Comment by jialatsia
21 hours ago
Ant generates $2.08 in revenue for every $1 spent on compute which is up from just $0.40 in Q1 2025.the payback period for compute is just insane, likely less than a year!
21 hours ago
Ant generates $2.08 in revenue for every $1 spent on compute which is up from just $0.40 in Q1 2025.the payback period for compute is just insane, likely less than a year!
I wonder how the "It's all heavily subsidized!" people are going to spin this.
Say I open a premium lemonade stand. I buy Walmart lemonade for $1 and resell it for $2. I have around 10 customers a day, but 2 of them buy 1,000 litres of lemonade each. The rest just buy a single cup. I'm making amazing profit.
There's just one detail: those 2 high-volume customers are buying my lemonade and re-selling them at a loss for $1 at another neighbourhood. Supposedly some high-profile Japanese bank is financing their lemonade purchasing expenses for eye-wateringly high interest rates. I've heard its well into the double digits. But that's not important, because the future is right around the corner - I can feel it - and in the future everyone wants lemonade. Thousands of litres of it. So even if those two customers go away, things will be fine!
It will all work out in the end. This is a totally sustainable business model. In fact I'm even thinking of going public.
I would unironically invest.
Lemonade isn't intelligence. Having 4000 liters of lemonade doesn't give you a competitive leg up over a lemonade stand with 2000 liters.
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If I'm buying one cup of lemonade a day then it seems highly likely I'm still going to be able to buy it for $2 in the future.
In an alternative world where Walmart is selling it for $10 and I'm buying it from the reseller for $2, that's not the case.
Many people have been saying the second thing is happening.
I'm not really in that camp, but I'm still in the camp of "will they survive long-term if good enough open models trickles down to commodity hardware" (in a way the opposite camp perhaps?).
Sun made bank 25 years ago because their servers was needed for websites, today we run larger workloads on 5$ VPS servers (well maybe the VPS servers has gotten more expensive due to HW shortages but they're not intrinsically expensive anymore).
Think they're going to be like Oracle. Databases were a valuable thing when they were new but became free with postgres. Like Oracle Anthropic et al will move up the value chain.
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First of all, revenue exceeds compute just for the most recent 2 quarters. Before that, revenue was not exceeding compute. With 500 billion $ in commitments over the next decade, the compute bill will start increasing rapidly and the new commitments are not at the old prices, they're at higher prices.
Second of all, revenue is not profit. So even if they made 2.08x revenue on every 1$ of compute spent in Q2, that's not taking into consideration all the other costs. Hence, the operating income is still negative for 2026 so far.
You can bet that revenue will keep increasing much faster than the more expensive compute commitments come due, but if that doesn't materialize, things go south real fast. Anthropic is going public with a deficit, so more liabilities than assets, so cash is tight to begin with.
Subscriptions are heavily subsidized. 80% of their revenue comes from consumption-based pricing, which is not heavily subsidized (and probably not subsidized at all). The trouble is that this revenue is not especially reliable. If and when OpenAI gets the upper hand again, the consumption-based revenue could crater.
This may also be why OpenAI punted on their IPO: Anthropic has had the lead for most of 2026, so their consumption-based revenue is probably not looking pretty.
> Subscriptions are heavily subsidized.
The only subsidization that matters is if they are selling the tokens for a loss.
Yes the $200 plan provides more than $200 of tokens, but that doesn't mean that it's losing money, either on average or on a case by case basis. The realistic alternative isn't that every $200-plan-user pays the full Api price, it's that they pay Anthropic $0.
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I've heard this a lot that the consumption-based pricing would be easy to switch, but I don't feel like that's how it works in B2B subscriptions. At the company I'm at, we have Anthropic subscriptions for employees. Switching to OpenAI would be a ton of work involving legal, IT, and every employee. I actually think there's a lot of stickiness even if OpenAI has some better frontier models.
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> Subscriptions are heavily subsidized
Revenue less compute & infrastructure less sales, marketing & partnerships is positive!
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subscriptions use already paid for compute in the holes left by high paying api customers, its hardly subsidised, if you look at it objectively, subscriptions are 100% margin
A podcast posted here recently had this number: 80% of ant revenue comes from just 8 customers. The consensus of the speakers was that if true, this would be indicative of a very vulnerable revenue structure. But this was based on leaks. Maybe we can have the real numbers now?
from the s-1, the top 5 customers make up 25% of revenue
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In this timeline, can we really trust publicly reported numbers even?
And those 8 customers.. you think they will accept large price increases?
Hahahahahaha.
Those large customers are not a mom and pop store - they’re large market cap firms!!!
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It's interesting to note the anthropic marginal cost of compute is quite high (the SpaceX deal). Claude estimates SpaceX are charging 3x as much as the anthropic average! If that is correct then a few interesting things are going on:
1. Anthropic are probably losing money on the SpaceX deal or not making much at all.
2. To be willing to pay a spot rate so high anthropic likely have no better options.
3. Many of the existing cheaper vendors are likely doing "we will give you cheap compute for now if you give us big commitments"... (cf. hyperscaler capex spends)
Which I suppose is to say that if the spot prices are in the same ballpark as future costs then anthro stops looking profitable pretty quickly. If you're especially bearish you can also throw in the huge reduction in token prices recently and that SpaceX is charging google almost 2x as much as they charge anthropic!
