4 ms·

And that is revenue only. In the past 15 or so years most US companies (and especially startups) always talk about revenue only. Wheras only profit should matte

by troupo 7mo ago

And that is revenue only. In the past 15 or so years most US companies (and especially startups) always talk about revenue only. Wheras only profit should matter. E.g. what good is 20 billion per year when "OpenAI is targeting roughly $600 billion in total compute spending through 2030". That is $150 billion per year?

merlindru 7mo ago
why should only profits matter? if i had a killer product today that i just need to sell tomorrow, wouldn't you still invest today knowing i'll probably only start to make money tomorrow (or perhaps next week)? the expectation is that they'll eventually make money. they can't raise forever. only startups are not profitable for a few years. but most companies that have existed for a long while have been profitable and since they're expected to make a LOT of money, everyone wants a piece of that future pie, pushing up the valuation and amount raised to admittedly somewhat delusional levels like here
- Barrin92 7mo ago
  not if your product is selling two dollars for one dollar and as soon as you'll start to charge more I'll switch to one of your twenty competitors profit isn't a function of having a killer product, it's a function of having no competition
  - ds2df 7mo ago
    no competition is a bit extreme. Limited competition yes due to competitive advantages.
  - aurareturn 7mo ago
    And why do you think twenty competitors can stay competitive for years to come? Industries always consolidate and winners emerge. SOTA LLMs look like a natural monopoly or duopoly to me because the cost to train the next model keeps going up such that it won't make sense for 20 competitors to compete at the very high end. TSMC is a perfect example of this. Fab costs double every 4 years (Rock’s Law). It's almost impossible to compete against TSMC because no one has the customer base to generate enough revenue to build the next generation of fabs - except those who are propped up by governments such as Intel and Rapidus. Samsung is basically the SK government. I don’t see how companies can catch OpenAI or Anthropic without the strong revenue growth.
    - outside1234 7mo ago
      Google has completely caught OpenAI. Anthropic has a better coding model, but I'm sure Google is working on that too.
      - baq 7mo ago
        > Anthropic has a better coding model I’ll be polite and call this statement ‘a very debatable’ one.
    - Barrin92 7mo ago
      >Industries always consolidate and winners emerge. no, most industries just sell boring generic products, a few industries favor monopolists. Semiconductors are one of them but LLMs are also as far removed from that business as is physically possible. TSMC makes the most complicated machines humans have ever built, a LLM requires a few dozen nerds, a power plant, a few thousand lines of python and chips. That's why if you're Elon Musk you could buy all of the above and train yourself an LLM in a month. LLMs are comically simple pieces of software, they're just big. But anyone with a billion dollars can have one, they're all going to be commoditized and free in due time, like search. Copying a lithography machine is difficult, copying software is easy. that's why Google burrowed itself into email, and browsers, and your phone's OS. Problem for openai is they don't have any of that, there's already half a dozen companies that, for 99% of people, do what they do.
    - komali2 7mo ago
      The barrier to replicating TSMC isn't just cost, it's supply chain, geopolitics, and talent. Only one company on Earth can make the UV lithography machines TSMC buys for their highest end fabs, and they're not selling to anyone else. The PRC tried to brute force this supply chain backed by the full might of the Party's blank check, all red tape cut, literally the best possible duplication scenario, and they failed.
      - purpleidea 7mo ago
        The PRC didn't fail, they haven't finished succeeding yet.
  - susupro1 7mo ago
    [dead]
- bandrami 7mo ago
  > why should only profits matter? In this case because it's not clear that anybody has actually figured out how to sell inference for more than it costs
  - nl 7mo ago
    It's well know everyone is making great money on inference. The cost is training. Whether GPT-5 was profitable to run depends on which profit margin you’re talking about. If we subtract the cost of compute from revenue to calculate the gross margin (on an accounting basis),2 it seems to be about 30% — lower than the norm for software companies (where 60-80% is typical) but still higher than many industries. (They go on to point out that there are other costs that might mean they didn't break even on other costs - although I suspect these costs should be partially amortized over the whole GPT 5.x series, not just 5.0) https://epochai.substack.com/p/can-ai-companies-become-profitable https://epochai.substack.com/p/can-ai-companies-become-profi... https://martinalderson.com/posts/are-openai-and-anthropic-really-losing-money-on-inference/ https://martinalderson.com/posts/are-openai-and-anthropic-re... (with math working backwards from GPU capacity) "Most of what we're building out at this point is the inference [...] We're profitable on inference. If we didn't pay for training, we'd be a very profitable company" https://simonwillison.net/2025/Aug/17/sam-altman/ https://simonwillison.net/2025/Aug/17/sam-altman/ "There’s a bright spot, however. OpenAI has gotten more efficient at serving paying users: Its compute margin—the revenue left after subtracting the cost of running AI models for those customers—was roughly 70% in October, an increase from about 52% at the end of last year and roughly 35% in January 2024." https://archive.is/OqIny#selection-1279.0-1279.305 https://archive.is/OqIny#selection-1279.0-1279.305 (Note this is after having to pay higher spot rates for compute because of higher than expected demand)
    - bandrami 7mo ago
      > It's well know everyone is making great money on inference. That is not, in fact, "well known", but based entirely on the announcements of the inference providers themselves who also get very cagey when asked to show their work and at least look like they're soliciting a constant firehose of investment money simply to keep the lights on. In particular there's a troubling tendency to call revenue "recurring" before it actually, you know, recurs.
Swizec 7mo ago
