6 ms·

How much Anthropic and Cursor spend on Amazon Web Services

164 points by isoprophlex 1y ago

isoprophlex 1y ago
Ed Zitron's style isn't for everybody, I understand that. But if these numbers, and the direction they're going in, are correct... to me this points to a significant AI bubble deflation coming soon. It just isn't sustainable, it seems.
- swyx 1y ago
  if you are worried about AWS spend, i have news for you about non AWS spend. "coming soon" is also really over simplistic. you would have missed some of the greatest tech companies in the past 20 years if you evaluated startups based on their early-year revenue vs infra spend like sure i have a dog in this fight but i actually want the criticism to sharpen my thinking, unfortunately yours does not meet that bar.
  - isoprophlex 1y ago
    are you glossing over the whole "aws bill isnt structural infra spend" thing?! they spend 104% of revenue on ONE cloud provider and costs scale linearly with revenue growth. assume zitron didn't pull these numbers out of his ass. educate me how this isnt selling $20 bills for $5. you're a smart dude; i myself aint seeing the "sustainable business practices" here
    - swyx 1y ago
      the entire point is that stressing sustainable business practices here at this point in a startup's life is extremely short sighted and is the kind of shitty analysis that gives HN a bad rep. pull up Uber's financials leading up to IPO. unsustainable and everyone knew it. they work it out after because they burned money and eventually achieved a sustainable moat. this is why venture exists. HN doesnt like venture which is, well, ironic given the domain we're on. a better negative argument i'd rather see looks like this - "ive run these aws numbers against the typical spend path of pre IPO startups who then later improved their cost baseline and margin profile and even after accounting for all that, Anthropic ngmi". thats the kind of minimum sophistication you need here to play armchair financial analyst. ed zitron, and everyone involved in this entire thread, incl myself, have not done that because we are lazy and ignorant and dont actually care enough about seeking the truth here. we are as unprepared to analyze this AWS spend as we are to understand their 1b -> 10b revenue ramp in 2025. you havent done the work and yet you sit here and judge it unsustainable based off some shitty "leaks". dont pretend that ed's analysis is at all meaningful particularly because he conveniently stops where it supports his known negative bias.
      - watwut 1y ago
        Afaik Uber numbers were significantly smaller.
- jsnell 1y ago
  There is nothing particularly concerning about the raw numbers, and I'd assume they are correct. (And they are also interesting, since we rarely get data at this granularity. Thanks to Zitron for publishing the leak with such completeness, despite the personal risk to his source.) But Zitron's analysis is as incorrect or irrelevant as ever. The problem is just that as usual there is so much tripe that it's impossible to rebut it all. The way I'd think about this leaked data is that it's giving us a reasonable upper bound on the fully loaded R&D compute cost for Claude Sonnet 4 - a product that will be making $7 billion in revenue with very good unit economics. Other than that, this just tells us that Anthropic, just like the other frontier AI lab, will be spending as much on training as they can.
daft_pink 1y ago
I think this is a minor speed bump and VC’s believe that cost of inference will decrease over time and this is a gold rush to grab market share while cost of inference declines. I don’t think they got it right and the market share and usage grew faster than inference dropped, but inference costs will clearly drop and these companies will eventually be very profitable. Reality is that startups like this assume moore’s law will drop the cost over time and arrange their business around where they expect costs to be and not where costs currently are.
- Frieren 1y ago
  > I think this is a minor speed bump and VC’s believe that cost of inference will decrease over time and this is a gold rush to grab market share while cost of inference declines. It could also be that you give too much credit to the market. People follow trends because in most cases that makes money. There is no other deeper though involved. Look at the financial crisis, totally irrational.
  - rglover 1y ago
    This. Post-crypto, AI was the obvious next gambit for VC. Their money flows to hype, not product. The second that hype starts to fade and the money dries up, VCs will be running with their Harold Hill trunk full of cash toward the border. Just from the content they publish alone you can tell they're channeling their inner Barnum & Bailey in between Ayahuasca seizures.
