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Daily reminder that API pricing for both OpenAI and Anthropic is profitable today and that the cost of tokens for existing models falls sharply over time for a variety of reasons (unless we go into a far worse hardware inflationary environment than we are in today). The only thing any of them are losing money on is the 200$ a month plans, and you betchya that they're moving as many enterprises to per token pricing as…
They could have existed indefinitely as a service layer that was reliant on other companies feeling charitable, like Firefox, but they also wanted to get rich.
These numbers show that OpenAI is boned. They have no path to profitability and if they raise prices or cut services they will strangle their golden goose. They could have existed indefinitely as a service layer that was reliant on other companies feeling charitable, like Firefox, but they also wanted to get rich.
not sure where this constant dooming comes from
Earlier quoted context omitted.
Sales and marketing have to be added to the COR, which makes COR slightly > Revenue.
No, no they do not. Those are operating expenses. This is accounting 101.
Financial Times: > A person familiar with the matter said the large majority of that jump reflected a non-cash accounting charge linked to the company’s previous structure rather than its underlying operations. > Before OpenAI’s switch late last year to become a public benefit corporation, investors in the company received convertible interest rights rather than conventional equity. Under US accounting rules, those i…
Revenue is higher than cost of revenue and revenue is growing faster than cost of revenue. We know OpenAI is forecasting $25-30B revenue for 2026. They will be very close to breaking even at those number. Given Anthropic has forecast more revenue than OpenAI and we know has spent less on R&D (cite their desperate scramble for compute capacity!) the rumours of them being profitable this year seem very credible.
Sales and marketing have to be added to the COR, which makes COR slightly > Revenue.
The R&D expenditure seems reasonable, and the revenue numbers seem realistic. I have no trouble believing they can be profitable by 2030 or much sooner. What I don't get is how you get from $30B in revenue to a nearly $1T valuation, but that seems almost level-headed compared to SpaceX, and it's not like any of the big tech companies' valuations make much sense in the context of their revenue.
You can debate the assumptions, but it isn't witchcraft. The math is simple.
Earlier quoted context omitted.
> 13 billion in revenue, 7.5 in cost of revenue. and 7.81 billion in R&D from last year. I don't know how long it took to build the weights for the current model, or exactly how much that costs, but it's certainly more than zero days and zero dollars. I also doubt that OpenAI could set that R&D expense to zero and survive without an agreement from Anthropic that they'll do the same... so that R&D expense can't be ign…
You're missing the point. There was a lot of debate around if inference was subsidized or not. And that's a huge point to confirm in the public discourse.
Ed Zitron was right all along?!