Mad Mad News

LIVE ABOVE THE MADNESS

SUCCESS


What Humanoid Robots Really Mean for Founders Right Now

Filed Under: Addicted2Success, SUCCESS

For most of the last decade, humanoid robots lived in viral videos. They danced, did backflips and occasionally fell over, and most founders reasonably filed them under “interesting, but not my problem.” That is starting to change. Humanoid robots are now clocking real shifts in real warehouses and factories, the companies building them are signing multi-year commercial contracts, and one of the biggest carmakers in the world has started early production of its own robot.
That does not mean a robot is about to walk into your office and take over the job of your operations manager. The truth is more nuanced and, for founders, more useful. Understanding where humanoid robots actually are today, what they can and cannot do and how the economics are shaping up will help you make better decisions about automation, hiring and the opportunities that will open up around this technology over the next few years.
Where Humanoid Robots Are Actually Working Today
The clearest evidence comes from deployments that have been running long enough to produce real numbers. Agility Robotics says its Digit robot has moved more than 100,000 totes at a GXO logistics facility in Georgia since June 2024, a deployment the company describes as the first formal commercial humanoid deployment. In an update released this week, Agility said GXO will expand Digit to sites in North Carolina and Tennessee starting in early 2027. It also listed Toyota Motor Manufacturing Canada, Schaeffler and Mercado Libre among its customers, said three manufacturing customers are in paid programs and reported more than $300 million in committed multi-year orders for its next-generation Digit 5, which is a measure of potential value rather than revenue already earned.
Figure AI has published some of the most detailed results so far. In a report on its BMW deployment, the company said its Figure 02 robots worked ten-hour shifts, Monday through Friday, for about eleven months at BMW’s plant in Spartanburg, South Carolina. Over that time they loaded more than 90,000 sheet-metal parts, logged over 1,250 hours of runtime and contributed to the production of more than 30,000 BMW X3 vehicles. The job demanded placing parts within a 5 millimeter tolerance inside tight cycle times. Figure was also candid that the robot’s forearm was its top hardware failure point, and it is now retiring Figure 02 in favor of a redesigned Figure 03.
To see what this looks like inside a working factory, this 60 Minutes report goes behind the scenes as Boston Dynamics trains its Atlas humanoid to work at a Hyundai plant.

Separating the Signal From the Hype
Every big technology wave comes with bold forecasts, and humanoids are no exception. In October 2026, Tesla said it had started early production of its Optimus robot at its Fremont factory. Elon Musk has claimed production could reach 20,000 units a week by the end of 2027, yet he also described the ramp as “slow and somewhat bumpy” and admitted, according to TechCrunch, that “there’s still quite a lot of work to do with regard to the AI and the robot for it to be truly useful for open-ended tasks.”
That second quote is the one founders should remember. Today’s humanoid robots are proving themselves in structured, repetitive jobs like moving totes, loading parts and feeding machines, often in facilities designed around clear workflows. They are not yet general-purpose workers you can drop into any messy environment and trust to figure things out. The deployments that work share a pattern. The task is well defined, the environment is controlled, success is measurable and humans remain close by to manage exceptions.
The wider robotics market tells a similar story of steady, practical growth rather than a sudden revolution. The Association for Advancing Automation reported that North American companies ordered 10,989 robots worth $723.5 million in the third quarter of 2026, up 24.8% in units from a year earlier. Collaborative robots, the kind built to work safely alongside people, made up about 16.7% of those orders. Most of that demand is for conventional industrial machines, not humanoids, which is a useful reminder that the best automation choice is often the simplest one that gets the job done.
The Business Model Is Changing Faster Than the Robots
One of the most important shifts for smaller companies has nothing to do with legs or hands. It is the move toward paying for robots the way you pay for software. Instead of a large upfront purchase, many providers are offering subscriptions or robots-as-a-service arrangements, where you pay a monthly or hourly rate and the vendor handles maintenance and updates. On the consumer side, 1X lists its NEO home humanoid at $20,000 to buy or $499 a month on subscription, with deliveries tied to the company’s production ramp.
For founders, that pricing model changes the math. A robot you rent by the month can be tested against a specific problem without betting the company on it, and it can be returned or upgraded as the technology improves. It also means the comparison is no longer “robot versus a year of wages” in the abstract. It becomes a practical question of cost per task, uptime, safety and how much management attention the robot requires compared with the alternatives you already have.
Where the Opportunities Are for Founders
Most founders will never build a humanoid robot, and that is fine. Some of the biggest opportunities in every platform shift sit around the core technology rather than inside it. When the personal computer arrived, fortunes were made in software, training, repair and services. When smartphones arrived, the app economy dwarfed the hardware makers in sheer number of businesses created. Robotics is likely to follow a similar path.

