alt Hacker NewsBrad Gerstner confirmed that tokens aren't being sold at a loss. Whatever the formula, API + Subscription split, the companies are making a profit on net token sale.
They maybe running at loss after all the salaries and stock comp, but tokens are in profit now.
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They aren't being sold at a loss but they aren't being sold at enough to cover the current losses and the costs. The losses are being passed around in some fucked up circular funding mess which will inevitably collapse into a debt crisis at some point.
Tokens can be sold at profit, but 70% of compute expenditure goes to R&D and model training[0]. Inference needs to cover all of that as well as being profitable in a vacuum.
If tokens weren't being sold at a loss, Anthropic would be screaming about it from the rooftops. They've been desparately trying to make themselves not look like a money furnace lately, but it's not really working.
They might be sold at-compute-cost, but that of course ignores training, salaries, and everything else.
Is sounds very much like "trust me bro" ...
Obviously I, like basically everyone else here, don't have access to Open AI or Anthropic books so it's just guessing based on public available evidences, but "tokens aren't being sold at a loss" does not imply there is any profit.
And, even if there is some profit, it needs to be big enough to at least pay back the capex spendings and finance the next model iteration.
Do you think it will be the case for the Claude Code/Codex tokens as well? I think those are heavily subsidized, but they're the only ones I find real value in.
In other words, AI companies have positive earnings before expenses
Brad Gerstner might need a primer in asset depreciation.
That isn't enough. Over time the need for growth and increasing profits will squeeze existing margins.
He's an interested party. His investments are worth a lot more if he says that tokens are sold at a profit. I don't understand how anyone would trust him?
This is the sort of uncritical thinking that inflates bubbles in the aggregate.
It's like witnessing a rocket using the most powerful engine on Earth then once it escaped orbit turn off the engine and said "It is flying without power!".
Yes, sure, right now it is ... but that's NOT how it got here.
There are trillions invested to recoup and at most billions in sales. It doesn't add up to tokens making a profit any time soon.