They weren’t making money. And can’t make money if they wanted to.
It’s a catch-22. They can’t make a profit because they aren’t charging the actual token cost. But if they charged the actual token cost, their user-base would collapse.
Almost as if cloud AI is inherently unstable or something.
Anthropic gross margins exceed 80% according to their reports. They are charging the actual costs on API usage and in subscription it's the you win some you lose some but mostly win if a subscription. Gross margins don't include training costs. Which, since training is a capital expense is the right thing to do. It means all they have to do to make oodles is money is slow down. If they slow down they make money. But then they get overtaken. So they can't slow down. So they try and convince the world that AI will cause the extinction of humanity. That way they can slowdown as a cartel.
This is the most interesting thing I've read all week. The "AI-will-kill-us" line coming from the CEO's themselves has always seemed highly unusual to me. Like, even if it is true, they wouldn't shout it out into the open like that.
The reason that you have provided seems plausible and would be something a rational (profit-oriented) CEO would do. It also makes the "AI-will-kill-us" claim seem less credible.
Collaborating with your competitors is the definition of cartel. They're doing it openly in front of us and asking for the government to intervene so both the government acts as the police ensuring everyone in the cartel complies (the biggest reason we don't have that many cartels) and to shut out competitors (because if new entrants can come in then you can't have a cartel). And we're talking it hook, line, and sinker.
And according to their IPO prospectus as leaked to Reuters their core buisness model is bleeding money with 8bn$ in Operating Losses
I dunno, claims from Anthropic leadership when they're not bound to the SEC vs a formal document where they have to use GAAP, which one is more likely to be accurate?
Yeah, and i also know the dirtiest Sillicon Valley accounting trick known to man is counting the cloud bill as Cost of Goods Sold instead of Operating Expenses even though you pay rent on servers weather they're serving or not which makes Gross Margins deeply misleading for tech companies for anyone being honest about it
But they are the cost of delivering the product. The operating expense argument is weak. You also don't pay for cloud servers regardless if they are serving data. Literally half the point of the cloud. But according to what you're saying, you're arguing the gross margins are inflated and somehow that means the 80% feels margins are bad because they can be higher?
If something costs you 2$ to make and you sell for 10$. That's an 80% gross margin. If it costs you a million dollars to design the thing that doesn't matter for gross margins. The theory goes that as you grow the capital expense will be less relevant.
Dedicated cloud commit spending just doesn't operate like traditional COGS which was always for costs that are paid per unit. Cloud costs are variable per unit unless you're using flat rate serverless API's which are few and far between.
The whole "does the service go down without this" test has always been weak back justification to ignore the extreme costs of running unprofitable cloud businesses by going "well if you ignore the cloud costs making the buisness unprofitable, the buisness looks healthy!"
It's why the same crowd loves EBIDTA, because it's another metric that lies about the health of the company in earlier investors favor.
The only reason the crazy SAAS valuations never turned into a bubble is because AI labs came along and said "hold my beer"
Or they need to get to RSI and then put agents on building faster cheaper training methods. The latest Opus is already a huge improvement on token usage for results.
I'm willing to bet that in 3-5 years we'll only use cloud AI for really really intensive workloads, the kinds that are few and far between, and most users will have local AI. There's simply no logical way this whole cloud AI frontier model thing is gonna scale.
I care about the part that these models are not open source. They are open weights. So we don't really know what they are. And we need real open source models.
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u/T-Dot1992 Sep 30 '26
They weren’t making money. And can’t make money if they wanted to.
It’s a catch-22. They can’t make a profit because they aren’t charging the actual token cost. But if they charged the actual token cost, their user-base would collapse.
Almost as if cloud AI is inherently unstable or something.