Integration and deployment. Companies that buy robots need help mapping workflows, preparing facilities, training staff and measuring results.
Software and data. Robots need task-specific training data, fleet management tools, analytics and safety monitoring, and that work increasingly looks like software.
Maintenance and support. Every robot in the field needs servicing, parts and on-site technicians, which creates local service businesses.
Training and workforce transition. People will need to learn how to supervise, troubleshoot and work alongside robots, and someone has to teach them.

If you run a business with physical operations, such as a warehouse, a production line, a kitchen or a distribution center, your opportunity looks different. You do not need to be first. You need to be informed. The founders who benefit most from new technology are rarely the ones who buy the flashiest version. They are the early adopters who understand the problem well enough to know when the tool is finally ready to solve it.
How to Prepare Without Getting Burned
Start by mapping the physical work inside your business. Write down the tasks that are repetitive, physically demanding, hard to staff or prone to injury, and estimate what each one actually costs you today in wages, turnover, errors and downtime. This exercise is valuable even if you never buy a robot, because it forces you to see your operations clearly and often reveals cheaper fixes, from better layout to simpler equipment.
Then match the problem to the right tool. A conveyor, an autonomous mobile robot or a collaborative arm may solve a task more cheaply and reliably than any humanoid. Humanoids make the most sense where your space, tools and processes were designed for people and redesigning them would be expensive. Before you think about physical robots at all, it is worth working out what to automate with AI agents first, because the software side of your business is usually where the fastest and cheapest gains are hiding.
When you do test a robot, run it like any serious experiment. Choose one narrow task, agree on clear success metrics with the vendor, insist on a pilot before a long contract and ask hard questions about uptime, safety certification, support response times and what happens to your data. And bring your team into the process early. The deployments that work treat robots as a way to remove the worst parts of a job, not as a threat hanging over the people doing it.
Stay Curious, Stay Grounded
Humanoid robots are at an awkward, fascinating stage. They are real enough to be loading car parts and moving totes on paid contracts, but early enough that their makers are still openly redesigning hardware and admitting how much work remains. That is exactly the moment when informed founders gain an edge, because they can learn while the costs of experimenting are falling and before the technology becomes a commodity everyone uses.
You do not need to predict exactly when humanoids will become common in small businesses. You just need to keep watching the real deployments, understand your own operations deeply and be ready to move when the numbers make sense. The future rarely arrives all at once. It shows up one shift, one pilot and one practical use case at a time, and the founders paying attention are the ones who get to shape it.
The post What Humanoid Robots Really Mean for Founders Right Now appeared first on Addicted 2 Success.

Scott Bessent just reframed the case for a December rate hike

Filed Under: SUCCESS, The Street

Treasury Secretary Scott Bessent said Oct. 28 that additional Federal Reserve rate hikes would not necessarily represent a policy mistake, signaling the Trump administration may tolerate further tightening if the data requires it.

Bessent’s remarks came hours after the Federal Reserve held interest rates steady at its October meeting, a widely expected decision. The pause followed a rate increase one month earlier, the first hike in three years.

Prediction markets put the odds of a December rate increase at roughly 50-50 ahead of the October decision.

Bessent’s comments mark a notable shift in tone from the administration’s typical posture on rates. President Donald Trump has repeatedly called for lower borrowing costs and previously pressured former Fed Chair Jerome Powell over monetary policy.

