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The Growing Compute Shortage

apollo.com

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Re: The Growing Compute Shortage

#41

Post by reticulates »

tristanj wrote: post #35
arijun wrote: post #22

Earlier quoted context omitted.

Do they actually have net positive income (excluding research, I guess)? I assumed no but I’ve never seen number one way or another.

Anthropic is currently profitable, generating around $1B/quarter and ~$50B in ARR. About 75% to 85% of Anthropic's revenue comes from its usage-based API business, which has a gross margin that exceeds 80%. https://www.tradingkey.com/analysis/stocks/us-stocks/2620181... Meanwhile, OpenAI is at ~$25B ARR, but is likely not yet profitable.

Where are you getting that 80% figure from? Even semi analysis, the most aggressively optimistic analysts, put it at around 60%.

https://newsletter.semianalysis.com/p/anthropic-growth-and-b...

Re: The Growing Compute Shortage

#42

Post by sjsdaiuasgdia »

rayiner wrote: post #15
reticulates wrote: post #13

Yes but how much of that compute shortage is from demand that is subsidized? We’ve seen companies like Uber drastically cut how much they are willing to spend on AI because they are paying actual usage costs, while at the same time OpenAI and Anthropic increase the limits on their fixed cost plans for individuals meaning people not paying usage costs are using it more and more… doesn’t this show that the compute shor…

The compute demand is not fake. Non-coding industries have barely begun to deploy this technology. In the legal sector, I’ve been a tech pessimist my entire career, because it was uniformly quite bad. I’ve spent the last few months demoing legal tools backed by frontier models, and we’re definitely going to buy one of them. They’re real and they work and they address a bunch of needs.

I'll believe you when I stop seeing lawyers getting busted for hallucinated references in their AI-generated filings.

Re: The Growing Compute Shortage

#43

Post by fhdkweig »

eternauta3k wrote: post #29
StilesCrisis wrote: post #20

Earlier quoted context omitted.

"Shortage" means exactly that. It doesn't mean "there's no GPUs at all." In a gasoline shortage, prices go up and there are lines at the pump, but there are still cars on the road.

The lines at the pump only happened because of rationing rules, which led people to hoard and buy gas when they otherwise wouldn't have.

If you are talking about Russia, hoarding or not, if you burn enough refineries, you will have shortages.

Re: The Growing Compute Shortage

#44

Post by antr »

khurs wrote: post #31

This is written by a financial company that is pouring billions into data centres. https://www.apollo.com/insights-news/pressreleases/2026/01/a... https://www.apollo.com/insights-news/pressreleases/2025/11/a... etc

So Apollo believes in the thesis strongly enough to put billions of its own capital behind it. That sounds more like putting their money where their mouth is than a rebuttal.

Re: The Growing Compute Shortage

#45

Post by reticulates »

OGWhales wrote: post #38
reticulates wrote: post #21

Earlier quoted context omitted.

no, even if we assume their margins are 90% (they are not) they are still losing money because the $200 plans allow for tens of thousands of dollars worth of inference and a huge number of users are milking every cent across multiple accounts. Every “reset” OpenAI and Anthropic do is setting money on fire. If it were true that they’re making money hand over fist they wouldn’t need to raise tens of billions of dollars…

> even if we assume their margins are 90% (they are not) How do you know they are not? It will be curious to see the cost of inference for these newly released open weight models and will help give an idea of the actual cost of inference. But for now, I think saying the $200 plans allows for "tens of thousands of dollars worth of inference" provides very little insight when you are measuring the inference cost in API…

We don’t “know” because they haven’t released any numbers but the most optimistic estimates (which many people believe are very very optimistic) put it at 60%: https://newsletter.semianalysis.com/p/anthropic-growth-and-b...

The simple question to ask is, if it is so profitable, where is all the money going? If Anthropic have 90% margins on API usage and API usage is $50bn+ in revenue per year, where is the $45bn going? Why do they need to raise so much cash, constantly?

Re: The Growing Compute Shortage

#46

Post by Diogenesian »

Normal_gaussian wrote: post #7

What on earth is that H100 price trend graph. The equally spaced x-axis points are 2x6 months, 6x3 months, 9x1 month. The whole visualisation of the trend is ruined on the back of that. There are liars, damned liars, and people who play silly buggers with scales.

I think this is a severely compromised visualization but not actually misleading, either by design or in effect. Seems like they wanted to include the full picture - namely, that the 2026 spike is still less than the 2023 price when new, but doing all the data monthly would have been hard to read. Note that doing it all monthly would have made the derivative of 2026 more visually stark, so the way the graph is presented actually weakens their argument (albeit inconsequentially).