> Wheras only profit should matter Profit is money you couldn’t figure out how to spend. During growth, you want positive operating margins with nominal profits. When the company/market matures, you want pure profits because shareholders like money. If you can find a way to invest those profits in new areas of growth, that’s better.
- aurareturn 7mo ago
  Not sure why you’re downvoted. Everyone wants to treat OpenAI like a car wash business where they need to make a profit almost immediately. I don’t know why people can’t understand that the industry is in a rapid growth stage and investing the money is more important than making a profit now. The profits will come later.
  - troupo 7mo ago
    "Profits will come later" https://news.ycombinator.com/item?id=47597480 https://news.ycombinator.com/item?id=47597480
  - nutjob2 7mo ago
    > The profits will come later. The nearly $1T hand wave. Forgive me if I ask how. Might give it some credence if Anthropic and Google weren't pulling even with or surpassing them in various way or markets. Whats worse is they mostly seem to have retail market name recognition which is arguably the hardest, or maybe the impossible market to make money from.
    - aurareturn 7mo ago
      Whats worse is they mostly seem to have retail market name recognition which is arguably the hardest, or maybe the impossible market to make money from. That doesn't seem to be the case at all. Meta and Google are two of the most profitable companies in history, off the backs of free users. Apple is another one that focuses almost exclusively on retail and is also one of the most profitable in history.
  - 7mo ago
aurareturn 7mo ago
It's not as much as you think. Google is spending $185b on data centers this year alone. Amazon is spending $200b this year. Total capex for big tech is ~$700b in 2026 and we're not including neo clouds, Chinese clouds, and other sovereign data centers. Since everyone is trying to get compute from anywhere they can, including OpenAI going to Google, it's hard to tell what is used internally vs externally. For example, it's entirely possible that Google's internal roadmap for Gemini sees it using $600b of compute through 2030 as well. In that case, OpenAI needs to match since compute is revenue.
- hvb2 7mo ago
  But if Gemini doesn't end up using the compute because of whatever reason, Google has other ways to monetize that compute. OpenAI doesn't? So the same money spent by OpenAI and Google doesn't carry nearly the same amount of risk?
  - aurareturn 7mo ago
    OpenAI doesn't? Why not? They've openly said they could in theory sell compute to others if they can't use it all.
    - adgjlsfhk1 7mo ago
      this isn't credible though. them not being able to use all their compute likely means that the ai bubble has popped, so they won't be getting a good price on it.
    - hvb2 7mo ago
      And who would be buying this from them? Let's say you're anthropic, would you give money to your competitor? I'll also add that Google is already a player in that space so more likely to easily sell it off.
pier25 7mo ago
Give me a billion and I'll have 500M of revenue in no time by selling dollars at 50 cents.
- aurareturn 7mo ago
  Why are we treating OpenAI and Anthropic differently than say, Amazon or Uber? Both companies invested in growth for many years before making a profit. Most tech companies in the last 2-3 decades lost money for years before making a profit. Why are we saying that OpenAI and Anthropic can't do the same?
  - deleted 7mo ago
    [deleted]
  - hirako2000 7mo ago
    Two reasons. They somewhat broke even, and kept getting investment. The potential for quasi monopoly was obvious. Openai can't claim either.
    - aurareturn 7mo ago
      How did Uber somewhat break even? They lost $34b before making a profit. Uber was only on a path to monopoly in the US, not world wide. It’s lost to local competitors in most countries. And it can get disrupted by self driving cars soon. OpenAI’s SOTA LLM training smells like a natural monopoly or duopoly to me. The cost to train the smartest models keep increasing. Most competitors will bow out as they do not have the revenue to keep competing. You can already see this with a few labs looking for a niche instead of competing head on with Anthropic and OpenAI.
      - vlovich123 7mo ago
        The cost of copying SOTA models though is super cheap and doesn’t take super long.
        7mo ago
muzani 7mo ago
The startup game is about building assets and then cashing out on them during exit. Assets are harder to measure. Facebook used to say something silly like every user was worth $100. That sounded ridiculous for a completely free app but over a decade later, the company is worth more than that. Revenue is an easier way of measuring assets than profit. Profit doesn't really matter. It gets taxed. But it's not about dodging taxes; it's because sitting on a pile of money is inefficient. They can hire people. They can buy hardware. They can give discounts to users with high CLTV. They can acquire instead of building. It's healthy to have profit close to $0, if not slightly negative. If revenues fall or costs increase, they can make up for the difference by just firing people or cutting unprofitable projects. Also when they're raising money, it makes absolutely no sense to be profitable. If they were profitable, why would they raise money? Just use the profits.
nl 7mo ago
What is the point - exactly - of profit? Profit is money you can't find a use for to grow your business, so you give some of it to the government in the form of tax. Also there is a big difference between operational expenses and capital expenses like building data centers. I think OpenAI is being very aggressive on the growth vs conservative financial management spectrum but just saying "only profit should matter" is just wrong.
- bandrami 7mo ago
  > What is the point - exactly - of profit? It's what attracts capital investment, which businesses need
  - nl 7mo ago
    OpenAI seems to do reasonably well at attracting capital investment without profits. As did Amazon, Google, Meta etc etc.
    - bandrami 7mo ago
      OpenAI is great at attracting people who say "yeah, sure, I'll give you capital at some point in the future" who then never actually give them the capital (or at least haven't yet).
      - deleted 7mo ago
        [deleted]
      - nl 7mo ago
        They seem to be spending lot of cash too...
    - ngold 7mo ago
      If I remember correctly, Facebook took 10 years raising money before going ipo. Could be wrong though.
- troupo 7mo ago