Happy to be corrected by someone more knowledgeable.
Revenue is not profit?
It's very simple, if you just assume they never have to spend money on training ever again, they're wildly profitable.
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Profit is not relevant
It’s still the case. Subscriptions are heavily subsidized
Unfortunately for you - youre the pleb here.
If you’re not generating enough revenue to cover ALL expenditures - you are in effect subsidising as you should raise prices.
Why haven’t they? It would harm their business.
Nah fam, it would harm their IPO price, these are not serious businesses and everyone at the top knows this. They're there to get their bag and leave, that's it.
They’ll just keep saying it is. That’s what they’ve done so far with DS
In page F-7 they write:
Audited, revenue in 2025 is $4.6 with a computing cost of $7.3 (i.e. heavily subsidizing tokens). Unaudited, revenue in 2026 (first six months) is $16.3, computing cost $8.9 (1.83:1). But after adding personnel, sales and administrative costs, they are still spending $17.0 to get that $16.3 revenue (still subsidizing tokens, but less).
Does that include R&D?
Over time that margin persists only if they maintain their competitive edge, which is not free.
It includes compute and infrastructure for R&D. Then you have to add just over a third of their compute spend for personnel, another expense of that size for sales and marketing, and half that for other admin/ops costs, for an operating loss of 693M. Then a bunch of accounting stuff to end up losing 80B
I'm not sure I'd call it a great result, but it's a promising one. If they can increase demand without significant changes in margin or R&D spending, they are on the path to becoming very profitable
The way I read it, it does. It looks like total revenue vs total compute expenditure.
my thesis is that it will go down and not up over time. The moat they had in coding which is by far the highest token consumption is not that huge compared to Nov-Feb period where token maxxing was prevalent and no other vendor's model was that good.
Assuming computing costs do not go up and revenue per customer does not go down.
I think the 500 billion $ of compute commitments are at higher prices than what they've been paying so far. Would be a shame if a price war between the AI labs intensifies at the same time.
Hmmm
Less than a year would also match what DeepSeek was reporting, where compute pays off in just 10 months. I think they also said they had an 80% margin on inference.
Impressive, but probably based on depreciation servers over 5 years. But is that realistic? I wonder how many people are still using 5 year old servers in their AI training or inference.
When will generic AI compute capability trickle down to us plebeians?
In the open weights scene, it is always chasing closely behind. Many leading edge big open models are trained in-part with distillation of large commercial hosted models.
It already has. If you have a gaming GPU you can run AI locally.
At this point though gaming GPUs are not exactly affordable. You need a 32GB GPU to be able to run something genuinely useful for coding, and that's thousands of dollars. Still, happy to see open models make lots of progress. I just hope hardware prices come back to earth.
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You have a 25K rig.[1] What can a gaming rig do by comparison? One agentic project at a time while yours does twenty? Okay, in that case regular people can do regular serial work (unlike the most agentic setups or whatever is going on).
[1] https://news.ycombinator.com/item?id=50238816
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yeah i trained a 1000 param LLM in my browser literally yesterday. it's game over for Anthropic /s.
Seems like that would imply you should be getting people to adopt now now still even if it costs a stupid amount, if you think it's valuable, rather than limiting token budgets. It'll only get cheaper over time.
ANT stock valuations might be high at listing, but it will be a good stock to add on declines. Great numbers!
Just renting them out as hardware is close to 12 months.
Including training?
Yes, this includes training and internal company usage.
That's their API cost price. No one will pay this on that scale? People are using tokens via their Max Plans?
Enterprise pays the API cost price
And enterprise is furiously working on cost optimization, finding that they can accomplish a lot of what they currently do with frontier models with budget offerings from frontier labs or open source models.
Why are you ignoring the $80.7 Billion loss?
$72 billion of this $80.7 billion loss consists of non-cash accounting charges— related to convertible debt—triggered by a surge in the company’s valuation.
The hardware related liabilities are staggering.
AI psychosis is real.
That's sort of a paper loss though. E.g. they made an agreement to give X% of stock for something, and now the stock has gone up a ton, so that X% of stock is worth a lot more than when they made the agreement. For accounting reasons this gets parsed as a loss. But they're still "paying" that same X% of stock, so it's not cash out the door.
Maybe not great, but a good problem to have if it means your stock is skyrocketing.
> $72 billion of this $80.7 billion loss consists of non-cash accounting charges— related to convertible debt—triggered by a surge in the company’s valuation.
Explain what you think this means.
It means that $72 billion will further dilute the stock price when the debt turns into stock.
It is pump and dump in action.
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I don't think you understand what you quoted. The reason for that loss is because their valuation skyrocketed. If I promise you 1% of my million dollar house, and then the price of my house grows 100x. On paper, I now owe you .99 million more dollars than I owed you before, but that doesn't mean I lost cash.
This is not what "AI psychosis" colloquially refers to. Few people have any firm opinions about the nature of cost accounting on LLM products.
They are getting high off their own supply.