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Is AI Profitable Yet?

isaiprofitable.com

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Re: Is AI Profitable Yet?

#151

Post by mgh2 »

sigmar wrote: post #136
mgh2 wrote: post #60

Earlier quoted context omitted.

The strategy of "scale for long term market dominance" or the idea of "build it and they will come" [1] were premised on the notion that adoption will be organic. AI usage seems to have plateaued overall [2], except for niche use cases like coding, that is why companies are forcing it on their employees to justify ROI [3] or creating "products" w/ AI features [4] or embedded addiction. [1] https://news.ycombinator.co…

Plateaued? Lol. Based on what? Pg 18 and 45 on that link are not showing a plateau.

[dead]

Re: Is AI Profitable Yet?

#152

Post by casualscience »

crowbahr wrote: post #77
casualscience wrote: post #53

How are the Google numbers calculated? I've seen their net income increasing a lot as they've rolled out Gemini. This suggests that Gemini tokens are actually profitable, or at least not extremely unprofitable. Yet this site suggests that tokens are very unprofitable

Google is making money on selling cloud compute. Their margins have gone from 9% to 32%. They're soaking up the investor bonanza into AI - Gemini ain't making them money. For context Cloud Compute made 20bn in Q1, Other services made 90bn.

Search, yt, etc.. are the real revenue sources for Google. But they are serving [3.2 quadrillion tokens per month](https://blog.google/innovation-and-ai/sundar-pichai-io-2026/...) and have ramped up a ton in 2026, yet profits continue to expand.

Comparing to ad revenue from a company like meta, the story that Gemini tokens are a strong cash drag on Google just doesn't add up. It seems at worst they are losing like 50 cents/1M tokens (including r&d spend, data centers, etc..), and very possible they are actually profitable per token.

Which is much better than anthropic and openai.

Re: Is AI Profitable Yet?

#153

Post by unmole »

bandrami wrote: post #150
unmole wrote: post #66

Earlier quoted context omitted.

Yeah, institutional investors who plowed billions into them are unsophisticated rubes who got hoodwinked because they don't get GAAP. And it's not like both OpenAI and Anthropic are both going to IPO soon which would require disclosures far beyond GAAP numbers. /s

I take it you weren't alive in 2008 if you say that sarcastically

You should do a Michael Burry and go short. Clearly you seem to think you are much better informed, put your money where your mouth is.

Re: Is AI Profitable Yet?

#154

Post by charcircuit »

abathologist wrote: post #137
charcircuit wrote: post #96

This ignores how much the stock has grown due to AI. Also many of these companies like Amazon, Google, and Meta drive a lot of incremental value due to both AI powered content suggestion and AI powered ad suggestion. Personalized ads has driven a ton of revenue.

Good point. We mustn't forget the magical money box: that's where the real value is delivered!

If you can spend $1 to raise the value of your company by $2 it makes sense to do regardless of if that $1 is directly earning a profit.

Re: Is AI Profitable Yet?

#155

Post by onetokeoverthe »

shimman wrote: post #46
crystal_revenge wrote: post #29

It’s weird to me that people here suddenly seem to care about profitability for relatively early stage companies just because they’re “AI”. I know a traditional SaaS company I worked for that IPO’d years ago and still has no signs that they can be profitable (and many others like it) and nobody seems particularly concerned.

Well seeing how they've all collectively spent over a trillion dollars and American citizens still don't have medicare for all, universal childcare, free school lunch, a publics job program, or universal education; it's quite easy to see why the American public has soundly rejected this technology where some are even trying to inflict violence to stop it.

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Re: Is AI Profitable Yet?

#156

Post by bandrami »

unmole wrote: post #153
bandrami wrote: post #150

Earlier quoted context omitted.

I take it you weren't alive in 2008 if you say that sarcastically

You should do a Michael Burry and go short. Clearly you seem to think you are much better informed, put your money where your mouth is.

Shorting isn't the magic trick people seem to think it is, but yes I'm heavily hedged for OpenAI's IPO failing and taking Oracle down with it

Re: Is AI Profitable Yet?

