highlighting the "code red" moment announced by CEO Sam Altman in December 2025, warning of an "astronomical" risk profile from adjacent investment plays to AI researcher and developer OpenAI.
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George Noble also cited how Salesforce CEO Marc Benioff publicly ditching ChatGPT for Gemini after using it for two hours made things worse. However, Noble added that OpenAI's biggest red flag was in their finances. According to him, it all comes down to financials, specifically a math problem that isn't being widely discussed.
"It's going to cost 5x the energy and money to make these models 2x better," he said. "The low-hanging fruit is gone. Every incremental improvement now requires exponentially more compute, more data centers, more power." The financial strain is even more severe, he says. Noble cited Microsoft disclosures indicating that OpenAI burned through $12 billion in a single quarter, while Deutsche Bank estimates the company could accumulate losses of $143 billion before turning a profit.
The mass talent exodus at OpenAI has further complicated the issue—CTO Mira Murati, Chief Scientist Ilya Sutskever, and half the AI safety team have gone out the door, which Noble said was taking ChatGPT in a dangerous direction, as GPT-5 could not reportedly match GPT-4.
The last straw? Enter Elon Musk and his $134 billion lawsuit against the AI giant over it breaking its promise to him to stay a non-profit. "OpenAI is chaos dressed up in a $500 billion valuation," he added, not mincing his words.
Noble's bottom line: With the AI hype reaching a peak, OpenAI needs to grow its revenue by 15 times of what it is now in just five years—despite the out-of-control costs—to stay in the game.
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"If you're exposed to the Magnificent 7 through AI infrastructure bets, consider trimming," he advised. "The smart money is rotating into sectors where valuations actually reflect fundamentals." "Markets can price risk," he noted. "But they can't price chaos.
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I'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.
The veteran investor laid out his thesis on OpenAI's red flags in a detailed X post on Tuesday, highlighting the "code red" moment announced by CEO Sam Altman in December 2025, warning of an "astronomical" risk profile from adjacent investment plays to AI researcher and developer OpenAI.
George Noble highlights 'biggest red flag' of OpenAI
In a lengthy post on X, George Noble highlighted 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. "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 post said.ALSO READ: Rimi Sen, who shared screen space with Aamir Khan and Salman Khan, is now selling homes in Dubai. Know why 'Dhoom' star made a stunning career shift
George Noble also cited how Salesforce CEO Marc Benioff publicly ditching ChatGPT for Gemini after using it for two hours made things worse. However, Noble added that OpenAI's biggest red flag was in their finances. According to him, it all comes down to financials, specifically a math problem that isn't being widely discussed.
"It's going to cost 5x the energy and money to make these models 2x better," he said. "The low-hanging fruit is gone. Every incremental improvement now requires exponentially more compute, more data centers, more power." The financial strain is even more severe, he says. Noble cited Microsoft disclosures indicating that OpenAI burned through $12 billion in a single quarter, while Deutsche Bank estimates the company could accumulate losses of $143 billion before turning a profit.
The mass talent exodus at OpenAI has further complicated the issue—CTO Mira Murati, Chief Scientist Ilya Sutskever, and half the AI safety team have gone out the door, which Noble said was taking ChatGPT in a dangerous direction, as GPT-5 could not reportedly match GPT-4.
The last straw? Enter Elon Musk and his $134 billion lawsuit against the AI giant over it breaking its promise to him to stay a non-profit. "OpenAI is chaos dressed up in a $500 billion valuation," he added, not mincing his words.
Noble's bottom line: With the AI hype reaching a peak, OpenAI needs to grow its revenue by 15 times of what it is now in just five years—despite the out-of-control costs—to stay in the game.
ALSO READ: Quote of the Day by Rumi: 'You are not a drop in the ocean. You are the entire ocean in a drop'
George Noble's advice to investors
George Noble advised AI startup founders to exit their companies while the boom is still going, adding that he believes the AI hype cycle is nearing its peak. He thinks investors should shift their focus to other parts of the market, as both the AI trade and the Magnificent Seven will be impacted if OpenAI begins to struggle."If you're exposed to the Magnificent 7 through AI infrastructure bets, consider trimming," he advised. "The smart money is rotating into sectors where valuations actually reflect fundamentals." "Markets can price risk," he noted. "But they can't price chaos.
ALSO READ: Strongest solar radiation storm in over 20 years sparks dazzling auroras across Europe and US, raises concerns for satellites, flights and astronauts
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.
