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Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

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Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#261

Post by lelanthran »

xdennis wrote: post #199
loveparade wrote: post #29

Earlier quoted context omitted.

I give it one to two more years before open source models have fully caught up. Products are commodities and models are commodities too. GPUs cores are still hard to get for inference at scale right now. They need a platform with lock in but unsure what that would look like and why it wouldn't be based on open source models.

Why do people have such faith in "open source" models? There's nothing "open source" about them. No individuals have the ability to train such modules. They are just released by companies to commoditize the models of the competition. If Mythos is the endgame, companies won't release open-weight equivalents, and no private individuals have the capital to train such models.

> There's nothing "open source" about them. No individuals have the ability to train such modules.

I expect that people on subscriptions can be asked to donate 1 query a month towards an open source distillery.

It should be good enough to distill SOTA models over time.

The result won't be perfect, but it will be close.

Think SETI@home, but it'll be model distillation instead.

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#262

Post by verdverm »

avereveard wrote: post #94
shubhamjain wrote: post #11

If you think you need to spend $100B, does using a third-party cloud provider still make sense? It doesn’t matter what sweet deal Amazon is pitching—in that scenario, you’d want to own your stack. Especially in a hyper-competitive field like this, where margins are going to matter a lot soon. It feels like these hyperscalers are just raising as much as they can giving extremely rosy projections becauses these sooner…

Cannot get Tranium anywhere else and NVIDIA commands a super high premium.

Similar for Google and their TPU, which Anthropic announced two weeks ago

https://www.anthropic.com/news/google-broadcom-partnership-c...

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#263

Post by bobro »

czhu12 wrote: post #229
Argonaut998 wrote: post #131

Does anyone feel that the jig is almost up? Surely the returns aren’t anywhere close to what investors expect with the sheer amount of cash at this point in time. Are Anthropic and OpenAI rushing to IPO for immediate cash so they can delay the inevitable? Surely this cycle of robbing Peter to pay Paul to pay John to pay Tim must end. We are only just now getting a taste of the “true cost” of these tokens. Then there…

I don’t necessarily disagree but to provide some counter points: 1. Model providers are currently profitable when just counting the cost to serve tokens for inference[1]. They lose money training the next generation of models. 2. Open models don’t work nearly as well. Given that tokens are still relatively cheap, and hallucinations are expensive, I’ve not seen a huge up tick in open model usage for coding agents yet.…

Your point 1 and point 2 live in direct tension. The reason the closed models are better is very likely that they are paying so much to train them.

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#264

Post by paulddraper »

lelanthran wrote: post #184
paulddraper wrote: post #171

Earlier quoted context omitted.

Anthropic revenue is ~$30B/year.

Revenue is a meaningless measure though; what's the spend:income ratio? Excluding capital investments, what's the cost of operations? At a very minimum, to repay the +$100b in investment within a reasonable timeframe, what's the minimum figure they have to bank post-tax each month?

Reportedly, they lost $4B last year.

By all accounts they in striking distance of profitability if they wanted.

It makes sense; Anthropic is by far our biggest vendor expense outside of AWS. And I suspect that is true at a number of companies.

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#265

Post by paulddraper »

coredog64 wrote: post #233
giancarlostoro wrote: post #182

Earlier quoted context omitted.

> Surely this cycle of robbing Peter to pay Paul to pay John to pay Tim must end. I think a LOT of companies really never needed to be on the public market, and its a darn shame that so many go on the stock market, we have this obnoxious culture where you have to fire tons of people if you have a bad quarter just to show you're stopping the bleeding. Companies literally fire and hire x number of people every quarter…

So you're asking for some type of equity that's private? Seriously though, I have seen some very large companies like Tibco and Dell go private for an extended period of time as a means of avoiding shareholder nonsense during restructuring.

> So you're asking for some type of equity that's private?

To read more: https://en.wikipedia.org/wiki/Private_equity

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#266

Post by paulddraper »

sandworm101 wrote: post #220
matrik wrote: post #196

Earlier quoted context omitted.

