Cross posted from https://sh.itjust.works/post/65157881
“If 70% of AI revenues are these two companies, there is no AI industry.”
Writer of Where’s Your Ed At and the host of the Better Offline podcast Ed Zitron joins The Tech Report’s Isaac Pound to talk about the state of the AI industry as it’s revealed that over two thirds of hyperscaler AI revenue is coming from two companies.
Their profits are negative for both of them. OpenAI makes a couple of billion a year, but they owe hundreds of billions, with more debt incoming. The same must apply to Anthropic. Their collected debt is around one trillion dollars.
There is no sign they will ever be profitable, especially because they are bleeding customers to Chinese open source LLMs.
In any sane world that would be game over, but somehow mega investors have decided that they need to double down. Because if only they invest more, the profits will come eventually.
I mean surely it’s because it’s about buying a part of “the future” and leaving everyone else behind. For such a belief, going all in may be the only option. Which is, of course, kinda death culty.
Yes it kind of seems like a financial death cult.
SpaceX IPO was 90% XAI 10% spaceX.
They made up an IPO price bypassing the bankers and then forced it into everyone’s Retirement Accounts with early adoption into the indexes.
OpenAI and Anthropic will do the same. They will pump it to the moon. Then IPO to the moon Vic’s will cash out at 100x profit as everyone’s retirement crater and reduce by half.
At the same time the economy goes great depression 2.0 as the bottom drops out.
They are talking about a value of $2 trillion for Anthropic. Somebody is going to lose a lot of money.
Be long puts.
They spent 38.5 billion on 13 billion in revenue last year. Even if you take out training costs, operational margins are negative at a cost of 14.8 billion as long as you include sales and marketing, which you absolutely should because they are clearly hiding expenses in that bucket. Nobody would spend 5.7 billion a year on marketing when they’re already losing 20 billion.