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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

#291

Post by mchusma »

postalrat wrote: post #231
bitmasher9 wrote: post #203

Earlier quoted context omitted.

The difference in the cost of compute between 2026 and 2036 won’t be nearly as large as the difference in the cost of compute between 2016 and 2026. Even at 2016 the slowdown in improvements was noticeable. We might see a one time bump in inference when we move off GPUs onto more limited and efficient dedicated hardware, but the sustained fast pace of improvements are far behind us.

I'm predicting now that there is a clear use-case for this tech that work will (and has) accelerate specialized hardware, software, models, etc that will run much more efficiently in 10 years. So that the real token costs will be a fraction of what they are now.

You can run models on FPGAs and get massive cost, speed, and throughput gains (like 10x). The reason people don’t do it is because of other improvements (algorithmic) means that nobody really thinks locking into a model makes sense…yet. Would I want to use gpt 4o for anything today at 1/10th the price? That would be $0.40 per input, $1.50 per output. Gemma-4 31b is much more capable and cheaper. So a FPGA version of the model is just not worth it today.

But if progress begins to slow down, then the economics work. Maybe Gemma 4 is a good example. It feels really generally useful. Getting it at 1/10th the cost feels like it could be competitive in 2 years.

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

#292

Post by lelanthran »

paulddraper wrote: post #264
lelanthran wrote: post #184

Earlier quoted context omitted.

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.

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

By their accounts they are in striking distance of profitability. Until they go public all we can do is estimate how much they burn by looking at how quickly they need more capital - this latest investment by Amazon ($5b investment with on $100b returned over 5 years) tells me that their previous raises have been spent.

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

#293

Post by jurgenburgen »

twoodfin wrote: post #282
jcgrillo wrote: post #271

Earlier quoted context omitted.

> as costs go down Huh? Why would that happen? Indications are that costs will likely go up , especially if currently vendors are selling tokens at a loss.

The main operational expense of a million LLM tokens is pennies of electricity. Even if you generously depreciate the GPU and other hardware, it’s hard to believe inference at scale in April 2026 isn’t highly profitable.

> The main operational expense of a million LLM tokens is pennies of electricity.

I think you meant dollars of electricity.

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

#294

Post by jurgenburgen »

xboxnolifes wrote: post #206
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…

If there is bubble to be popped, I'm guessing there's still a few years before it happens. Just based on the timeline of events, maybe end of 2028. Even if the big players find profitability, all of the other companies latching onto the AI-first identity will probably pop by then.

Private credit funds are already gating redemptions. Now with the energy crisis stemming from the war raising interest rates it’s not unimaginable that this pops the bubble.

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

#295

Post by paradoxyl »

stackskipton wrote: post #211
nielsole wrote: post #194

Earlier quoted context omitted.

I don't know about SEC rules but the anthropic CEO said they have a 50%+ margin on API pricing.

SEC rules means CEO cannot lie or deliberately hide the cost of something. 50%+ Margin statements have basically been "We are making 50% on delivering it." This does not include ANY of the costs of getting to this point, training, scraping, datacenters, people and so forth. They are basically saying "Oh yea, the cost of GAS in the car is only X so charging Y per mile is great margin" while ignoring maintenance, cost…

That's a tad naive. CEOs can and have and often lied about everything:

Sam Bankman-Fried, Elizabeth Holmes, Kenneth Lay - and hundreds if not thousands more.

The SEC is a regulatory agency, not able to bring criminal charges. The above-named for the most part had to be prosecuted by the Department of Justice or sometimes state attorneys.

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

#297

Post by vanviegen »

devolving-dev wrote: post #175
electroly wrote: post #158

Earlier quoted context omitted.

tbh, that's a good point about the voice agents that I hadn't considered. I guess there are some latency-sensitive inference workloads. Thanks for pointing that out.

Yeah, also stuff like robotics which might not really exist today but could be big in the future.

You'll want the time-sensitive parts (motor control) to be running locally anyway.

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

#298

Post by bsder »

neya wrote: post #108
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…

I remember seeing this extremely shocking graph of top AI companies on Facebook on how the money just keeps changing hands between a handful of companies. Almost seemed like a scam.

It's the Carly Fiorina playbook. Welcome back to the TeleBomb! Lucent sends their regards.

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

#299

Post by ItsBob »

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 think you're right. I think they are tightening the noose!

I use Gemini quite extensively - I have a 5TB storage plan with Google so I get Pro thrown in. I also have Github Copilot Pro for IDE integration.

However, lately it feels like I keep tripping the circuit breaker on Gemini more easily and get the message about using up all my Pro tokens for the next 3 hours.

I used to be able to work most of the day before it hit the brakes but I can trigger it before work in the mornings now... that seems to me like they're tightening the usage limits!

I use a Dell Micro PC with an Intel Core Ultra 265 so it's nice and fast but it has no GPU, hence the reason I use Gemini but I'm now starting to think that, despite the RAM cost, before the end of the year I'll buy a PC with a monster GPU in it and run all my AI locally... the direction of travel is clearly heading towards a massive cost increase so might as well get ahead of it: it's not going to become cheaper, that's for sure!

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

#300

Post by sandworm101 »

mchusma wrote: post #291
postalrat wrote: post #231

Earlier quoted context omitted.

I'm predicting now that there is a clear use-case for this tech that work will (and has) accelerate specialized hardware, software, models, etc that will run much more efficiently in 10 years. So that the real token costs will be a fraction of what they are now.

You can run models on FPGAs and get massive cost, speed, and throughput gains (like 10x). The reason people don’t do it is because of other improvements (algorithmic) means that nobody really thinks locking into a model makes sense…yet. Would I want to use gpt 4o for anything today at 1/10th the price? That would be $0.40 per input, $1.50 per output. Gemma-4 31b is much more capable and cheaper. So a FPGA version of…

The fpga would be for prototyping. The real progress comes from asics ... exactly as we saw with bitcoin mining. This GPU-based approach will eventually give way to bespoke circuits once everyone picks a favorite model.
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