AMD, Alibaba should be on there too. AMD is making good money on AI, with R&D at less than half the AI revenue. Whereas Alibaba's weird financials show it's kinda-sorta-protifable?
I just wanna know how the OpenAI/Anthropic shell game works long-term. So both companies made equity deals with infrastructure providers; OpenAI on Azure, Anthropic on AWS, GCloud, and Colossus. They get a loan of compute credits and then pay for the compute with the credits. So the PaaS are effectively giving them free compute, then book it as revenue; and the AI provider lets them do inference and books that as revenue. So, it's like both types of company have a buffet, and let each other eat there for free. But somebody has to actually buy the pasta salad, with real dollars. Afaict, those real dollars are.... the cash reserves of the PaaS.
How long are they going to eat into that cash? Microsoft and AWS don't really have their own models, whereas Google and SpaceX do. And while Google has tons of cash, SpaceX is perpetually looking for cash. So the only player here that can actually afford to keep doing this, or leave the game entirely, is Google.
Outside investment is not a revenue, it's looking more like a pyramid scheme. It's yet more people putting their money in the scheme expecting a return
Either the actual revenue of paying customers ramp up or the bubble will pop at some point
I expect the paying customers will actually be companies buying ad, not people buying AI subscriptions
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.
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.
(I don't quite understand your take?) but overall, companies like cloudflare are basically firing people for the costs associated with AI and layoffs are starting to being questioned with this take.
I don't know what your statement is but if you are an employee, then as your employer is forcing you to tokenmax and forcing you to use slop and creating leaderboards for these token spend which will all end up forcing the company to bleed money afterwards they might even lay off people.
If you are an employer then there are still long term issues associated. For example, cloudflare is a company which hasn't been in profit but it has burnt through 5 million dollars per month for AI as it first created an incentive (shrewd even) for employees to use it (for everything) only to please the investors but in the end, its still unclear how profitable all of it is for cloudflare.
Perhaps I have misunderstood you but I really don't understand how its going to leave a lot of money on the table, the only thing I see is a race to the bottom.
These companies are spending more money than budgets of many countries enough to add 2+% to the US GDP so the amount of loss for if it comes all crashing down will be huge.
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 all the shares of the company were bought at that price, the ones who got shares cheaper are showing paper profits, unrealized. Those who have already cashed out have money in their bank accounts that was transferred from people who wanted to get in. If the company goes bankrupt, their shares will be worthless, but the money they paid for them still remains in the accounts of people who sold their shares: the money was not lost even if some people lost money.
I'm not going to keep going through it but the reason it works to value things the way we do is that the values are comparable and they frequently work out, so snapshots of the economy and the participants are comparable. But "losses" are not like taking gold and feeding it into some deep fold in the earth where it will disappear into the molten middle of earth.
Stock valuations are "expectations for the future". Those expectations weren't money, they were lottery tickes where the lottery consisted of human creativity and human effort. People buying and selling share are moving real money around to trade the expectations. The money didn't go anywhere, it's still there, it's just that expectations for the future have been reduced. It all boils down to humans trading some of their time and potential on a bet that things work out. Some people's effort gets more rewarded than others. Not every team wins the world cup, but people like to play and like to watch.
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.
That's one way to look at it, though it feels like you could say the same about the dot-com crash or 2008 which isn't too helpful. At the very least (extremely high-paying) jobs can be actually lost
This is way, way more neat and tidy than reality. When these stocks start to sink there is going to be an enormous evaporation of value from the overall market because people in riskier investments will get scared that other people will get scared. This will scare people with slightly safer investments, on up the line. Capital will dry up and velocity of money will drop. The market is not made by rational robots, it's run by barely sentient apes just minutes from reverting to crushing things with rocks. The markets run on vibes and fever dreams of hitting the next big thing.
Loss to who? Now all of a sudden, we are caring about investors and sovereign funds?
And I think we passed the threshold for crash down for AI, even if AI companies wont be that profitable. Nvidia/cloud providers will be profitable as long as there is demand for AI.
Their loss, big deal. Let them suffer. The problem is that when they crash they bring a lot of other stuff down along with them. The people who lost money in the 2008 crash were not the ones who suffered the aftermath.
