At this point the AI labs would pretty much have to form an illegal price fixing cartel in order to jack the prices up, they've been competing to drive down prices for so long.
They'd have to get the Chinese AI labs to go along with that price fixing too.
For the thousandth time - they. make. a. profit. Inference margin is over 60%, today.
They are spending that money training ever-larger models, so they are cashflow negative, but under almost any sane GAAP treatment that does not allow one to write down all R&D upfront (capital costs of model training), they are profitable.
Should this matter to you? Only if you're making financial decisions that assume that somehow one day the "jig will be up" - i.e. please don't short these stocks when they float, or at least do so very judiciously.
It always makes me laugh when people say this, because its so utterly pointless. That percentage assumes literally no other costs exist besides the direct inference cost.
Even if they quit trying to make better models today, there are a mountain of recurring costs that will never go away. Retraining the models with new data, replacing/upgrading old hardware, enormous infrastructure costs related to maintaining the actual platforms, data collection costs, payroll...
I'm not aware of a single player in the LLM space actually turning a profit, even if they're only providing inference.
Keep in mind that they make large profit on inference. Not enough to make up for losses on training but it won’t be a problem for Chinese labs which will just steal their weights.
Given that they built their businesses on wide spread copyright infringement and licence violations, I couldn't give less of a shit about people turning around and "stealing" from them
simonw|6 days ago
They'd have to get the Chinese AI labs to go along with that price fixing too.
paxys|6 days ago
arctic-true|6 days ago
vessenes|6 days ago
They are spending that money training ever-larger models, so they are cashflow negative, but under almost any sane GAAP treatment that does not allow one to write down all R&D upfront (capital costs of model training), they are profitable.
Should this matter to you? Only if you're making financial decisions that assume that somehow one day the "jig will be up" - i.e. please don't short these stocks when they float, or at least do so very judiciously.
scuff3d|6 days ago
Even if they quit trying to make better models today, there are a mountain of recurring costs that will never go away. Retraining the models with new data, replacing/upgrading old hardware, enormous infrastructure costs related to maintaining the actual platforms, data collection costs, payroll...
I'm not aware of a single player in the LLM space actually turning a profit, even if they're only providing inference.
azan_|6 days ago
scuff3d|6 days ago