- xnx 1y ago
  > inference costs will clearly drop and these companies will eventually be very profitable. Inference costs for old models will drop, but inference costs may stay the same if models continue to improve. No guarantee that any wrapper for inference will be able to hold on to customers when they stop selling $1.00 for $0.50.
  - deleted 1y ago
    [deleted]
- 1y ago
floatrock 1y ago
The buried lede: Anthropic: "$2.66 billion on compute on an estimated $2.55 billion in revenue" Cursor: "bills more than doubled from $6.2 million in May 2025 to $12.6 million in June 2025" Clickthrough if you want the analysis and caveats
- neuronexmachina 1y ago
  For context, AWS's total revenue for 2024 was $107.6B: https://ir.aboutamazon.com/news-release/news-release-details/2025/Amazon-com-Announces-Fourth-Quarter-Results/default.aspx https://ir.aboutamazon.com/news-release/news-release-details...
- Kuinox 1y ago
  I could find an ARR for Cursor of $500M. Why do they they in this article that Cursor is loosing with this spending number ?
  - LetsGetTechnicl 1y ago
    Ed's mentioned ARR in previous articles and it's not a "generally accepted accounting principle". They cherry pick the highest monthly revenue number and multiply that by 12, but that's not their actual annual revenue.
    - dcre 1y ago
      "Cherry pick the highest" is misleading. If your revenue is growing 10% a month for a year straight and is not seasonal, picking any other than the most recent month to annualize would make no sense.
      - mossTechnician 1y ago
        If a company's revenue in January is $100 and it grows by 10% every month, the December revenue is $285. The year's revenue would be about $2,138, but ARR in December would be $3,423. That's 1.6x the actual revenue. ARR could be a useful tool to help predict future revenue, but why not simply report on actual revenue and suggest it might increase in the next year? I have found the most articles to be unclear to the reader about what ARR actually represents.
swyx 1y ago
> Based on discussions with sources with direct knowledge of their AWS billing, I am able to disclose the amounts that AI firms are spending, specifically Anthropic and AI coding company Cursor, its largest customer. so he got a leaked copy of their AWS bills?
- joshribakoff 1y ago
  Usually, the reporter inspects the document but does not get to take a copy
rdtsc 1y ago
> through September, Anthropic has spent more than 100% of its estimated revenue (based on reporting in the last year) on Amazon Web Services, spending $2.66 billion on compute on an estimated $2.55 billion in revenue. Well I don't have to scratch my head any longer and wonder why Amazon hasn't jumped on the AI bandwagon with their own Gemini or whatever. They are sitting pretty and selling shovels and pickaxes to the AI fools. Not a bad strategy for them...
- haberdasher 1y ago
  Amazon owns 15-19% of Anthropic. So yes and no.
  - candiddevmike 1y ago
    GenAI financing is a flat circle. The bubble bursting is going to have a huge blast radius.
    - lesuorac 1y ago
      They survived the dot-com bubble, I don't see the AI bubble taking out Amazon. It might take out your 401k for a decade.
      - noir_lord 1y ago
        I'm on like my fifth once in a generation financial crisis. At a certain point you just expect it.
        gruez 1y ago
        How are you getting 5? In recent memory, there's only 3: dotcom bubble (2000), GFC (2008), covid (2020). You'd either have to go back in time even more (eg. savings and loan crisis in the 80s/90s), or include regional ones (eg. eurozone crisis) to hit 5.
dumbmrblah 1y ago
Is that just for inference or is that the cost of training the models as well?
- dcre 1y ago
  There is no breakdown. Assuming they're real, they're just spending numbers.
dzonga 1y ago
One day we will westerners will learn why the Chinese are releasing models that are optimized for cost of training n yet good enough to run locally or cheaply. when the music stops, suddenly a lot of people won't just sit on the ground but plunge into the depths of hell.
- infecto 1y ago
  I keep hearing this but I don’t know of many folks utilizing Chinese models, even those hosted in an agreeable territory.
  - ojosilva 1y ago
