| With this line of thinking, nobody would have ever built refineries, or fabs, or clouds. The frontier labs have fantastic margin on inference. You do not understand how fantastic. And they have license to change inputs at will based on profitability. They are not only innovating on models and tooling, they are innovating on cogs (I wrote this btw, and I’m not going to stop writing this way because Claude discovered it’s brilliant). Speaking of models, the cost of training is not scaling nearly as fast as demand for inference. Training used to be the biggest cost by far, now it’s not. So margin is increasing, and guess what else is happening? Customers are finding value. And the customers that are finding value are also the ones who happen to have huge enterprise budgets. And while this is happening, so is implicit collusion (and lock in, and hype, and all that). And so prices are going up. They’re going to be just fine man, there is no inference bubble. They can modulate supply. It’s all going to be fine. You should invest. |
This. The gross margin on inference is at least 95% if not higher - several open weight models on my tiny consumer DGX Spark easily replace the 15 dollars a day I was paying in tokens for Claw usage with a dollar a day electricity. You add data centre overhead and depreciation, the theoretical net margin will trend lower but depreciation is always far more aggressive than actual product degradation. The old NVIDIA GPU on a 9 year old second hand gaming PC I bought still serves up a small Gemma 4 variant quite reasonably.