Comment by game_the0ry
5 hours ago
I have a theory that xAI has one of the largest clusters but with far less traffic + tokens to process bc its less popular than its competition, and xAI can pass the savings on to the end user.
5 hours ago
I have a theory that xAI has one of the largest clusters but with far less traffic + tokens to process bc its less popular than its competition, and xAI can pass the savings on to the end user.
Why would having more costs and less income allow them to pass savings on to the end user?
They already invested in the massive datacentres of GPUs sitting idle. They have fewer users so they can deliver more inference per user - more thinking, larger models.
Don't they just rent them out to the frontier AI shops? They're not sitting idle.
So where are these mythical savings coming from? You're saying they have spent more per user therefore can charge each user less or something? I'm not following.
2 replies →
More like they have a less focus on margins and more on cost recovery.
Definitely. They had insanely low rates on TTS up until a month or two ago ($4.20/1M) for example, which they only recently started increasing.
As their models get more competitive I'm sure prices will catch up.
“We lose money on every rack, but we make up for it in volume!” - Elon Musk, probably
SpaceX, like Tesla, seems to have the same "portrayals over profits" mindset investors. So it doesn't even really matter whether or not xAI is making any money.
they are renting parts to google for like 1b a month
really dont think they have a lot of idle power
If they've got billions to rent out, they're not using it...
xAI had $2.5B in operating losses in the past quarter. What savings are being passed on?
Profitability is never a constraint for Elon companies. He has always been able to be able to extract money from the middle east, government, banks, retail investors (or these same parties through his other companies) whenever they need more.
His net worth is orders of magnitude bigger than the cumulative profits his companies have ever produced (even if you only count the profitable quarters)