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Does Anthropic really expect to double their income without also doubling their expenses?

by dminik 5mo ago

Forgeties79 5mo ago
I’ve been hearing that anthropic is on the verge of profitability for probably a year straight. Until all the companies agree to stop the training arms race I just don’t see how it’s in the cards
i2km 5mo ago
This is one of the things people miss. If they double their customers, of course they double their expenses. Unlike SW, the marginal cost here is still high
- dminik 5mo ago
  I mean, it's possible that with the new datacenter from SpaceX, they could onboard more users than it costs them to rent. That's fair. But I kind of doubt that. One thing that really stinks to me is that various AI boosters have been claiming insane profit margins (40%, 50%, ...), yet apparently Anthropic stands to (possibly) make $500M profit on $11B in expenses, that's clearly nowhere near 50%. Not to mention that they're not making profit on inference now. So where do people get this confidence to pull random numbers from?
wongarsu 5mo ago
There we go back to the original question: are subscriptions profitable, API pricing wildly profitable, and they just lose all that money on fixed costs like model training; or do they actually barely make money on inference? That's why talking about the profitability of inference without accounting for model training is interesting, because that is the deciding factor in whether more customers would help getting them in the green
- dminik 5mo ago
  Without actual data I don't know. My gut feeling is that they overall lose money on subscriptions (and especially the free tier that accounts for 95% of all users). And make thin profit (~5%) on API pricing. But it's just that. A gut feeling.
  - Forgeties79 5mo ago
    I don’t think it’s a gut feeling. It seems to be the consensus that subscriptions are still heavily subsidized
  - anthonypasq 5mo ago
    its well reported that inference margins on api pricing are 30-50%
    - dminik 5mo ago
      No it's not. It's well speculated. Can you give a single source that says they have a 50% margin on inference?

Does Anthropic really expect to double their income without also doubling their expenses?

by dminik 5mo ago

Does Anthropic really expect to double their income without also doubling their expenses?

I’ve been hearing that anthropic is on the verge of profitability for probably a year straight. Until all the companies agree to stop the training arms race I just don’t see how it’s in the cards

i2km 5mo ago

This is one of the things people miss. If they double their customers, of course they double their expenses. Unlike SW, the marginal cost here is still high

dminik 5mo ago
I mean, it's possible that with the new datacenter from SpaceX, they could onboard more users than it costs them to rent. That's fair. But I kind of doubt that. One thing that really stinks to me is that various AI boosters have been claiming insane profit margins (40%, 50%, ...), yet apparently Anthropic stands to (possibly) make $500M profit on $11B in expenses, that's clearly nowhere near 50%. Not to mention that they're not making profit on inference now. So where do people get this confidence to pull random numbers from?

wongarsu 5mo ago

There we go back to the original question: are subscriptions profitable, API pricing wildly profitable, and they just lose all that money on fixed costs like model training; or do they actually barely make money on inference? That's why talking about the profitability of inference without accounting for model training is interesting, because that is the deciding factor in whether more customers would help getting them in the green

dminik 5mo ago
Without actual data I don't know. My gut feeling is that they overall lose money on subscriptions (and especially the free tier that accounts for 95% of all users). And make thin profit (~5%) on API pricing. But it's just that. A gut feeling.
- Forgeties79 5mo ago
  I don’t think it’s a gut feeling. It seems to be the consensus that subscriptions are still heavily subsidized
- anthonypasq 5mo ago
  its well reported that inference margins on api pricing are 30-50%
  - dminik 5mo ago
    No it's not. It's well speculated. Can you give a single source that says they have a 50% margin on inference?