Comment by mike_hearn

People are pessimistic about profitability because it's basic economics. Pricing power comes from advantage and nothing else. In particular it doesn't come from demand because in a well functioning market supply will rapidly increase to meet demand.

The little companies inferencing DeepSeek have no advantage over any other company doing the same thing. Therefore, their margins should look like any competitive industry. Farming, supermarkets, airlines are my go-to example. Usually margins in the 3% to 5% range. Profit margin average across all industry including very profitable ones like tech or oil is only 10%.

The companies offering inferencing and nothing else are relying on subsidies by the open weight model providers. If those companies all stopped releasing open weights tomorrow the offerings on OpenRouter would see rapid traffic declines as the knowledge in the weights became stale and as other companies that invested in proprietary R&D overtake them. So being profitable on inferencing open weights is a very short term play, and there's no reason to think it's a great business in the long run.