There's just one detail: those 2 high-volume customers are buying my lemonade and re-selling them at a loss for $1 at another neighbourhood. Supposedly some high-profile Japanese bank is financing their lemonade purchasing expenses for eye-wateringly high interest rates. I've heard its well into the double digits. But that's not important, because the future is right around the corner - I can feel it - and in the future everyone wants lemonade. Thousands of litres of it. So even if those two customers go away, things will be fine!
It will all work out in the end. This is a totally sustainable business model. In fact I'm even thinking of going public.
In an alternative world where Walmart is selling it for $10 and I'm buying it from the reseller for $2, that's not the case.
Many people have been saying the second thing is happening.
Sun made bank 25 years ago because their servers was needed for websites, today we run larger workloads on 5$ VPS servers (well maybe the VPS servers has gotten more expensive due to HW shortages but they're not intrinsically expensive anymore).
Second of all, revenue is not profit. So even if they made 2.08x revenue on every 1$ of compute spent in Q2, that's not taking into consideration all the other costs. Hence, the operating income is still negative for 2026 so far.
You can bet that revenue will keep increasing much faster than the more expensive compute commitments come due, but if that doesn't materialize, things go south real fast. Anthropic is going public with a deficit, so more liabilities than assets, so cash is tight to begin with.
This may also be why OpenAI punted on their IPO: Anthropic has had the lead for most of 2026, so their consumption-based revenue is probably not looking pretty.
The only subsidization that matters is if they are selling the tokens for a loss.
Yes the $200 plan provides more than $200 of tokens, but that doesn't mean that it's losing money, either on average or on a case by case basis. The realistic alternative isn't that every $200-plan-user pays the full Api price, it's that they pay Anthropic $0.
Now, the reason they won't do that is because subscriptions provide a stable floor of revenue. The floor is lower than it could be because of the subsidies, and that's why they matter even if they do not bring prices down to below cost: if the growth of consumption-based spending ever slows or - heaven forbid - DROPS, Anthropic will need to cut into those subsidies to avoid a revenue slowdown, which risks sending away reliable recurring revenues (i.e., customers quitting).
Anthropic is kind of like the bus in Speed: if it stops moving it'll blow up. At least over the next 5 years, massive revenues won't be enough - it needs to sustain massive revenue GROWTH. They can pull two levers to do this: increase uptake or increase prices. So far, the "increase uptake" lever works like an infinite money glitch. But at some point, they'll need to look at the "increase prices" lever. When that happens, we will find out just how big the subsidies are.
As a software dev, if I'm using codex at home and I'm happy with it, I'll likely choose it at work as well since I don't have to relearn the quirks of other models.
There’s no moat. AI tools actually make the switching that much easier
Also, shouldn't your AI efficiency gains shrink the switching costs by a lot? Legal can review for cheaper, IT can implement faster, etc.
Revenue less compute & infrastructure less sales, marketing & partnerships is positive!
Why would this be exempt from any of the above categories?
> Overall revenue is not especially informative on the price structure of a revenue stream
It’s pretty informative on the business model of the enterprise!
If you’re quibbling that Anthropic has loss leaders, yes, sure. Whatever. So does Costco. Loss leaders converting into profitable sales is good business.
This is a silly quibble.
> and that its profit leaders are extremely unstable
This is a fair one! Claiming Anthropic’s “subscriptions are heavily subsidized” is not.
The metric we need to question stability is churn rate.
Hahahahahaha.
Those large customers are not a mom and pop store - they’re large market cap firms!!!
Which feels like a carefully chosen statistic.
1. Anthropic are probably losing money on the SpaceX deal or not making much at all.
2. To be willing to pay a spot rate so high anthropic likely have no better options.
3. Many of the existing cheaper vendors are likely doing "we will give you cheap compute for now if you give us big commitments"... (cf. hyperscaler capex spends)
Which I suppose is to say that if the spot prices are in the same ballpark as future costs then anthro stops looking profitable pretty quickly. If you're especially bearish you can also throw in the huge reduction in token prices recently and that SpaceX is charging google almost 2x as much as they charge anthropic!
Happy to be corrected by someone more knowledgeable.
If you’re not generating enough revenue to cover ALL expenditures - you are in effect subsidising as you should raise prices.
Why haven’t they? It would harm their business.
Audited, revenue in 2025 is $4.6 with a computing cost of $7.3 (i.e. heavily subsidizing tokens). Unaudited, revenue in 2026 (first six months) is $16.3, computing cost $8.9 (1.83:1). But after adding personnel, sales and administrative costs, they are still spending $17.0 to get that $16.3 revenue (still subsidizing tokens, but less).
I think the 500 billion $ of compute commitments are at higher prices than what they've been paying so far. Would be a shame if a price war between the AI labs intensifies at the same time.
Hmmm
Over time that margin persists only if they maintain their competitive edge, which is not free.
I'm not sure I'd call it a great result, but it's a promising one. If they can increase demand without significant changes in margin or R&D spending, they are on the path to becoming very profitable
And cards like the $1600 (sheesh) R9700 have actually gotten more capable through community efforts at optimization, since their launch.
I think if the bubble can ever deflate/pop, and GPUs and RAM back off a bit, we'll see the dam burst for local AI.
Right now it's only accessible to people who can justify the costs.
Precisely. It is cheap at almost any price.
I have to admit I am a sort of enthusiast for the natural intelligences, though.
$72 billion of this $80.7 billion loss consists of non-cash accounting charges— related to convertible debt—triggered by a surge in the company’s valuation.
The hardware related liabilities are staggering.
AI psychosis is real.
Maybe not great, but a good problem to have if it means your stock is skyrocketing.
Explain what you think this means.
It is pump and dump in action.