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> the big providers are charging full freight for inference. Except they're not. Anthropic's claims of temporary profitability line up exactly with when SpaceX

> the big providers are charging full freight for inference. Except they're not. Anthropic's claims of temporary profitability line up exactly with when SpaceX is giving them discounted compute, OpenAI's such a shitfest they threw the CFO off the glass cliff for daring to push back against the IPO. "Profitable on inference" is an unsubstantiated rumour. Just look at the copilot changes. Demand switching to other providers immediately when prices rise, and there's not even certainty that the new copilot prices cover costs. > They might not make back the money from training This is an understatement. With all the datacenter buildout, they need trillions. For the investors get their money back and the bubble to not implode, they functionally need to unemploy everyone in the US. If the AI dream is real, society just breaks.

simonw 4mo ago
> "Profitable on inference" is an unsubstantiated rumour. So is "unprofitable on inference". Thankfully we should find out for real as soon as those S-1 documents arrive.
- davedx 4mo ago
  Don't count on it. They might not break out inference from training.
treis 4mo ago
The pricing on Open router is clear. Anthropic, OpenAI, and Google all garner a massive premium over deepseek and qwen. There's no other realistic explanation except that they're making bank.
- bootsmann 4mo ago
  I can sell the tomatoes in my garden for twice the price of those in the supermarket and still make massive loses.
  - senordevnyc 4mo ago
    When you're selling orders of magnitude more than the grocery store? Only if you're completely incompetent.
- SlinkyOnStairs 4mo ago
  > There's no other realistic explanation except that they're making bank. If they were, they'd never shut up about it. Yet they keep quiet about the financials.
  - treis 4mo ago
    They don't shut up about it. Profitable on inference has been the story for years.
  - HarHarVeryFunny 4mo ago
    Well, as soon as they IPO they won't be able to keep quiet about it anymore.
- boarsofcanada 4mo ago
  And yet they are not profitable on an ongoing basis, and aren’t even claiming to be. The supply is currently constrained because 50+% of data center plans were cancelled as a result of the impossibility of the buildouts happening in a timely fashion, and subscriptions are charging a small fraction of the actual cost of inference, leading them to all bleed money, hence the rush to IPO to get one last infusion, since many of the past investors have publicly stated they aren’t putting any more money in until they see an ROI.
  - treis 4mo ago
    They've stopped subscriptions for the most part. Companies are paying API rates for their employees.
    - boarsofcanada 4mo ago
      Companies are hitting their budgeted limits for AI tokens less than half way through the year and reporting that they aren’t seeing enough benefit to substantially increase that budget, and so they are scaling back use and asking people to be prudent rather than token maxxing. In the meantime subscriptions still exist in the form of chatbots and it’s easy to exceed the inference cost of the provider by simply using your daily, weekly, and monthly limits. The reality is that we just don’t seem to be at a point now where people are willing to pay full price for the perceived value. Perhaps we’ll get there within another generation or two of hardware and software improvements.
- johnsmith1840 4mo ago
