Inference alone is certainly profitable. I'm running models at home that are comparable to performance of paid models a year or so ago for free. Even for much larger models the cost around inference serving are clearly manageable.
Training is where the costs are, but I'm increasingly convinced those too could have costs dramatically reduced if necessary. Chinese companies like Moonshot.ai are doing fantastic work training frontier models for a fraction of the cost we're seeing from Anthropic/OpenAI.
This isn't like Uber or Doordash where the economics fundamentally don't make sense (referring to the early days of these services where rates were very cheap).
It's a compelling story that "current AI is unsustainable", but it doesn't pan out in practice for a multitude of reasons (not the least of which is that we can always fall back to what models did last year for basically free).
Profitable maybe, in terms of having low costs, but why pay Google or whoever when you can do it yourself for cheaper/"free"?
The value of the firm's operating assets = EBIT(1-t) - Reinvestment
You (Anthropic) want that sky-high valuation? Accept reinvestment is part of the equation.
If they decide to stop reinvesting, then they are as good as dead.
Moreover, they clearly are not re-investing cash flows from operations. Why do you think they are continually raising money? Lmao.
Ed Zitron and Gary Marcus are... confused.
Amazon was unprofitable because they poured their revenue into growth. On paper, they were in the red, but everyone - especially investors - saw what was going to happen, given their trajectory.
Is it the case that any of these AI companies are actually making a ton of money and growing accordingly? AFAICT, we've just got [a] big players like Google that can subsidize AI in the hopes of waiting everyone else out and [b] private companies raising capital in the hopes that when the market returns to rationality, they may be solvent.
> HSBC Global Investment Research projects that OpenAI still won’t be profitable by 2030, even though its consumer base will grow by that point to comprise some 44% of the world’s adult population (up from 10% in 2025). Beyond that, it will need at least another $207 billion of compute to keep up with its growth plans.
This article is from six months ago. Was HSBC wrong; did something dramatically change in the last six months; is OpenAI not, in fact, profitable?, or are they in fact doing well but doing a huge investment (as was the case with Amazon 25ish years ago)?
I genuinely do not know, but my impression is that they're burning investment capital trying to compete with others' investment capital and Google's bottomless pockets.
[0] https://fortune.com/2025/11/26/is-openai-profitable-forecast...
Whoever buys the stock at a richly priced 1tn at ipo is a bozo lmao. I know I know, index funds will be forced to hold it bypassing the 1 year rule. Disaster already.
The trend lines are going in the opposite direction.
That's not to say they will be or are wrong, it's just that they aren't exactly unbiased, or humble, sources.
The small models are useful for small things like summarizing text or search but not much else.
Even anthropic who does not own any hardware still have a big margin providing claude models.
Google has just recently upgraded their TPUs.
It's pretty funny that everyone say that this business is unsustainable, but I have yet seen anyone bankrupt, even the pure hardware providers who are renting out a100 b200.