    Yeah, I'm one of them, using Qwen 3 coder on Cerebras as coding agent through CC. What I keep hearing is (very ballpark anecdata)... 50% of people into coding agents are quite concerned about that last mile in difference with frontier models that they "can't afford to lose" - my experience tells me otherwise, the difference is negligible once you have a good setup going and knows how to tune your model + agent. The other 50% don't give a damn, they just landed, or got locked, into some deal for a coding agent and are happy with what they got, so why change? These deals arrived from the big model providers and resellers first, so Chinese arrived late and with too little to the party. Running Chinese models (for coding) requires many things that you need to figure-out yourself. Are you running the model on your hw or through a provider? Are you paying by token or on a plan? Does the model pair well with you agent CLI/IDE of choice? (Zed, Cline, Opencode, etc) Does it even work with your favorite tool? (tool calling is very wobbly) Is it fast (tps)? Is it reliable? How do you do "ultrathink" with a secondary model? How do you do "large context"? Does it include a cache or are you going to eat through the plan in 1hr/day? What context size are you getting? Does it include vision and web search or do you have to get another provider/mcp for that? And, yeah, is it in a territory where you can send your client's code to? A lot to grok. Cerebras Coder Max is really cool if you want to hack your way through this, but they couldn't care less about your experience: no cache, no tool endpoint fine-tuning, no plans or roadmap on updating models, on increasing context windows, adding vision, or anything really. They just deleted some of the tools they were recommending out of the website (ie Cursor) as they got reports of things that stopped working.
JCM9 1y ago
“Spend” requires a grain of salt here. AWS “invests” in Anthropic and then Anthropic buys AWS. If you follow the money with marked bills, AWS is buying this compute from itself and then claiming revenue. There’s a lot of that sort of thing going on at the moment in the AI bubble.
ai-x 1y ago
Just a reminder, Ed Zitron is neither an AI researcher, nor an Engineer, nor a Financial Analyst, nor an Economist nor an Insider and has ZERO clue in multiple dimensions (technology, investing, unit economics, growth, TAM) to analyze any of this
- disgruntledphd2 1y ago
  Correct. And yet, he's provided some of the most level headed takes on the current LLM boom, to the point where FT Alphaville link to his analysis of the economics.
  - ai-x 1y ago
    The jury is still out there if his analysis are level-headed or not. He says things that *some* people want to hear, but that's not level-headed E.g What is the unit cost of serving a Token? It is the cost of electricity + amortized cost of GPU (GPUs would have been Capex, but because of their fast depreciation rate, you can claim they should be Opex). Given this cost structure, every SOTA labs (Google, Anthropic and OpenAI) are profitable and actually have high-margins 50-60%. With this margin and growth, the frontier labs can be profitable anytime they want to. But they are sacrificing profitability for growth (as they should be) Where is Ed's analysis about this? Either he is disingenuous or clueless. Remember people who voluntarily subscribe to Ed, are coming from wanting to hear what they believe. If he is level-headed, show me an Ed article that is positive about AI
    - tecleandor 1y ago
      > If he is level-headed, show me an Ed article that is positive about AI Why should those two things go together?
      - ai-x 1y ago
        If 1 Billion people voluntarily use a product and many claim to be productive, there must be something good about the product right? But I guess Ed Zitron has found his audience
spyckie2 1y ago
Ai can both be a bubble and also the greatest economic value add of this generation at the same time. It doesn’t have to be either or. All bubbles (dot com, housing, tech, crypto, etc) have a lot of losers and a few big winners. That is less a reflection on the market of the bubble and more a reflection of the number, skill and risk taking of the prospectors.
dcre 1y ago
Numbers are always interesting, assuming they're real, but I just want to comment on the Cursor thing: Zitron has been insisting for 6 months that Anthropic screwed Cursor somehow by raising prices on them but the claim has always been gibberish. It's not that it's false, it's that it's impossible to figure out what Zitron claims happened. He cannot describe (here or in https://www.wheresyoured.at/anthropic-and-openai-have-begun-the-subprime-ai-crisis/ https://www.wheresyoured.at/anthropic-and-openai-have-begun-...) what the bad change actually was. We know everyone moved to more usage-oriented pricing earlier this year. He cannot explain why this was a price increase for Cursor. He is unable to draw a distinction between a price increase for end users (it's not even clear that it was a price increase for the average end user) and a price increase for Cursor.
- literatepeople 1y ago