by troupo 7mo ago

merlindru 7mo ago

why should only profits matter? if i had a killer product today that i just need to sell tomorrow, wouldn't you still invest today knowing i'll probably only start to make money tomorrow (or perhaps next week)? the expectation is that they'll eventually make money. they can't raise forever. only startups are not profitable for a few years. but most companies that have existed for a long while have been profitable and since they're expected to make a LOT of money, everyone wants a piece of that future pie, pushing up the valuation and amount raised to admittedly somewhat delusional levels like here

Barrin92 7mo ago
not if your product is selling two dollars for one dollar and as soon as you'll start to charge more I'll switch to one of your twenty competitors profit isn't a function of having a killer product, it's a function of having no competition
- ds2df 7mo ago
  no competition is a bit extreme. Limited competition yes due to competitive advantages.
- aurareturn 7mo ago
  And why do you think twenty competitors can stay competitive for years to come? Industries always consolidate and winners emerge. SOTA LLMs look like a natural monopoly or duopoly to me because the cost to train the next model keeps going up such that it won't make sense for 20 competitors to compete at the very high end. TSMC is a perfect example of this. Fab costs double every 4 years (Rock’s Law). It's almost impossible to compete against TSMC because no one has the customer base to generate enough revenue to build the next generation of fabs - except those who are propped up by governments such as Intel and Rapidus. Samsung is basically the SK government. I don’t see how companies can catch OpenAI or Anthropic without the strong revenue growth.
  - outside1234 7mo ago
    Google has completely caught OpenAI. Anthropic has a better coding model, but I'm sure Google is working on that too.
    - baq 7mo ago
      > Anthropic has a better coding model I’ll be polite and call this statement ‘a very debatable’ one.
  - Barrin92 7mo ago
    >Industries always consolidate and winners emerge. no, most industries just sell boring generic products, a few industries favor monopolists. Semiconductors are one of them but LLMs are also as far removed from that business as is physically possible. TSMC makes the most complicated machines humans have ever built, a LLM requires a few dozen nerds, a power plant, a few thousand lines of python and chips. That's why if you're Elon Musk you could buy all of the above and train yourself an LLM in a month. LLMs are comically simple pieces of software, they're just big. But anyone with a billion dollars can have one, they're all going to be commoditized and free in due time, like search. Copying a lithography machine is difficult, copying software is easy. that's why Google burrowed itself into email, and browsers, and your phone's OS. Problem for openai is they don't have any of that, there's already half a dozen companies that, for 99% of people, do what they do.
  - komali2 7mo ago
    The barrier to replicating TSMC isn't just cost, it's supply chain, geopolitics, and talent. Only one company on Earth can make the UV lithography machines TSMC buys for their highest end fabs, and they're not selling to anyone else. The PRC tried to brute force this supply chain backed by the full might of the Party's blank check, all red tape cut, literally the best possible duplication scenario, and they failed.
    - purpleidea 7mo ago
      The PRC didn't fail, they haven't finished succeeding yet.
- susupro1 7mo ago
  [dead]
bandrami 7mo ago
> why should only profits matter? In this case because it's not clear that anybody has actually figured out how to sell inference for more than it costs
- nl 7mo ago