Bessent said he and Trump have confidence in Fed Chair Kevin Warsh, who was confirmed to the post earlier this year, and that the two believe Warsh is managing the balance between full employment and price stability well.

Bessent handed the December rate call to the Fed

Bessent did not oppose a December rate increase. Rather, he said whether one is warranted depends on what the data show between now and then, and that judgment belongs to the Fed. He said he and Trump have confidence in Warsh and are not pressing the central bank in either direction.

“I think Chair Warsh is off to a great start,” Bessent said. “As I often say, I have great confidence in him.”

Also read: Fed Chair Kevin Warsh reveals October surprise inside interest-rate pause

The Fed’s October hold left the federal funds rate unchanged after the central bank raised borrowing costs in September.

That September move was the first rate increase in three years. The Fed pointed to persistent inflation above its 2% target as the basis for tightening, and December has become the next key decision date markets are watching.

Bessent’s posture allows the Fed more operational independence than Trump-era commentary on monetary policy has typically suggested. Instead of calling for cuts, he characterized Warsh’s stewardship as strong and declined to put pressure on the central bank ahead of December’s meeting.

That restraint distinguishes his Oct. 28 comments from how the administration has talked about the Fed in the past.

The Iran war shock keeping prices above target

Bessent identified the energy-price shock tied to the U.S. conflict with Iran as the main force keeping inflation above the Fed’s 2% target. He asked the central bank to keep an open mind about whether the shock is transitory before deciding how aggressively to respond.

Monetary tightening works through demand. It raises borrowing costs, slows spending, and cools price growth that way. It does not replenish oil fields or reopen supply chains.

If the Iran conflict pushed energy prices up and those costs ease on their own, a rate hike in December addresses the wrong problem. It slows the economy without doing anything about the source of the inflation.

Bessent said he was not forecasting which outcome was more likely. He said the Fed has time to assess it before December. Getting that call wrong carries costs: tightening into a supply-driven price spike means slowing an economy that the energy shock is already straining.

On the Iran front, Bessent described Operation Economic Outcast, the Treasury-led campaign to isolate Iran’s economy, as producing results. Internal estimates, he said, put Iran’s potential economic contraction at 20% to 25%. He said the operation has been “very successful.”

Bessent said he expected the third-quarter GDP report, due Oct. 29, to show strong growth, though he added he had not yet seen the data.Alex Wong / Getty Images

Musk’s neocloud warning didn’t spook Bessent

Bessent also addressed growing concerns about debt financing among neocloud companies, a group of specialized AI infrastructure providers that have faced market pressure in recent weeks. 

Musk’s warning that more than 200 neocloud firms could face what he called “guppy-level death and consolidation” weighed on the sector. Bessent said Treasury is monitoring the space but does not view the credit stress as a systemic risk.

“I don’t think it’s problematic at all,” Bessent said. “The neoclouds are a small component of the overall ecosystem, and we’re still seeing the financing getting done. We’re still seeing the deals get done.”

More Federal Reserve:

J.P. Morgan sees Fed rate hikes going out with a bang this year

October Fed rate hike hinges on two looming economic reports

Scott Bessent sends signal on Kevin Warsh Fed rate hike

The Treasury’s assessment tracks with how regulators typically treat a niche sector under strain. Individual companies may fail or consolidate without that stress transmitting to the broader financial system.

Bessent’s comments suggest Treasury is watching for contagion but sees no reason to intervene. Whether that view holds depends on how quickly credit conditions tighten for the firms still actively financing AI infrastructure buildouts.

What the Oct. 29 GDP print could change for December

Bessent said he expected the third-quarter GDP report, due Oct. 29, to show strong growth, though he added he had not yet seen the data. The report will offer the clearest read yet on how the economy held up through a period of rising rates and energy-driven inflation.

A strong number alongside elevated inflation narrows the Fed’s case for holding. The central bank does not need to protect a fragile economy if the data show growth holding up.