#157

Post by jwitthuhn »

throwaway85825 wrote: post #90
conradkay wrote: post #85

The numbers for Meta are pretty misleading, I assume the $3 billion is something like direct generative AI revenue? Sure they're torching money on building consumer LLMs, but they seem to be doing very well optimizing things like ad ranking https://engineering.fb.com/2025/11/10/ml-applications/metas-... https://engineering.fb.com/2026/03/31/ml-applications/meta-a...

Isn't ad ranking just SORT price;

For immediate revenue yes, but if you want advertisers to keep coming back you need to give them a good conversion rate.

Re: Is AI Profitable Yet?

#158

Post by fsckboy »

Retric wrote: post #130
fsckboy wrote: post #79

Earlier quoted context omitted.

if these companies go bankrupt, they will have spent (not lost) all their money, the large amounts of money that they got from investors. That money generated profits for other companies they bought stuff from, and income for their employees, and capital gains for other people if AIco acquired other companies. the market cap of a company is computed by the current price of a company's shares, the last price paid; not…

That’s an overly simplified model. AI companies spending results in infrastructure beyond the company such as manufacturing capacity, power lines, software systems, and even individual expertise. If they fail then the negative impact ripples through the economy due to misallocation of resources.

>infrastructure beyond the company

consider all the companies in a market and those that feed that market to be one virtual mega company, add up all the valuations and revenue streams, costs, etc and aggregate all the investors into one. Nothing changes about the picture I drew. We simplify models to make the real world understandable.

>negative impact ripples through the economy due to misallocation of resources

free or relatively free financial markets are the only way, the best way, the ne plus ultra of ways we know to allocate capital, we have no better way than for the owner of the capital and the reapers of the loss or reward to make a considered opinion that is risk "impedance" matched. By definition, the market does not "misallocate" capital, it optimally allocates it.

your theory is that we could somehow know the future, but that's a fallacy.

Re: Is AI Profitable Yet?

#159

Post by xigoi »

sothatsit wrote: post #83
beloch wrote: post #27

Remember the model: 1. Outspend and outlast your competition until you have market dominance. Win over and lock in your customers with sweetheart deals. 2. Enshittify and squeeze your customers to pay back your debt. If you're using AI, you're not paying the true cost right now because we're in phase 1. Be ready for phase 2.

Or, tokens are more like energy and prices will drop over time until they reach some equilibrium. The big labs are actively moving into the application layer, where they’ll have more pricing power. Maybe that layer will end up with a Mac (Anthropic) vs Windows (OpenAI) vs Linux (open-source) dynamic as well if they can create a moat. But so far it’s pretty easy to move between providers.

> Or, tokens are more like energy and prices will drop over time until they reach some equilibrium.

In that case, AI companies will never get their money back, leading to a huge crash.

Re: Is AI Profitable Yet?

#160

Post by Retric »

fsckboy wrote: post #158
Retric wrote: post #130

Earlier quoted context omitted.

That’s an overly simplified model. AI companies spending results in infrastructure beyond the company such as manufacturing capacity, power lines, software systems, and even individual expertise. If they fail then the negative impact ripples through the economy due to misallocation of resources.

> infrastructure beyond the company consider all the companies in a market and those that feed that market to be one virtual mega company, add up all the valuations and revenue streams, costs, etc and aggregate all the investors into one. Nothing changes about the picture I drew. We simplify models to make the real world understandable. > negative impact ripples through the economy due to misallocation of resources f…

> one virtual mega company

Free market efficiency is inherently tied to having multiple companies. Treating the entire economy as a single company gives nonsensical results because it fundamentally differs from what actually occurs. You might as well compare the economy to a game of tick tack toe, inherent complexity isn’t something you can simplify it has meaningful consequences.

Your ideas like many other ideas are simply wrong.

> could somehow know the future

Perfect accuracy isn’t the only possibility here, there’s levels of error.

Our system involves intermediaries between the actual owners of capital and the allocation of that capital who have very different incentives. When the worst possibility is missing a bonus there’s little difference between losing 10% of an investors money and 100%. That results in inefficiency through the misalignment of incentives.

That is actually true, and thus there’s no way to gloss over that truth without simply being wrong.

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