  It's well know everyone is making great money on inference. The cost is training. Whether GPT-5 was profitable to run depends on which profit margin you’re talking about. If we subtract the cost of compute from revenue to calculate the gross margin (on an accounting basis),2 it seems to be about 30% — lower than the norm for software companies (where 60-80% is typical) but still higher than many industries. (They go on to point out that there are other costs that might mean they didn't break even on other costs - although I suspect these costs should be partially amortized over the whole GPT 5.x series, not just 5.0) https://epochai.substack.com/p/can-ai-companies-become-profitable https://epochai.substack.com/p/can-ai-companies-become-profi... https://martinalderson.com/posts/are-openai-and-anthropic-really-losing-money-on-inference/ https://martinalderson.com/posts/are-openai-and-anthropic-re... (with math working backwards from GPU capacity) "Most of what we're building out at this point is the inference [...] We're profitable on inference. If we didn't pay for training, we'd be a very profitable company" https://simonwillison.net/2025/Aug/17/sam-altman/ https://simonwillison.net/2025/Aug/17/sam-altman/ "There’s a bright spot, however. OpenAI has gotten more efficient at serving paying users: Its compute margin—the revenue left after subtracting the cost of running AI models for those customers—was roughly 70% in October, an increase from about 52% at the end of last year and roughly 35% in January 2024." https://archive.is/OqIny#selection-1279.0-1279.305 https://archive.is/OqIny#selection-1279.0-1279.305 (Note this is after having to pay higher spot rates for compute because of higher than expected demand)
  - bandrami 7mo ago
    > It's well know everyone is making great money on inference. That is not, in fact, "well known", but based entirely on the announcements of the inference providers themselves who also get very cagey when asked to show their work and at least look like they're soliciting a constant firehose of investment money simply to keep the lights on. In particular there's a troubling tendency to call revenue "recurring" before it actually, you know, recurs.

Swizec 7mo ago

> Wheras only profit should matter Profit is money you couldn’t figure out how to spend. During growth, you want positive operating margins with nominal profits. When the company/market matures, you want pure profits because shareholders like money. If you can find a way to invest those profits in new areas of growth, that’s better.

aurareturn 7mo ago
Not sure why you’re downvoted. Everyone wants to treat OpenAI like a car wash business where they need to make a profit almost immediately. I don’t know why people can’t understand that the industry is in a rapid growth stage and investing the money is more important than making a profit now. The profits will come later.
- troupo 7mo ago
  "Profits will come later" https://news.ycombinator.com/item?id=47597480 https://news.ycombinator.com/item?id=47597480
- nutjob2 7mo ago
  > The profits will come later. The nearly $1T hand wave. Forgive me if I ask how. Might give it some credence if Anthropic and Google weren't pulling even with or surpassing them in various way or markets. Whats worse is they mostly seem to have retail market name recognition which is arguably the hardest, or maybe the impossible market to make money from.
  - aurareturn 7mo ago
    Whats worse is they mostly seem to have retail market name recognition which is arguably the hardest, or maybe the impossible market to make money from. That doesn't seem to be the case at all. Meta and Google are two of the most profitable companies in history, off the backs of free users. Apple is another one that focuses almost exclusively on retail and is also one of the most profitable in history.
- 7mo ago

aurareturn 7mo ago

It's not as much as you think. Google is spending $185b on data centers this year alone. Amazon is spending $200b this year. Total capex for big tech is ~$700b in 2026 and we're not including neo clouds, Chinese clouds, and other sovereign data centers. Since everyone is trying to get compute from anywhere they can, including OpenAI going to Google, it's hard to tell what is used internally vs externally. For example, it's entirely possible that Google's internal roadmap for Gemini sees it using $600b of compute through 2030 as well. In that case, OpenAI needs to match since compute is revenue.