A soft print changes that. It puts tightening into a slowing economy at a moment when energy costs are already eating into household and business budgets.

For bond markets, the combination of a strong GDP print and persistent inflation is the scenario most likely to extend the selloff in longer-dated Treasuries.

Mortgage rates, which track the 10-year yield, would follow. Growth stocks and high-debt companies, which are more sensitive to rate expectations, would also face pressure if December’s hike becomes the consensus view.

Bessent’s Oct. 28 comments, taken together, outlined an administration that sees the economy as durable, the Fed as capable and the path to December as data-dependent.

Whether that confidence is tested will depend on what the Oct. 29 GDP figure shows and what the next inflation reading says about how far energy prices have spread into the broader price level.

Related: Scott Bessent just opened the door to a major gold comeback

How the Midterm Elections Could Affect Your Investments

Filed Under: Clark Howard, SUCCESS

The midterm elections are Tuesday, November 3, and the Federal Reserve made its last rate decision before the vote on Wednesday, holding its benchmark rate at 3.75% to 4%. If you’re wondering whether to move money around before the results come in, more than a century of market history says to leave your portfolio alone.

Here’s what the record shows about stocks, interest rates and inflation around midterms, whether the midterm slump is real or a statistical accident, and why the part that matters is still ahead of us.

What History Says About Stocks in Midterm Years

Midterm years have been the weakest stretch of the four-year presidential cycle. Across 31 midterm elections since 1900, U.S. stocks returned an average of 2.9% in the 12 months before the midterm vote, compared with 8.9% across all years, according to research from U.S. Bank Asset Management Group. In the 12 months after a midterm, average returns jump to 12.4%.

The two most recent midterm years were rough. The S&P 500 lost 18.1% in 2022 and 4.4% in 2018, the index’s two worst years since 2008, per BlackRock. The gap looks dramatic, which raises two questions the averages alone can’t answer.

Is the Midterm Effect Real or Just Noise?

Mostly noise, with a kernel of something real. When U.S. Bank’s researchers ran statistical tests on all 31 cycles, the gap between midterm years and other years wasn’t large or consistent enough to count as a reliable effect. Returns in midterm years have ranged from losses of more than 30% to gains approaching 50%, and a handful of terrible years drag the average down.

Those terrible years also had better explanations than the election alone. The 2018 and 2022 selloffs came from Federal Reserve rate hikes, and 2002 fell with the rest of the dot-com hangover. Set those aside and what’s left is a modest, plausible effect. Investors dislike not knowing what Congress will look like, and some of them wait until they do. That shows up as softer returns in the run-up and a rebound once the result is in, whichever party wins.

Where We Are in the Cycle Right Now

If the effect is real, the weak half of it is nearly over. The 12 months of underperformance in the data run up to election day, and the market has historically turned higher about a month before the vote as polls firm up. The strong half, the 12 months after, hasn’t started yet. For anyone tempted to sell ahead of the results, that is exactly backward.

This year hasn’t followed the script anyway. Fidelity notes stocks have held up in 2026 despite higher oil prices, tariffs and the prospect of more rate increases, so there’s less of a hole to climb out of than in 2018 or 2022. That cuts both ways. Less pre-election weakness may mean a smaller post-election bounce, since part of the historical rebound is simply recovering ground lost in the run-up.

Interest Rates and Inflation Are Not on the Ballot

Congress does not set interest rates, and neither does the president. The Fed does, and it just held at 3.75% to 4% after raising rates in September for the first time since 2023. Inflation has been running above target, with core PCE at 3.0% in August, and futures markets put the odds of another quarter-point hike in December near 85%, according to the Associated Press.

The next Congress can push on inflation through spending and tax decisions, and those feed into what the Fed does, but that link is indirect and slow. Morgan Stanley’s view is that the election alone is unlikely to change the longer-term outlook for rates or the deficit in any substantial way. If you’re hoping the vote will bring mortgage rates down, the Fed’s December meeting matters far more than next Tuesday’s results.

Does It Matter Which Party Wins?