  Ed has constantly done this, and it's a shame because it has taken the air out of the room for real AI criticism. Most of Ed's criticism comes from a place of giving a narrative to people who are wishing for a magic bullet that makes ChatGPT vanish tomorrow rather than actually pressuring companies about the harms this technology can cause. This in part is why his writing so often focuses on perceived financial issues (despite his lack of credentials in financial journalism) rather than the social harms the technologies cause today (slop, delusions, manipulated truth).
  - watwut 1y ago
    Zitron is too much of a small player to "suck the air off other criticism of ai". Claiming that a single journalist blog has power to stop others from criticiaing ai for different reasons ia kind of absurd.
    - Jordan-117 1y ago
      I definitely seen him cited as an authority by AI critics far more than anyone else. The bending truth to tell them what they want to hear (and the gratuitous swearing) really helps.
    - 1y ago
bgwalter 1y ago
It would be hilarious if all this was a devilish scheme to burn the excess money that was printed during COVID. Unfortunately, what is more likely is another bailout if the bubble bursts.
VirusNewbie 1y ago
I have sat with these numbers for a great deal of time, and I can’t find any evidence that Anthropic has any path to profitability outside of aggressively increasing the prices on their customers to the point that its services will become untenable for consumers and enterprise customers alike. This is where he misunderstands. Enterprise companies will absolutely pay 10x the cost for Claude. Meta and Apple are two large customers, you think they won't pay $500 a month per employee? $1000 a month per employee? Neither of those are outrageous to imagine if it increases productivity 10%.
- scottyah 1y ago
  Also spend will drop dramatically if the models level out a bit more. The training is what's compute heavy, and if you aren't having to retrain every month, but able to use things like Skills to stay competitive your costs will drop a lot. I suppose that's the pessimistic-on-AI side. On the other hand, once you create God little things like money are meaningless.
- ludicity 1y ago
  I'm much more skeptical about this for two major reasons. Firstly, a huge amount of labour that can be accelerated by LLMs fall into the "bullshit jobs" category, where you can make someone faster at writing emails but the emails themselves don't really contribute much value. The majority of LLM use I see falls into this category. Many people can speed up parts of their job, but you can add as much efficiency as you want without actually impacting the bottom line -- and for various reasons that are not tractable right now, including with LLMs, businesses aren't able to get themselves to remove these roles. Secondly, the median company is incapable of doing the things that aren't driven entirely by hype or political promises made by executives. We still exist in the universe where they prefer to have all their staff attrition out due to not getting raises, then end up paying the same amount for a bunch of folks that have no knowledge of the business when they inevitably have to replace their best talent. With all that said, I'm sure a few savvier places would happily drop $1000 month per head if the value is there, but I really think in the average case that this would be more about marketing than any logic. People still buy Informatica in 2025 for much more money than they spend on LLMs.
mannyv 1y ago
Given how hard it is to understand AWS billing, especially if you have custom pricing, I doubt his numbers are anywhere near correct. That said, I hope they're using their prime Visa card so they can get some cash back on that spend.
fred_is_fred 1y ago
I've been unable to find it but early in the railroad boom did rail companies undercharge for freight in order to build demand and interest? Given that they were also given land in exchange fro building, it would have been in their interests to do so. They could also amortize rail costs over a long time as rails are useful for longer than GPUs - but I am also curious if there was an unsustainably low entry price for railroads like Ed is implying for AI tools.
mdavid626 1y ago
Premium newsletter? Sigh, I’m getting old…
- AstroBen 1y ago
  Would you rather ads obnoxiously plastered all over, and sponsors strategically woven into the content? ..oh and this article is free
kamranjon 1y ago
Does it seem strange that this has 121 comments within 4 hours and somehow is ranked 131st on HN? I would think this would be front page with those type of numbers.
- steveklabnik 1y ago
  Any time # of comments > # of upvotes, HN immediately downranks it quite a bit. This is called the "flamewar filter," and it's intended to cool off heated discussions.

