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Are OpenAI and Anthropic losing money on inference?

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Re: Are OpenAI and Anthropic losing money on inference?

#301

Post by datavirtue »

lawlessone wrote: post #280
_sword wrote: post #276

I've done the modeling on this a few times and I always get to a place where inference can run at 50%+ gross margins, depending mostly on GPU depreciation and how good the host is at optimizing utilization. The challenge for the margins is whether or not you consider model training costs as part of the calculation. If model training isn't capitalized + amortized, margins are great. If they are amortized and need to b…

Does that include legal fights and potential payouts to artists and writers whose work was used without permission? Can anyone explain why it's not allowed to compensate the creators of the data?

[flagged]

Re: Are OpenAI and Anthropic losing money on inference?

#302

Post by lawlessone »

datavirtue wrote: post #301
lawlessone wrote: post #280

Earlier quoted context omitted.

Does that include legal fights and potential payouts to artists and writers whose work was used without permission? Can anyone explain why it's not allowed to compensate the creators of the data?

[flagged]

why not?

Re: Are OpenAI and Anthropic losing money on inference?

#303

Post by BlindEyeHalo »

_sword wrote: post #276

I've done the modeling on this a few times and I always get to a place where inference can run at 50%+ gross margins, depending mostly on GPU depreciation and how good the host is at optimizing utilization. The challenge for the margins is whether or not you consider model training costs as part of the calculation. If model training isn't capitalized + amortized, margins are great. If they are amortized and need to b…

Why wouldn't you factor in training? It is not like you can train once and then have the model run for years. You need to constantly improve to keep up with the competition. The lifespan of a model is just a few months at this point.

Re: Are OpenAI and Anthropic losing money on inference?

#304

Post by citizenpaul »

aeternum wrote: post #224
simonw wrote: post #213

https://www.axios.com/2025/08/15/sam-altman-gpt5-launch-chat... quotes Sam Altman saying: > Most of what we're building out at this point is the inference [...] We're profitable on inference. If we didn't pay for training, we'd be a very profitable company.

This can be technically true without being actually true. IE OpenAI invests in Cursor/Windsurf/Startups that give away credits to users and make heavy use of inference API. Money flows back to OpenAI then OpenAI sends it back to those companies via credits/investment $. It's even more circular in this case because nvidia is also funding companies that generate significant inference. It'll be quite difficult to figure…

There a journalist ed zittron

https://www.wheresyoured.at/

That is an openai skeptic. His research if correct says not only is openai unprofitable but it likely never will be. Can't be ,its various finance ratios make early uber, amazon ect look downright fiscally frugal.

He is not a tech person for what that means to you.

Re: Are OpenAI and Anthropic losing money on inference?

#305

Post by [deleted] »

BlindEyeHalo wrote: post #303
_sword wrote: post #276

I've done the modeling on this a few times and I always get to a place where inference can run at 50%+ gross margins, depending mostly on GPU depreciation and how good the host is at optimizing utilization. The challenge for the margins is whether or not you consider model training costs as part of the calculation. If model training isn't capitalized + amortized, margins are great. If they are amortized and need to b…

Why wouldn't you factor in training? It is not like you can train once and then have the model run for years. You need to constantly improve to keep up with the competition. The lifespan of a model is just a few months at this point.

[deleted]

Re: Are OpenAI and Anthropic losing money on inference?

#306

Post by DenisM »

dcre wrote: post #291
827a wrote: post #256

Earlier quoted context omitted.

OpenAI and Anthropic have very different customer bases and usage profiles. I'd estimate a significantly higher percentage of Anthropic's tokens are paid by the customer than OpenAI's. The ChatGPT free tier is magnitudes more popular than Claude's free tier, and Anthropic in all likelihood does a higher percentage of API business versus consumer business than OpenAI does. In other words, its possible this story is co…

Good point, very possible that Altman is excluding free tier as a marketing cost even if it loses more than they make on paid customers. On the other hand they may be able to cut free tier costs a lot by having the model router send queries to gpt-5-mini where before they were going to 4o.

Free tier provides a lot of training material. Every time you correct ChatGPT on its mistakes you’re giving them knowledge that’s not in any book or website.

Thats a moat, albeit one that is slow to build.

Re: Are OpenAI and Anthropic losing money on inference?

#307

Post by Avshalom »

dcre wrote: post #219
simonw wrote: post #213

https://www.axios.com/2025/08/15/sam-altman-gpt5-launch-chat... quotes Sam Altman saying: > Most of what we're building out at this point is the inference [...] We're profitable on inference. If we didn't pay for training, we'd be a very profitable company.

ICYMI, Amodei said the same in much greater detail: "If you consider each model to be a company, the model that was trained in 2023 was profitable. You paid $100 million, and then it made $200 million of revenue. There's some cost to inference with the model, but let's just assume, in this cartoonish cartoon example, that even if you add those two up, you're kind of in a good state. So, if every model was a company,…

Okay but noticeably he invents two numbers then pretends that a third number is irrelevant in order to claim that each model (which is not a company) is a profitable company.

You'd think maybe the CEO might be able to give a ball park on the profit made off that 2023 model.

ETA: "You paid $100 million... There's some cost to inference with the model, but let's just assume ... that even if you add those two up, you're kind of in a good state."

You see this right? He literally says that if you assume revenue exceeds costs then it's profitable. He doesn't actually say that it does though.

Re: Are OpenAI and Anthropic losing money on inference?

#309

Post by DenisM »

dcre wrote: post #219
simonw wrote: post #213

https://www.axios.com/2025/08/15/sam-altman-gpt5-launch-chat... quotes Sam Altman saying: > Most of what we're building out at this point is the inference [...] We're profitable on inference. If we didn't pay for training, we'd be a very profitable company.

ICYMI, Amodei said the same in much greater detail: "If you consider each model to be a company, the model that was trained in 2023 was profitable. You paid $100 million, and then it made $200 million of revenue. There's some cost to inference with the model, but let's just assume, in this cartoonish cartoon example, that even if you add those two up, you're kind of in a good state. So, if every model was a company,…

Fantastic perspective.

Basically each new company puts competitive pressure on the previous company, and together they compress margins.

They are racing themselves to the bottom. I imagine they know this and bet on AGI primacy.

Re: Are OpenAI and Anthropic losing money on inference?

#310

Post by wahnfrieden »

ath3nd wrote: post #151

Yes they are, they are deeply deeply unprofitable and that's why they need endless investments to prop them up. That's why Microsoft is not doing the deal with OpenAI, that's why Claude was fiddling with token limits just a couple of weeks ago. It's a huge bubble, and the only winner at this moment is Nvidia.

Citation? Investments aren't evidence of unprofitability in inference
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