For your investments, less than the headlines suggest. Forecasters currently favor Democrats to retake the House with the Senate close to a toss-up, per Morgan Stanley, which would mean divided government. That usually means fewer major laws get passed, and markets have performed reasonably well under that arrangement in the past. Analysts at Russell Investments note that the less-expected outcome, Republicans keeping both chambers, could mean more spending and tax cuts that support growth but keep inflation and rates higher for longer.

Either way, the effects tend to land in specific industries through hearings, regulation and executive action rather than across the whole market. Over the next year, inflation, economic growth and corporate earnings will do far more to your portfolio than the makeup of Congress.

What To Do With Your Investments

Nothing you wouldn’t already be doing. Keep your 401(k) and IRA contributions on schedule, rebalance on your normal calendar rather than on election night, and expect some extra volatility in the weeks around the vote. Investors who sold after the brutal 2022 midterm year missed the rally that followed in 2023, and the historical record suggests the same risk applies to anyone sitting out now.

Schwab’s Washington policy analyst Michael Townsend has said much the same, telling investors to expect near-term volatility but to stay focused on long-term goals rather than trying to time the market around the outcome. The election will settle many questions about Washington. It won’t settle the ones that matter most for your money, which are still inflation, interest rates and whether companies keep growing their earnings.
The post How the Midterm Elections Could Affect Your Investments appeared first on Clark Howard.

Why Many People Retire at the Worst Time

Filed Under: Clark Howard, SUCCESS

Most people spend a few years thinking about retirement before they do it. They start running the numbers, log into their 401(k) a little more often and wonder if they can afford to stop working. If the market happens to be climbing during those years, every time they log in, the answer looks a little more like yes.

But a rising balance doesn’t tell the whole story. Strong market gains can make retirement look more affordable just as elevated stock prices and lower expected future returns make it harder to sustain that lifestyle for decades.

Good Markets Trigger Retirements

The labor force participation rate for Americans 55 and older was 40.3% in February 2020. By July 2026, it had fallen to 36.9%. Bank of America Securities economist Aditya Bhave tied the drop to a 35% gain in the S&P 500 over the prior two years and an index that has more than doubled since 2020. His team called it a “stock-fueled retirement party.” Financial planners quoted in the same reporting said clients were finally pulling the trigger because the numbers on screen had never looked better.

This is the wealth effect, and it is not a new pattern. Research using the 1990s bull market found that unexpected gains in 401(k) and IRA balances pushed workers to retire sooner. A bigger balance means a lower withdrawal rate for the same spending, so retiring after a run-up looks mathematically safer than it did a few years earlier.

Big Past Gains May Mean Lower Future Returns

When the stock market has risen sharply over several years, returns over the next ten years have usually been below average. For a new retiree, those first ten years matter more than any other stretch. Michael Kitces found that inflation-adjusted stock returns over the first ten years of retirement have a 0.79 correlation with how much a portfolio could sustainably pay out over 30 years.

A bad first decade is rarely overcome by a good second and third one, because the withdrawals taken during the bad years are gone. (That mechanism is sequence of returns risk, and we cover it in detail here.)

The historical record shows the pattern clearly. The worst years to retire since 1926 all came after the stock market’s biggest ten-year gains.

Sources: S&P 500 annual returns (dividends reinvested), Pfau, Financial Advisor magazine.

The 1968 retiree is the cleanest example. Three retirement dates two years apart, with the same strategy, produced safe withdrawal rates of 4.88%, 4.41% and 4.09%. The person who waited longest and retired with the biggest balance got the worst result.

Now let’s look at the last ten years. From 2016 through 2025, the S&P 500 returned about 295% with dividends reinvested, or 14.7% a year, well above its long-run average of around 10%. Seven of those ten years produced double-digit gains, and the last three alone (2023 through 2025) added 83%. That ten-year figure sits right alongside the 1966 and 1968 cohorts in the table, and behind only 1929 and 2000.