164 points by isoprophlex 1y ago

Ed Zitron's style isn't for everybody, I understand that. But if these numbers, and the direction they're going in, are correct... to me this points to a significant AI bubble deflation coming soon. It just isn't sustainable, it seems.

swyx 1y ago
if you are worried about AWS spend, i have news for you about non AWS spend. "coming soon" is also really over simplistic. you would have missed some of the greatest tech companies in the past 20 years if you evaluated startups based on their early-year revenue vs infra spend like sure i have a dog in this fight but i actually want the criticism to sharpen my thinking, unfortunately yours does not meet that bar.
- isoprophlex 1y ago
  are you glossing over the whole "aws bill isnt structural infra spend" thing?! they spend 104% of revenue on ONE cloud provider and costs scale linearly with revenue growth. assume zitron didn't pull these numbers out of his ass. educate me how this isnt selling $20 bills for $5. you're a smart dude; i myself aint seeing the "sustainable business practices" here
  - swyx 1y ago
    the entire point is that stressing sustainable business practices here at this point in a startup's life is extremely short sighted and is the kind of shitty analysis that gives HN a bad rep. pull up Uber's financials leading up to IPO. unsustainable and everyone knew it. they work it out after because they burned money and eventually achieved a sustainable moat. this is why venture exists. HN doesnt like venture which is, well, ironic given the domain we're on. a better negative argument i'd rather see looks like this - "ive run these aws numbers against the typical spend path of pre IPO startups who then later improved their cost baseline and margin profile and even after accounting for all that, Anthropic ngmi". thats the kind of minimum sophistication you need here to play armchair financial analyst. ed zitron, and everyone involved in this entire thread, incl myself, have not done that because we are lazy and ignorant and dont actually care enough about seeking the truth here. we are as unprepared to analyze this AWS spend as we are to understand their 1b -> 10b revenue ramp in 2025. you havent done the work and yet you sit here and judge it unsustainable based off some shitty "leaks". dont pretend that ed's analysis is at all meaningful particularly because he conveniently stops where it supports his known negative bias.
    - watwut 1y ago
      Afaik Uber numbers were significantly smaller.
jsnell 1y ago
There is nothing particularly concerning about the raw numbers, and I'd assume they are correct. (And they are also interesting, since we rarely get data at this granularity. Thanks to Zitron for publishing the leak with such completeness, despite the personal risk to his source.) But Zitron's analysis is as incorrect or irrelevant as ever. The problem is just that as usual there is so much tripe that it's impossible to rebut it all. The way I'd think about this leaked data is that it's giving us a reasonable upper bound on the fully loaded R&D compute cost for Claude Sonnet 4 - a product that will be making $7 billion in revenue with very good unit economics. Other than that, this just tells us that Anthropic, just like the other frontier AI lab, will be spending as much on training as they can.

daft_pink 1y ago

I think this is a minor speed bump and VC’s believe that cost of inference will decrease over time and this is a gold rush to grab market share while cost of inference declines. I don’t think they got it right and the market share and usage grew faster than inference dropped, but inference costs will clearly drop and these companies will eventually be very profitable. Reality is that startups like this assume moore’s law will drop the cost over time and arrange their business around where they expect costs to be and not where costs currently are.

Frieren 1y ago
> I think this is a minor speed bump and VC’s believe that cost of inference will decrease over time and this is a gold rush to grab market share while cost of inference declines. It could also be that you give too much credit to the market. People follow trends because in most cases that makes money. There is no other deeper though involved. Look at the financial crisis, totally irrational.
- rglover 1y ago
  This. Post-crypto, AI was the obvious next gambit for VC. Their money flows to hype, not product. The second that hype starts to fade and the money dries up, VCs will be running with their Harold Hill trunk full of cash toward the border. Just from the content they publish alone you can tell they're channeling their inner Barnum & Bailey in between Ayahuasca seizures.
xnx 1y ago
> inference costs will clearly drop and these companies will eventually be very profitable. Inference costs for old models will drop, but inference costs may stay the same if models continue to improve. No guarantee that any wrapper for inference will be able to hold on to customers when they stop selling $1.00 for $0.50.
- deleted 1y ago
  [deleted]
1y ago