I'm not sure this information is grounded, but I remember to have read somewhere the inference is indeed profitable. My personal experience is similar. Running 2x3090s draw 500-600W and you can locally run amazing models with a similar setup.

Running the model isnt the cost. Watts per token is the math they show investors. You also have to be constantly training new models, which currently needs more compute than servicing the customer base. You have to biuld datacenters, and possibly powerplants to feed them. You have to carry debts. And you will need to buy new GPUs/ram every few years to remain competative. The total business is vastly different than s…

You are in violent agreement.

> inference is indeed profitable

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#267

Post by [deleted] »

Argonaut998 wrote: post #131

Does anyone feel that the jig is almost up? Surely the returns aren’t anywhere close to what investors expect with the sheer amount of cash at this point in time. Are Anthropic and OpenAI rushing to IPO for immediate cash so they can delay the inevitable? Surely this cycle of robbing Peter to pay Paul to pay John to pay Tim must end. We are only just now getting a taste of the “true cost” of these tokens. Then there…

[deleted]

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#268

Post by svnt »

mlinsey wrote: post #254
svnt wrote: post #222

Earlier quoted context omitted.

They are different observations, I think, though the phrasing confuses it: a) cost per successful task is rising — eg claude max allocation is functionally shrinking b) is there enough potential cost reduction in the queue to make up the gap c) if open models converge on a more efficient but slightly-less capable point (which has effectively happened) what is the actual moat?

Yes, cost per successful task is rising - ie, we are all paying effectively more for AI. And yet - Anthropic is still struggling to have enough capacity to serve demand - they are virtually sold out. And yes, are almost-as-good open models, on part with the closed models from 6 months ago (at worst), that are just a single Openrouter API call away, and yet Anthropic is still selling out. So people are paying for the…

I don’t have feelings about the AI industry to put aside. I would not have sufficient information to assess whether thingamajigs are legitimately valuable or whether they are tulips. The only indicator I see is the last point about people using it in the short term despite having access to cost effective alternatives, which actually points to irrationality/FOMO more than legitimate value.

What we are looking at looks to me like it is rapidly becoming a a commodity: it will become as existential as electricity and water to businesses, and it will be sold and marketed and regulated, more or less like a utility.

Re: Anthropic takes $5B from Amazon and pledges $100B in cloud spending in return

#269

Post by sassymuffinz »

czhu12 wrote: post #229
Argonaut998 wrote: post #131

Does anyone feel that the jig is almost up? Surely the returns aren’t anywhere close to what investors expect with the sheer amount of cash at this point in time. Are Anthropic and OpenAI rushing to IPO for immediate cash so they can delay the inevitable? Surely this cycle of robbing Peter to pay Paul to pay John to pay Tim must end. We are only just now getting a taste of the “true cost” of these tokens. Then there…

I don’t necessarily disagree but to provide some counter points: 1. Model providers are currently profitable when just counting the cost to serve tokens for inference[1]. They lose money training the next generation of models. 2. Open models don’t work nearly as well. Given that tokens are still relatively cheap, and hallucinations are expensive, I’ve not seen a huge up tick in open model usage for coding agents yet.…

If I start a business making a really special beef sandwich where I have to buy a farm every year for $1mil dollars, and then sell the sandwiches for $5, I can't get away with saying that my sandwiches turn a profit if the raw margin on the bread, the lettuce and the technical value of the weight of the beef is $3.

Sure my gross margin might be $2 on each sammie sold but I need to sell 500,000 sandwiches just to break even to be a viable business. The fact is these AI companies are playing the game where they talk about revenue and gross profit per token and just try to wave their hands in the face of anyone looking behind them at the crater they're throwing investor money into.

It's nothing but a gamble for AGI but the grand irony is that if that genie escapes out of the bottle the whole world economy is toast and money becomes meaningless anyway. I just can't comprehend the logic of why anyone is investing in this apart from short term gains.

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