[sothatsit]

Dario Amodei has said that their models actually have a good return, even when accounting for training costs [0]. They lose money because of R&D, training the next bigger models, and I assume also investment in other areas like data centers.

Sam Altman has made similar statements, and Chinese companies also often serve their models very cheaply. All of this makes me believe them when they say they are profitable on API usage. Usage on the plans is a bit more unknown.

[0] https://youtu.be/GcqQ1ebBqkc?si=Vs2R4taIhj3uwIyj&t=1088

[vidarh]

We can also look at the inference costs at 3rd party inference providers.

[aeronaut80]

Their whole company has to be profitable, or at least not run out of money/investors. If you have no cash you can't just point to one part of your business as being profitable, given that it will quickly become hopelessly out-of-date when other models overtake it.

[vidarh]

Other models will only overtake as long as there is enough investor money or margins from inference for others to continue training bigger and bigger models.

We can see from inference costs at third party providers that the inference is profitable enough to sustain even third party providers of proprietary models that they are undoubtedly paying licensing/usage fees for, and so these models won't go away.

[sothatsit]

Yeah, that’s the whole game they’re playing. Compete until they can’t raise more and then they will start cutting costs and introducing new revenue sources like ads.

They spend money on growth and new models. At some point that will slow and then they’ll start to spend less on R&D and training. Competition means some may lose, but models will continue to be served.

[overgard]

> Sam Altman has made similar statements, and Chinese companies also often serve their models very cheaply.

Sam Altman got fired by his own board for dishonesty, and a lot of the original OpenAI people have left. I don't know the guy, but given his track record I'm not sure I'd just take his word for it.

As for chinese models..: https://www.wheresyoured.at/the-enshittifinancial-crisis/#th...

From the article:

> You’re probably gonna say at this point that Anthropic or OpenAI might go public, which will infuse capital into the system, and I want to give you a preview of what to look forward to, courtesy of AI labs MiniMax and Zhipu (as reported by The Information), which just filed to go public in Hong Kong.

> Anyway, I’m sure these numbers are great-oh my GOD!

> In the first half of this year, Zhipu had a net loss of $334 million on $27 million in revenue, and guess what, 85% of that revenue came from enterprise customers. Meanwhile, MiniMax made $53.4 million in revenue in the first nine months of the year, and burned $211 million to earn it.