Profitable on a per token basis is meaningless. Ed Zitron doesn’t argue that it is impossible to offer profitable inference, he argues that the business as it stands today is deeply unprofitable and only getting worse because it isn’t a high-margin inference business.

Play out the most likely pessimist’s scenario: LLMs are useful but frontier models are overkill so businesses just use dirt cheap open weight models on their own hardware and/or they rent hardware instead of paying per token. Then what for OpenAI and Anthropic?

OpenAI’s business collapses if customers are happy with an LLM that costs $0.10 per million tokens even if it only costs OpenAI $0.05 in inference per million tokens. The insane bonkers claim from Garry Tan that in 2 years we will be using 90,000x as many tokens as today is… well, obviously not true.

The fixed costs that OpenAI and Anthropic have created need inference demand far beyond what is plausible.

edit: and hand waving away the vast losses of companies like OpenAI because of “training” is ridiculous. Anthropic are spending a billion dollars per month to rent additional capacity from xAI for inference, not training. The models don’t need to get better: if there is a case for LLMs to change business forever, GPT 5.4 is just as capable of achieving it as GPT 5.5.