None of that says a crash is coming. It says the easy part of the decade may already be behind you. Morningstar’s 2025 State of Retirement Income report set the safe starting withdrawal rate for someone retiring in 2026 at 3.9% rather than the traditional 4%, because stock prices are high relative to earnings.

What To Do About It

If you are thinking about retirement, this is not necessarily a reason to wait. It is a reason to build the plan around the possibility that the next ten years could look nothing like the last ten.

Don’t let a rising balance automatically raise your spending. Revisit your withdrawal rate in light of market valuations, expected returns and your retirement timeline. A larger portfolio can support more spending, but only if the plan accounts for the possibility of lower future returns.

Stay flexible. Every flexible spending method Morningstar tested beat the fixed base case. A guardrails approach that trims spending when the portfolio falls behind supported a 5.2% starting rate on a 40/60 portfolio. Spending less during a bad stretch is what protects the portfolio.

Keep a few years of spending out of stocks so a crash never forces you to sell at the bottom.

Delay Social Security if you can. Until age 70, each year past full retirement age adds about 8% to a benefit that doesn’t depend on the market, and that hedge is most valuable when valuations are high.

Keep some earned income in the first few years. Every dollar earned is a dollar you don’t withdraw during the window when withdrawals do the most damage.

The one thing that does not help is waiting a year with the same plan. If the market keeps rising, the extra year makes you feel safer while nudging the odds the other way.

Final Thoughts

A strong stock market can make retirement feel closer than ever. But before you turn in your notice, make sure your plan can withstand more than another year of gains.

Stress-test your retirement budget against a market downturn, lower investment returns and higher-than-expected expenses. Consider how much you can adjust your spending, when to claim Social Security and whether working a little longer would materially improve your outlook.

You can’t control what the market does next. You can control whether your retirement plan depends on it continuing to do what it has done recently.
The post Why Many People Retire at the Worst Time appeared first on Clark Howard.

DraftKings CEO has a gambling addiction warning about kids

Filed Under: SUCCESS, The Street

Jason Robins went on CNBC on Oct. 28 and told parents to sit down with their kids and educate them about gambling.

During the interview, the DraftKings (DKNG) CEO urged families to maintain open communication, comparing the discussion to how parents approach discussions of underage alcohol consumption.

Even though Robins runs America’s second-largest sportsbook, and his company’s stock is having a rough year, he still feels parents have a role to play in keeping their underage kids away from gambling platforms.

His warning coincides with a recent spike in gambling disorder diagnoses among young adults.

DraftKings’ Robins compares the “gambling talk” to the “wine talk” at home

Speaking on CNBC, Robins said his own kids already know what “point spreads” and “money lines” are because they grow up around the industry.

His point was that kids from non-betting households also hear similar things from ads or from other kids at school. So he feels even families with no link to betting should answer their kids’ questions honestly and remind them they cannot legally place a bet until age 21.

Also read: Sports betting reality bites for Gen Z, Millennials

“Every parent, even if you don’t have a business or don’t live in a world where the kids grow up around it, I think it’s something every parent should have conversations with their kids about,” Robins told CNBC. 

He compared the situation to when a child asks his parents about the wine on the table. Parents often take that opportunity to educate their kids about drinking.

Robins feels parents should address gambling the same way. “The important thing is just to have a transparent relationship with your kids, where they feel like they can ask you anything,” he said.

DraftKings CEO Jason Robins has urged parents to speak openly with their kids about gambling.SOPA Images / Getty Images

New study puts youth gambling warning in sharper focus

One of the reasons people are paying attention to Robins’ comment is that gambling addiction appears more prevalent in states that have legalized sports betting.

According to a study from Epic Research, the quarterly rate of diagnosed gambling disorders in those states increased by about 61% between the first quarter of 2018 and the first quarter of 2026.

Meanwhile, states that did not legalize sports betting saw their rates fall by about 29%. The study also noted that the disorder’s fastest-growing prevalence was among young adults aged 18 to 29. 

Treatment specialists have also noticed the increase in gambling addiction. “We’ve seen definitely an increase in related referrals and diagnoses,” Steven Heim, an outpatient supervisor at New Hope Integrated Behavioral Health Care in New Jersey, told NBC News. 