  Why do you think Chinese companies can do that? It's government subsidising price they do it with literally every ibdustry. Home grow a bunch discount them federally, let them wipe the foreign markets. If AI is threatened by china why would US NOT do the same? If they did they're in a much stronger position to do so than china. Cheaper energy, more cash, stronger industries. Infrastrucure is thr kind of thing that only a foolish US admin would let fall apart to their advesary.
  - treis 4mo ago
    It's not all Chinese companies. It's some western companies running Chinese models.
  - podocarp 4mo ago
    This is just silly. Deepseek has published so much regarding speeding up and making cheaper inference and people are still harping on the government subsidies thing. So what's all the project Stargate stuff? Subsidies only work when China is doing it? Deepseek is actively sacrificing performance for cost, which is very clear in their latest model releases. They are not attempting to get to number 1 in benchmarks, and they say it clearly in their own publications. Furthermore, being open weight, anyone can sell qwen and deepseek compute, not just Ali and deepseek themselves.
    - johnsmith1840 4mo ago
      Us gov isn't funding ai in any meaningful way? Not sure what else you're arguing here. Deepseek like all major chinese companies are 1:1 ccp so not sure you're points are.
  - watwut 4mo ago
    > Home grow a bunch discount them federally, let them wipe the foreign markets. US is doing the same and was doing that for decades now. American companies operate on loss for astonishing amounts of money and consider it completely normal. One gotta love complains about Chinese companies selling under price coming from American tech industry.
icepush 4mo ago
Unemploying everyone was what openai described as their success condition when it was founded a decade ago. There was a q&a on their website that said "How will you know when you have reached AGI? When the system performs most or all economically valuable work." Lots of people thought they were joking, or it was marketing, but they were 100% serious from the first.
- HarHarVeryFunny 4mo ago
  I think they've since changed that definition, but the reason for it is their agreement with Microsoft which stops granting MSFT IP rights to OpenAIs tech once they reach "AGI". So, it's in OpenAI's best interests to be able to claim "AGI" ASAP.
WarmWash 4mo ago
>For the investors get their money back and the bubble to not implode, they functionally need to unemploy everyone in the US. More like $75/mo per user for the next 5-10 years if they can get 5% of the global population to pay that.
- kranke155 4mo ago
  Can 5% of the population even pay for that? Some kind of huge increase in prices for compute and inference and companies maintaining large bills for AI assistants for key employees or teams (1000-2000$) seems most likely to me.
  - WarmWash 4mo ago
    It would be akin to a cell phone bill, so pricier in the first world, cheaper in the 3rd, but 70% of the global population has a cell phone.
    - kranke155 4mo ago
      75$ a month for a cell phone? I pay 18$ monthly for mine. This is Southern Europe where the average monthly wage is 1000$. I dont know who could afford yet another 75$ expense.
  - xboxnolifes 4mo ago
    You dont think every company wouldn't be able to pay all of their full-time employees 1k less and switch it to AI spend?
imtringued 4mo ago
Anthropic is a five year old startup, if they can be profitable that quickly in the AI space, even if only temporarily, I'm not really seeing the problem? These companies are going all in and growing rapidly, because they want to dominate the market and since it is difficult to differentiate between competitors, even being third place is a terrible place to be in the consumer facing AI space.