hvb2 7mo ago
But if Gemini doesn't end up using the compute because of whatever reason, Google has other ways to monetize that compute. OpenAI doesn't? So the same money spent by OpenAI and Google doesn't carry nearly the same amount of risk?
- aurareturn 7mo ago
  OpenAI doesn't? Why not? They've openly said they could in theory sell compute to others if they can't use it all.
  - adgjlsfhk1 7mo ago
    this isn't credible though. them not being able to use all their compute likely means that the ai bubble has popped, so they won't be getting a good price on it.
  - hvb2 7mo ago
    And who would be buying this from them? Let's say you're anthropic, would you give money to your competitor? I'll also add that Google is already a player in that space so more likely to easily sell it off.

pier25 7mo ago

Give me a billion and I'll have 500M of revenue in no time by selling dollars at 50 cents.

aurareturn 7mo ago
Why are we treating OpenAI and Anthropic differently than say, Amazon or Uber? Both companies invested in growth for many years before making a profit. Most tech companies in the last 2-3 decades lost money for years before making a profit. Why are we saying that OpenAI and Anthropic can't do the same?
- deleted 7mo ago
  [deleted]
- hirako2000 7mo ago
  Two reasons. They somewhat broke even, and kept getting investment. The potential for quasi monopoly was obvious. Openai can't claim either.
  - aurareturn 7mo ago
    How did Uber somewhat break even? They lost $34b before making a profit. Uber was only on a path to monopoly in the US, not world wide. It’s lost to local competitors in most countries. And it can get disrupted by self driving cars soon. OpenAI’s SOTA LLM training smells like a natural monopoly or duopoly to me. The cost to train the smartest models keep increasing. Most competitors will bow out as they do not have the revenue to keep competing. You can already see this with a few labs looking for a niche instead of competing head on with Anthropic and OpenAI.
    - vlovich123 7mo ago
      The cost of copying SOTA models though is super cheap and doesn’t take super long.
      - 7mo ago

muzani 7mo ago

The startup game is about building assets and then cashing out on them during exit. Assets are harder to measure. Facebook used to say something silly like every user was worth $100. That sounded ridiculous for a completely free app but over a decade later, the company is worth more than that. Revenue is an easier way of measuring assets than profit. Profit doesn't really matter. It gets taxed. But it's not about dodging taxes; it's because sitting on a pile of money is inefficient. They can hire people. They can buy hardware. They can give discounts to users with high CLTV. They can acquire instead of building. It's healthy to have profit close to $0, if not slightly negative. If revenues fall or costs increase, they can make up for the difference by just firing people or cutting unprofitable projects. Also when they're raising money, it makes absolutely no sense to be profitable. If they were profitable, why would they raise money? Just use the profits.

nl 7mo ago

What is the point - exactly - of profit? Profit is money you can't find a use for to grow your business, so you give some of it to the government in the form of tax. Also there is a big difference between operational expenses and capital expenses like building data centers. I think OpenAI is being very aggressive on the growth vs conservative financial management spectrum but just saying "only profit should matter" is just wrong.

bandrami 7mo ago
> What is the point - exactly - of profit? It's what attracts capital investment, which businesses need
- nl 7mo ago
  OpenAI seems to do reasonably well at attracting capital investment without profits. As did Amazon, Google, Meta etc etc.
  - bandrami 7mo ago
    OpenAI is great at attracting people who say "yeah, sure, I'll give you capital at some point in the future" who then never actually give them the capital (or at least haven't yet).
    - deleted 7mo ago
      [deleted]
    - nl 7mo ago
      They seem to be spending lot of cash too...
  - ngold 7mo ago
    If I remember correctly, Facebook took 10 years raising money before going ipo. Could be wrong though.
troupo 7mo ago