More Gambling Coverage:

Prediction markets like Kalshi are booming. 79% of users say they’ve lost money

Dave Ramsey names the two apps draining Gen Z savings

DraftKings gets upgrade as a feared threat becomes an edge

Apart from the study results, DraftKings faces legal pressure from users. A federal lawsuit cited by Daily Citizen was filed in June, accusing the company of using customer data to spot heavy losers and offer them VIP perks.

Then a ProPublica reporter tested the app’s responsible gaming features in early October and found faster deposit options that pushed people to continue playing, despite warnings.

The warning works as a quiet shield for DraftKings shareholders

Robins’ message to parents gives DraftKings a clear answer for lawmakers when they ask what the company is doing about rising addiction rates.

If state officials see the company’s responsible-gambling tools, combined with open family talks, as a solid safety net, they may hold off on tougher ad rules or limits on prop bets.

Related: Dave Ramsey warns Americans on 401(k)s, Roth 401(k)s

DraftKings needs that shield right now, since the stock is already under pressure. DKNG is down about 42% this year, mostly because the company is putting money into prediction markets to keep up with players like Kalshi and Polymarket.

The spending’s effects showed up clearly in DraftKings’ second-quarter report, where adjusted EBITDA dropped about 62% to $114.6 million due to heavy promotions and prediction infrastructure costs, according to an SEC filing.

Steps parents and DKNG shareholders can take now

Parents don’t have to wait on Washington to act on Robins’ advice. Most states offer self-exclusion lists through their gaming portals, and it usually only takes a few minutes to set up the protection your kids need.

If you hear your teen or their friends discussing terms such as “money line,” it could be an early signal that you should start educating them about gambling.

DKNG shareholders should wait for the company to report its third-quarter results on Nov. 5. The report should show whether its growth can keep pace with its spending on the prediction market. 

More Stocks NewsADT agrees to $7.6 billion buyout; more offers possibleCathie Wood buys $9.1 million of tumbling tech stockUnitedHealth is bouncing back, but a major risk remainsBoeing’s comeback hits another frustrating roadblock

Google’s AI chips could change what ChatGPT costs you

Filed Under: SUCCESS, The Street

Every question someone asks ChatGPT has a cost.

To produce responses, pictures, and code, OpenAI requires massive amounts of processing power, and a large portion of that infrastructure has traditionally relied on pricey processors such as Nvidia’s (NVDA).

According to reports, OpenAI is now getting ready to purchase AI processors from Alphabet’s (GOOGL) Google, one of Nvidia’s main up-and-coming competitors.

Because Google’s Tensor Processing Units, or TPUs, are increasingly being promoted as a more affordable solution to run AI workloads, the possible discount is significant to customers.

A $20 ChatGPT Plus membership might not be cheaper, even with lower infrastructure expenses. Still, OpenAI may have greater leeway to maintain lower costs, raise use limits, or offer more powerful models without charging clients more.

OpenAI plans to purchase Google’s AI chips after already beginning to rent TPUs in 2025, Reuters, citing The Information, reported.

This case makes a dispute among some of the world’s largest IT firms seem much more commonplace: How much will it cost you to employ AI?

OpenAI is hunting for cheaper ways to run ChatGPT

The focus is mostly on training a frontier AI model, which requires massive processor clusters. However, training takes place on a regular basis.

Every time a user requests a task from the model, inference, which is the computation process that transforms a user’s request into an AI answer, takes place.

Billions of such interactions may make even small variations in computation cost crucial for a service like ChatGPT. This helps explain OpenAI’s hardware diversification.

Although it is still a major Nvidia client, it has also collaborated with Broadcom to create its own AI processor (AVGO).

By the end of 2026, the Jalapeño chip, specifically designed for inference, should be in use. Reuters reported in June that OpenAI designed the chip partly to improve the economics and availability of the infrastructure behind its AI products.

