We already know they are not profitable in the truest sense w.r.t valuation.
FCFF = EBIT(1-t) - Reinvestment.
This is how the operating assets are valued via intrinsic valuation.
Could they generate immense earnings and cash flows net of reinvestment? Sure. DO I believe so? Nope. They've got way too out infront ahead of their skies about where this technology belongs and operates best.
Many people have reported that their use would be drastically more expensive with the API. None have (afaict) reported how much the average subscription is used.
Aren't there providers who will run open models for you? If those are profitable, or haven't taken large investments, then it's reasonable to assume that the same thing is profitable for other providers.
Comments
There is a narrative that subscriptions are subsidized. Perhaps we should consider that API users are being price gouged?
No way of knowing, this report is about revenue not profit.
We already know they are not profitable in the truest sense w.r.t valuation.
FCFF = EBIT(1-t) - Reinvestment.
This is how the operating assets are valued via intrinsic valuation.
Could they generate immense earnings and cash flows net of reinvestment? Sure. DO I believe so? Nope. They've got way too out infront ahead of their skies about where this technology belongs and operates best.
There is such a narrative.
Many people have reported that their use would be drastically more expensive with the API. None have (afaict) reported how much the average subscription is used.
Or maybe everyone’s paying proportionately to value received?
Inference is profitable. Even open models can be profitable. Obviously your cost of capital is the thing that influences that the most.
Do we know this as a fact? Do we have proofs it is profitable? I haven’t seen any evidence so far, it’s mostly something repeated and accepted as fact
Aren't there providers who will run open models for you? If those are profitable, or haven't taken large investments, then it's reasonable to assume that the same thing is profitable for other providers.
OpenRouter exists
There is so much competition gouging is impossible. If somebody is willing to pay Anthropic's high prices let them. I don't.
And its only transitory.
Both OAI and Anthropic tried to time their pricing to look good heading into an IPO window.
They got screwed as China has kept up. Wonder how they're gonna overcome this problem - protectionism? Maybe.
Most developers would rather use Claude or Codex than mess around with anything else. Codex has 15+ million users.
But the 15 millions includes free users and companies purchasing seats in bulk, no?
Very impressive growth for sure (they doubled in around a month?), but we don’t know the ratio of paying seats
You're projecting your preference for these products onto a hugely fragmented group of people.
It cannot be denied that local LLM people are very proud. But how many of them are there really?