simonw 4mo ago

> "Profitable on inference" is an unsubstantiated rumour. So is "unprofitable on inference". Thankfully we should find out for real as soon as those S-1 documents arrive.

davedx 4mo ago
Don't count on it. They might not break out inference from training.

treis 4mo ago

The pricing on Open router is clear. Anthropic, OpenAI, and Google all garner a massive premium over deepseek and qwen. There's no other realistic explanation except that they're making bank.

bootsmann 4mo ago
I can sell the tomatoes in my garden for twice the price of those in the supermarket and still make massive loses.
- senordevnyc 4mo ago
  When you're selling orders of magnitude more than the grocery store? Only if you're completely incompetent.
SlinkyOnStairs 4mo ago
> There's no other realistic explanation except that they're making bank. If they were, they'd never shut up about it. Yet they keep quiet about the financials.
- treis 4mo ago
  They don't shut up about it. Profitable on inference has been the story for years.
- HarHarVeryFunny 4mo ago
  Well, as soon as they IPO they won't be able to keep quiet about it anymore.
boarsofcanada 4mo ago
And yet they are not profitable on an ongoing basis, and aren’t even claiming to be. The supply is currently constrained because 50+% of data center plans were cancelled as a result of the impossibility of the buildouts happening in a timely fashion, and subscriptions are charging a small fraction of the actual cost of inference, leading them to all bleed money, hence the rush to IPO to get one last infusion, since many of the past investors have publicly stated they aren’t putting any more money in until they see an ROI.
- treis 4mo ago
  They've stopped subscriptions for the most part. Companies are paying API rates for their employees.
  - boarsofcanada 4mo ago
    Companies are hitting their budgeted limits for AI tokens less than half way through the year and reporting that they aren’t seeing enough benefit to substantially increase that budget, and so they are scaling back use and asking people to be prudent rather than token maxxing. In the meantime subscriptions still exist in the form of chatbots and it’s easy to exceed the inference cost of the provider by simply using your daily, weekly, and monthly limits. The reality is that we just don’t seem to be at a point now where people are willing to pay full price for the perceived value. Perhaps we’ll get there within another generation or two of hardware and software improvements.
johnsmith1840 4mo ago
Why do you think Chinese companies can do that? It's government subsidising price they do it with literally every ibdustry. Home grow a bunch discount them federally, let them wipe the foreign markets. If AI is threatened by china why would US NOT do the same? If they did they're in a much stronger position to do so than china. Cheaper energy, more cash, stronger industries. Infrastrucure is thr kind of thing that only a foolish US admin would let fall apart to their advesary.
- treis 4mo ago
  It's not all Chinese companies. It's some western companies running Chinese models.
- podocarp 4mo ago
  This is just silly. Deepseek has published so much regarding speeding up and making cheaper inference and people are still harping on the government subsidies thing. So what's all the project Stargate stuff? Subsidies only work when China is doing it? Deepseek is actively sacrificing performance for cost, which is very clear in their latest model releases. They are not attempting to get to number 1 in benchmarks, and they say it clearly in their own publications. Furthermore, being open weight, anyone can sell qwen and deepseek compute, not just Ali and deepseek themselves.
  - johnsmith1840 4mo ago
    Us gov isn't funding ai in any meaningful way? Not sure what else you're arguing here. Deepseek like all major chinese companies are 1:1 ccp so not sure you're points are.
- watwut 4mo ago
  > Home grow a bunch discount them federally, let them wipe the foreign markets. US is doing the same and was doing that for decades now. American companies operate on loss for astonishing amounts of money and consider it completely normal. One gotta love complains about Chinese companies selling under price coming from American tech industry.

icepush 4mo ago

Unemploying everyone was what openai described as their success condition when it was founded a decade ago. There was a q&a on their website that said "How will you know when you have reached AGI? When the system performs most or all economically valuable work." Lots of people thought they were joking, or it was marketing, but they were 100% serious from the first.

HarHarVeryFunny 4mo ago
I think they've since changed that definition, but the reason for it is their agreement with Microsoft which stops granting MSFT IP rights to OpenAIs tech once they reach "AGI". So, it's in OpenAI's best interests to be able to claim "AGI" ASAP.

WarmWash 4mo ago

>For the investors get their money back and the bubble to not implode, they functionally need to unemploy everyone in the US. More like $75/mo per user for the next 5-10 years if they can get 5% of the global population to pay that.

kranke155 4mo ago
Can 5% of the population even pay for that? Some kind of huge increase in prices for compute and inference and companies maintaining large bills for AI assistants for key employees or teams (1000-2000$) seems most likely to me.
- WarmWash 4mo ago
  It would be akin to a cell phone bill, so pricier in the first world, cheaper in the 3rd, but 70% of the global population has a cell phone.
  - kranke155 4mo ago
    75$ a month for a cell phone? I pay 18$ monthly for mine. This is Southern Europe where the average monthly wage is 1000$. I dont know who could afford yet another 75$ expense.
- xboxnolifes 4mo ago
  You dont think every company wouldn't be able to pay all of their full-time employees 1k less and switch it to AI spend?

imtringued 4mo ago

Anthropic is a five year old startup, if they can be profitable that quickly in the AI space, even if only temporarily, I'm not really seeing the problem? These companies are going all in and growing rapidly, because they want to dominate the market and since it is difficult to differentiate between competitors, even being third place is a terrible place to be in the consumer facing AI space.