[bandrami]

If they had high margins they wouldn't be issuing senior debt with a 18.5% coupon payment (and failing to fully subscribe it), nor would they need Elon to give them two months of free compute in order to appear profitable for a single quarter.

[wqaatwt]

We were talking specifically about inference and I don’t think there any indication that their gross margins on the API tokens (if not the personal subscriptions) are negative?

Obviously they have R&D and other fixed expenses that make the company itself highly unprofitable but that’s only semi-tangential.

[bandrami]

No I mean Anthropic has only claimed a profitable quarter based on xAI giving them two months of free compute, and both Anthropic and OpenAI are counting discounted revenue as actual revenue. They haven't found a way to sell inference for less than it costs them yet, and when they tried earlier this quarter their customers bailed.

[wqaatwt]

Well again.. you are mixing up inference costs and their other mostly fixed expenses (in addition to sales and marketing)

Is there any indication that if they could sell X * N more tokens than now at the same (or even quite a bit lower) price they wouldn’t become profitable as a company?

> They haven't found a way to sell inference for less than it costs them yet

Based on what? I only see evidence to the contrary.

[bandrami]

> Based on what?

Based on the money they're spending on compute being less than the money they're getting from customers.

[wqaatwt]

Is there any evidence that’s true? i.e. they are losing money on every additional token they sell?