I think the best way to fix the graph would be shading or line texture to indicate the scale. The biggest problem is that the inconsistent scale is a surprise you only see upon close reading, after you've visually digested the trend. So the scale needs to be apparent in this first visual digest. (Sort of like how many logarithmic charts include thin axis marker lines in the body of the graph itself, so as to immediately inform a quick glance.)

Re: The Growing Compute Shortage

#47

Post by user43928 »

isodev wrote: post #37

I feel this post is blind to many of the secondary side effects of this "shortage". The rapid increase in prices and delivery times is having deleterious effects on all things tech - everything from phones to smart appliances and all sorts of gadgets has moved into unreachable price levels. Just imagine, if the rumours are true and Apple's 'foldable' phone costs 2500€ or more - who is going to buys this? So much of A…

I for one am going to buy Apple's foldable at the expected price between $2000-$2500.

As long as they sell an iPhone 18 at a more accessible price point, I do not see the issue.

Re: The Growing Compute Shortage

#48

Post by cmiles8 »

Four things are currently correct:

1. There is a huge demand for compute, specifically GPU compute

2. Infrastructure providers are building like crazy, including taking on massive debt to fund this because their own cash flow can’t cover the bills

3. The demand for that compute is broadly being paid for with investor dollars pumping up the valuation of AI companies, not cash flow from said companies. If those subsidies go away these companies can’t pay for the compute they’re buying.

4. Those that own a lot of compute are starting to offload it, looking for interested buyers (e.g., Meta looking to build a cloud biz or SpaceX selling its excess compute to others).

All while advances in open weight models are making it appear that the major labs truly have no model moat.

Put together those 4 things paint a very ugly business and financial picture that seems unlikely to just correct itself naturally. History tells us, very clearly, that “the way out” of such a scenario is a series of events that is likely to leave some of the current players severely damaged if not simply out of business.

Re: The Growing Compute Shortage

#49

Post by OGWhales »

reticulates wrote: post #41
tristanj wrote: post #35

Earlier quoted context omitted.

Anthropic is currently profitable, generating around $1B/quarter and ~$50B in ARR. About 75% to 85% of Anthropic's revenue comes from its usage-based API business, which has a gross margin that exceeds 80%. https://www.tradingkey.com/analysis/stocks/us-stocks/2620181... Meanwhile, OpenAI is at ~$25B ARR, but is likely not yet profitable.

Where are you getting that 80% figure from? Even semi analysis, the most aggressively optimistic analysts, put it at around 60%. https://newsletter.semianalysis.com/p/anthropic-growth-and-b...

>The divergence in business models is directly reflected in financial data. SemiAnalysis estimates that Anthropic's overall gross margin has rebounded from negative 94% in 2024 to the mid-60% range, with the gross margin of its API business exceeding 80%.

Their link seems to claim semi analysis thinks it is 80%. It looks like it might be referencing this newer article from them, as the same picture is in both articles, but I didn't feel like paying to find out: https://newsletter.semianalysis.com/p/anthropic-3q26-profit-...

Re: The Growing Compute Shortage

#50

Post by zer00eyz »

> Compute Is Becoming a Competitive Moat

No, it is not a moat.

The story here changes dramatically when you start to look at the facets of the industry that the poster is skipping over.

> At the semiconductor level, TSMC’s advanced-node capacity—particularly N3, which underpins much of the AI accelerator ecosystem—is approaching full utilization through at least 2027.

MS bought more GPU's than they had rack space for: https://www.datacenterdynamics.com/en/news/microsoft-has-ai-...

Open AI bought out the memory: https://x.com/kwharrison13/status/2029248559388746168 but they have no means to consume anywhere close to their order.

Meanwhile both google and amazon are consuming a bunch of TSMC capacity to build their own ai chips, bypassing NVIDIA ... And as for them, they seem to be addicted to burning power to keep scaling, and that is a massive problem - if the next gen chips burn more watts for the same amount of work that is only going to exacerbate the power issues were having not help them.

Tokens are just Gacha for business. https://en.wikipedia.org/wiki/Gacha_game - It is software you dont control and you are going to pay for a cache miss. That isnt a model that is sustainable (even more so in the authors multi agent flows).

At the point that prices come down, (and they will) you're going to see a lot of corporations move from the cloud to on premise or back into colocation.

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