floatrock 1y ago

The buried lede: Anthropic: "$2.66 billion on compute on an estimated $2.55 billion in revenue" Cursor: "bills more than doubled from $6.2 million in May 2025 to $12.6 million in June 2025" Clickthrough if you want the analysis and caveats

neuronexmachina 1y ago
For context, AWS's total revenue for 2024 was $107.6B: https://ir.aboutamazon.com/news-release/news-release-details/2025/Amazon-com-Announces-Fourth-Quarter-Results/default.aspx https://ir.aboutamazon.com/news-release/news-release-details...
Kuinox 1y ago
I could find an ARR for Cursor of $500M. Why do they they in this article that Cursor is loosing with this spending number ?
- LetsGetTechnicl 1y ago
  Ed's mentioned ARR in previous articles and it's not a "generally accepted accounting principle". They cherry pick the highest monthly revenue number and multiply that by 12, but that's not their actual annual revenue.
  - dcre 1y ago
    "Cherry pick the highest" is misleading. If your revenue is growing 10% a month for a year straight and is not seasonal, picking any other than the most recent month to annualize would make no sense.
    - mossTechnician 1y ago
      If a company's revenue in January is $100 and it grows by 10% every month, the December revenue is $285. The year's revenue would be about $2,138, but ARR in December would be $3,423. That's 1.6x the actual revenue. ARR could be a useful tool to help predict future revenue, but why not simply report on actual revenue and suggest it might increase in the next year? I have found the most articles to be unclear to the reader about what ARR actually represents.

swyx 1y ago

> Based on discussions with sources with direct knowledge of their AWS billing, I am able to disclose the amounts that AI firms are spending, specifically Anthropic and AI coding company Cursor, its largest customer. so he got a leaked copy of their AWS bills?

joshribakoff 1y ago
Usually, the reporter inspects the document but does not get to take a copy

rdtsc 1y ago

> through September, Anthropic has spent more than 100% of its estimated revenue (based on reporting in the last year) on Amazon Web Services, spending $2.66 billion on compute on an estimated $2.55 billion in revenue. Well I don't have to scratch my head any longer and wonder why Amazon hasn't jumped on the AI bandwagon with their own Gemini or whatever. They are sitting pretty and selling shovels and pickaxes to the AI fools. Not a bad strategy for them...

haberdasher 1y ago
Amazon owns 15-19% of Anthropic. So yes and no.
- candiddevmike 1y ago
  GenAI financing is a flat circle. The bubble bursting is going to have a huge blast radius.
  - lesuorac 1y ago
    They survived the dot-com bubble, I don't see the AI bubble taking out Amazon. It might take out your 401k for a decade.
    - noir_lord 1y ago
      I'm on like my fifth once in a generation financial crisis. At a certain point you just expect it.
      - gruez 1y ago
        How are you getting 5? In recent memory, there's only 3: dotcom bubble (2000), GFC (2008), covid (2020). You'd either have to go back in time even more (eg. savings and loan crisis in the 80s/90s), or include regional ones (eg. eurozone crisis) to hit 5.

dumbmrblah 1y ago

Is that just for inference or is that the cost of training the models as well?

dcre 1y ago
There is no breakdown. Assuming they're real, they're just spending numbers.

dzonga 1y ago

One day we will westerners will learn why the Chinese are releasing models that are optimized for cost of training n yet good enough to run locally or cheaply. when the music stops, suddenly a lot of people won't just sit on the ground but plunge into the depths of hell.