Google offers OpenAI an additional choice. Its latest TPU 8i is designed specifically for inference and delivers up to 80% better performance per dollar than the previous Ironwood generation, according to Google Cloud.

This does not imply that Google’s processor is 80% less expensive than Nvidia’s. The model, workload, software, contract, and infrastructure around the chip all affect the cost of AI technology.

However, since each new user increases the need for processing power, an AI business seeks to enhance performance per dollar.

Google turned cost control into a potential business

There’s more to the agreement.

Because it didn’t want to completely depend on outside chip providers for its massive processing demands, Google first developed TPUs.

Google may now market its internal cost-control effort to other AI companies.

I recently wrote for TheStreet that Evercore ISI believes Google’s external TPU business could generate $75 billion in 2027 and $113 billion in 2028.

Due to its direct competition with Google’s Gemini products, OpenAI would be a very significant client.

When a competitor leverages processing capacity to service its AI clients, Google would essentially be profiting.

That’s already taking place elsewhere. Oracle is preparing to provide Google TPUs via its own cloud infrastructure, and Anthropic has committed to use a significant portion of Google’s TPU capacity.

Google’s attempt to make bespoke silicon a company outside of its own ecosystem would be further validated if OpenAI were to purchase the chips directly.

The timing is noteworthy. Alphabet CEO Sundar Pichai said on the company’s Oct. 28 earnings call that Google Cloud revenue increased 103% from a year earlier and that the company is seeing strong demand for TPU systems across a broad range of customers.

This implies that Google might make more money regardless of the AI helper a customer selects, which is positive news for Alphabet investors.

ChatGPT may be used in place of Gemini, but the infrastructure supporting it may still generate revenue for Google.

OpenAI may have found a cheaper way to run ChatGPT.Heather Diehl / Getty Images

AI prices have already been moving lower

There is evidence that consumers may benefit from declining computer costs, but not always via more affordable monthly subscriptions.

Currently, ChatGPT Plus costs $20 a month. Additionally, OpenAI charges $8 per month for ChatGPT Go in the United States.

Through its application programming interface, OpenAI has consistently reduced the cost for developers to use some of its models. CEO Sam Altman said during the firm’s September developer conference that the business aimed to continue enhancing the quantity of intelligence clients receive at every pricing tier.

TheStreet’s Mwangi Enos recently examined how dramatically OpenAI’s model prices have fallen, including large reductions in the cost of its newest models compared with previous generations.

This change is significant because OpenAI may pass on reduced infrastructure costs to clients in a number of ways.

It could reduce prices. It could keep monthly prices unchanged while increasing message limits. It could move more capable models into cheaper subscription tiers. Or it could simply protect margins while spending more on new products.

Customers shouldn’t believe that Google’s chips would always result in a less expensive ChatGPT subscription.

However, OpenAI has greater negotiating leverage because of competition among chip providers. And having multiple hardware alternatives lessens its reliance on any one provider.

Cheaper chips may matter more as AI use explodes

The rapid expansion of AI use is driving an increasing demand to reduce computer costs.

Google said its first-party AI application programming interfaces are now processing nearly 32 billion tokens per minute, more than four times the volume from a year ago.

OpenAI has the same fundamental issue. As more individuals use AI, they require more infrastructure to meet their needs.

This produces a unique dynamic.

A profitable software business often gains from the low cost of acquiring new clients. But every time a consumer uses an AI company’s product, the company still incurs significant computational costs.

Chip efficiency is clearly a factor in consumer price. Thus, the rumored Google acquisition of OpenAI is significant to investors outside of Alphabet, Nvidia, and Broadcom.

Consumers ultimately pay for the massive data centers, processors, and energy that power the AI products they use. So businesses that can lower such expenses have greater control over what clients are willing to spend.

Google is attempting to join that group. In addition, the most significant outcome for ChatGPT customers may not be the logo on the processor if OpenAI really begins purchasing its competitors’ chips.

This may happen if increased competition lowers the cost of producing each AI response.

Related: Google gives Fitbit a major health upgrade with one catch