Comment by wolttam
4 hours ago
The financials depend on revenue that isn’t materializing because:
- the utility of the models is not that great (see almost every company outside of tech and even many within tech reporting “no measurable increased revenue or productivity as a result of adopting the technology”.
- China has been undercutting them hard with open-weight models that are “good enough” for 95%+ of use-cases, leaving only the hardest problems for OpenAI and Anthropic’s models, which it turns out isn’t where there is a ton of money to made (curing various forms of cancer is valuable but not “let’s dump trillions on these companies” valuable - and once their models can solve it, it probably won’t be long before others do too).
People want these models on their own hardware. People will (eventually) want these models running on robots that can do real work for them, and they won’t want those things tethered to an insecure and privacy eviscerating cloud subscription.
The money to be made is in selling hardware, as it should be.
Anthropic’s S1 still shows them not even breaking even on revenue/expenses during what was probably their biggest year of adoption, right before people started going “oh, I can do this with an open model”
I’m not saying anything new here. What are we missing?
I'm mildly optimistic about Anthropic: positive free cash flow, growing margins, and incredible revenue growth are heartening. Its clear now that their delayed IPO was due to continually improving financial metrics and the desire to balance the time value of an earlier IPO with the gains from presenting a financially healthier company which is growing quickly and spending heavily to do so.
OpenAI seems to be in a much tougher spot and I'm not sure how they'll fare in the future.
But honestly, neither of those really matter to me and its why I didn't mention them in my above comment. Anthropic + OpenAI revenue is ~$120B/yr, and even if those companies go to zero because open models commoditize their business model, that demand for inference isn't going to go away, someone will need to absorb it. In fact I would expect that an open model good enough to drive demand for Opus 5.5 all the way down to zero would be so good that inference on that model would drastically exceed what we're seeing. I'm more concerned with one layer up, the datacenter builders and the semiconductor companies, and there I see fortress balance sheets, great governance, and massive demand. Open Models are great for these companies, not a threat at all. I don't see any credible threat to AWS+Azure+GCP datacenter buildout not paying for itself.