infecto 1y ago
I keep hearing this but I don’t know of many folks utilizing Chinese models, even those hosted in an agreeable territory.
- ojosilva 1y ago
  Yeah, I'm one of them, using Qwen 3 coder on Cerebras as coding agent through CC. What I keep hearing is (very ballpark anecdata)... 50% of people into coding agents are quite concerned about that last mile in difference with frontier models that they "can't afford to lose" - my experience tells me otherwise, the difference is negligible once you have a good setup going and knows how to tune your model + agent. The other 50% don't give a damn, they just landed, or got locked, into some deal for a coding agent and are happy with what they got, so why change? These deals arrived from the big model providers and resellers first, so Chinese arrived late and with too little to the party. Running Chinese models (for coding) requires many things that you need to figure-out yourself. Are you running the model on your hw or through a provider? Are you paying by token or on a plan? Does the model pair well with you agent CLI/IDE of choice? (Zed, Cline, Opencode, etc) Does it even work with your favorite tool? (tool calling is very wobbly) Is it fast (tps)? Is it reliable? How do you do "ultrathink" with a secondary model? How do you do "large context"? Does it include a cache or are you going to eat through the plan in 1hr/day? What context size are you getting? Does it include vision and web search or do you have to get another provider/mcp for that? And, yeah, is it in a territory where you can send your client's code to? A lot to grok. Cerebras Coder Max is really cool if you want to hack your way through this, but they couldn't care less about your experience: no cache, no tool endpoint fine-tuning, no plans or roadmap on updating models, on increasing context windows, adding vision, or anything really. They just deleted some of the tools they were recommending out of the website (ie Cursor) as they got reports of things that stopped working.

JCM9 1y ago

“Spend” requires a grain of salt here. AWS “invests” in Anthropic and then Anthropic buys AWS. If you follow the money with marked bills, AWS is buying this compute from itself and then claiming revenue. There’s a lot of that sort of thing going on at the moment in the AI bubble.

ai-x 1y ago

Just a reminder, Ed Zitron is neither an AI researcher, nor an Engineer, nor a Financial Analyst, nor an Economist nor an Insider and has ZERO clue in multiple dimensions (technology, investing, unit economics, growth, TAM) to analyze any of this

disgruntledphd2 1y ago
Correct. And yet, he's provided some of the most level headed takes on the current LLM boom, to the point where FT Alphaville link to his analysis of the economics.
- ai-x 1y ago
  The jury is still out there if his analysis are level-headed or not. He says things that *some* people want to hear, but that's not level-headed E.g What is the unit cost of serving a Token? It is the cost of electricity + amortized cost of GPU (GPUs would have been Capex, but because of their fast depreciation rate, you can claim they should be Opex). Given this cost structure, every SOTA labs (Google, Anthropic and OpenAI) are profitable and actually have high-margins 50-60%. With this margin and growth, the frontier labs can be profitable anytime they want to. But they are sacrificing profitability for growth (as they should be) Where is Ed's analysis about this? Either he is disingenuous or clueless. Remember people who voluntarily subscribe to Ed, are coming from wanting to hear what they believe. If he is level-headed, show me an Ed article that is positive about AI
  - tecleandor 1y ago
    > If he is level-headed, show me an Ed article that is positive about AI Why should those two things go together?
    - ai-x 1y ago
      If 1 Billion people voluntarily use a product and many claim to be productive, there must be something good about the product right? But I guess Ed Zitron has found his audience

spyckie2 1y ago

Ai can both be a bubble and also the greatest economic value add of this generation at the same time. It doesn’t have to be either or. All bubbles (dot com, housing, tech, crypto, etc) have a lot of losers and a few big winners. That is less a reflection on the market of the bubble and more a reflection of the number, skill and risk taking of the prospectors.

dcre 1y ago

Numbers are always interesting, assuming they're real, but I just want to comment on the Cursor thing: Zitron has been insisting for 6 months that Anthropic screwed Cursor somehow by raising prices on them but the claim has always been gibberish. It's not that it's false, it's that it's impossible to figure out what Zitron claims happened. He cannot describe (here or in https://www.wheresyoured.at/anthropic-and-openai-have-begun-the-subprime-ai-crisis/ https://www.wheresyoured.at/anthropic-and-openai-have-begun-...) what the bad change actually was. We know everyone moved to more usage-oriented pricing earlier this year. He cannot explain why this was a price increase for Cursor. He is unable to draw a distinction between a price increase for end users (it's not even clear that it was a price increase for the average end user) and a price increase for Cursor.

literatepeople 1y ago
Ed has constantly done this, and it's a shame because it has taken the air out of the room for real AI criticism. Most of Ed's criticism comes from a place of giving a narrative to people who are wishing for a magic bullet that makes ChatGPT vanish tomorrow rather than actually pressuring companies about the harms this technology can cause. This in part is why his writing so often focuses on perceived financial issues (despite his lack of credentials in financial journalism) rather than the social harms the technologies cause today (slop, delusions, manipulated truth).
- watwut 1y ago
  Zitron is too much of a small player to "suck the air off other criticism of ai". Claiming that a single journalist blog has power to stop others from criticiaing ai for different reasons ia kind of absurd.
  - Jordan-117 1y ago
    I definitely seen him cited as an authority by AI critics far more than anyone else. The bending truth to tell them what they want to hear (and the gratuitous swearing) really helps.
  - 1y ago

bgwalter 1y ago

It would be hilarious if all this was a devilish scheme to burn the excess money that was printed during COVID. Unfortunately, what is more likely is another bailout if the bubble bursts.

VirusNewbie 1y ago

I have sat with these numbers for a great deal of time, and I can’t find any evidence that Anthropic has any path to profitability outside of aggressively increasing the prices on their customers to the point that its services will become untenable for consumers and enterprise customers alike. This is where he misunderstands. Enterprise companies will absolutely pay 10x the cost for Claude. Meta and Apple are two large customers, you think they won't pay $500 a month per employee? $1000 a month per employee? Neither of those are outrageous to imagine if it increases productivity 10%.

scottyah 1y ago
Also spend will drop dramatically if the models level out a bit more. The training is what's compute heavy, and if you aren't having to retrain every month, but able to use things like Skills to stay competitive your costs will drop a lot. I suppose that's the pessimistic-on-AI side. On the other hand, once you create God little things like money are meaningless.
ludicity 1y ago
I'm much more skeptical about this for two major reasons. Firstly, a huge amount of labour that can be accelerated by LLMs fall into the "bullshit jobs" category, where you can make someone faster at writing emails but the emails themselves don't really contribute much value. The majority of LLM use I see falls into this category. Many people can speed up parts of their job, but you can add as much efficiency as you want without actually impacting the bottom line -- and for various reasons that are not tractable right now, including with LLMs, businesses aren't able to get themselves to remove these roles. Secondly, the median company is incapable of doing the things that aren't driven entirely by hype or political promises made by executives. We still exist in the universe where they prefer to have all their staff attrition out due to not getting raises, then end up paying the same amount for a bunch of folks that have no knowledge of the business when they inevitably have to replace their best talent. With all that said, I'm sure a few savvier places would happily drop $1000 month per head if the value is there, but I really think in the average case that this would be more about marketing than any logic. People still buy Informatica in 2025 for much more money than they spend on LLMs.

mannyv 1y ago

Given how hard it is to understand AWS billing, especially if you have custom pricing, I doubt his numbers are anywhere near correct. That said, I hope they're using their prime Visa card so they can get some cash back on that spend.

fred_is_fred 1y ago

I've been unable to find it but early in the railroad boom did rail companies undercharge for freight in order to build demand and interest? Given that they were also given land in exchange fro building, it would have been in their interests to do so. They could also amortize rail costs over a long time as rails are useful for longer than GPUs - but I am also curious if there was an unsustainably low entry price for railroads like Ed is implying for AI tools.

mdavid626 1y ago

Premium newsletter? Sigh, I’m getting old…

AstroBen 1y ago
Would you rather ads obnoxiously plastered all over, and sponsors strategically woven into the content? ..oh and this article is free

kamranjon 1y ago

Does it seem strange that this has 121 comments within 4 hours and somehow is ranked 131st on HN? I would think this would be front page with those type of numbers.

steveklabnik 1y ago
Any time # of comments > # of upvotes, HN immediately downranks it quite a bit. This is called the "flamewar filter," and it's intended to cool off heated discussions.