Uhh I think a lot of people and their families likely have investment exposure to nvidia/hyperscalers. if places like Amazon spent unrealistically on ai or their stock goes down massively that could mean major job losses too.
If AI companies aren't that profitable...then they're going to stop spending so much money on GPUs to train AI models. A gigantic amount of Nvidia's profits would go bust overnight.
We go through this with every startup cycle. Startups are not expected to be profitable because they’re spending so much money on growth and R&D. The concept of running a business in an intentionally unprofitable state is confusing to those who don’t understand startup funding.
The weird thing is that so many people believe that inference is unprofitable. There are large open weights models that companies run at a profit while charging far less than what OpenAI and Anthropic charge. Deepseek V4 just made their 75% off deal permanent and it was already very cheap.
Yes, you have to consider costs of training the models, but as usage grows it’s going to become a smaller and smaller part of the business.
I think we will see some data center businesses and AI companies blow up, but I think the people expecting the entire AI scene to blow up because prices quadruple are going to be disappointed.
These companies are blowing through an incomparable amount of resources. If their bravado is misplaced, the economic impacts will be far more significant.
How so? Most of these companies will take a hit but will be fine Alphabet, Amazon, Google, etc can write off their entire investments in AI and will be a-OK. The pure AI companies will obviously be dead.
All of those companies will be fine, but they are currently valued on the stock market for future earnings. Investors anticipate them making a lot more money in the future. So stocks will slide dramatically. Open AI and Anthropic might not survive. And suddenly you see a 20-50% pull back on stocks. That impacts retirement and pension funds. It may trigger a panic and sell off across sectors.
This is what people said about the banks in 2007. Just because the big players’ balance sheets can take the hit doesn’t mean the wider economy is insulated.
A) they still screwed the economy and everyone in it except themselves. B) Nobody gives a shit about the banks as businesses. They got bailed out because they physically made much of the world’s economy function, like plumbing. That’s not going to happen here.
You're still ignoring their mention of the wider economy. The banks were bailed out, but everyone downstream of them still felt the brunt of the impact, atop paying for that bailout with tax dollars.
The stock market. Stocks crash, companies go belly-up, tons of people get laid off, unemployment spikes, people die. I don’t give a shit about the companies themselves. I do give a shit about who they employ, both directly and downstream, and the job market that will result from many of them losing their jobs.
The difference is the sheer scale of the spend. I bet that SaaS company hasn’t spent the annual GDP of a small nation. If Chat GPT can’t pay the bills it is going to ripple through the economy likely causing at minimum a large correction. If the SAAS company goes under hardly anyone noticed.
dot-com bubble? It's less about black or white, and more about how much of it. Nothing weird to me about caring given how it all also impacts peoples lives and much wilder all these numbers are becoming.
Difference is that Amazon, Microsoft, Google or Oracle are not going out of business if it all collapses. Neither chip or hardware manufacturers will be harmed.
I'm im no way expert on corporate finance, but Oracle has always been known to be sleaziest of sleazy companies. And Larry Ellison is still 6th richest person in the world and is not known to throw money on crazy moonshots like Mark Zuckerberg.
Oracle likely structured everything the way that its gonna be everyone else problem before they go down. No?
It does not have to be bad, it depends on who they lost it to. Nvidea probably wins, the data center construction companies, electric companies etc. The tricky thing about an economy is that big picture "losing" means money is not moving and "winning" means that it is.
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.
It’s weird to me that profitability is so thoroughly dismissed by the software tech industry because of an assumption that the tech industry will always be “early stage” and “high growth.”
We can look at a “success story” like Uber and it is still net negative over its entire existence. This is a business that’s in a literal monopoly/duopoly status in most markets it operates in with vastly reduced regulatory burden compared to the industry disrupted. Literally the ideal scenario for printing money and yet it hasn’t made any. It’s the poster child for the unicorn exit that founders dream of.
The end result is that Uber and companies like it are a financial instruments that transfer dollars away from one set of investors to another set of investors.
If Uber hasn’t yet made its investment back, I struggle to wonder how some of these AI ventures will ever make that money back when their expenditures make Uber look like a small little side project.
Meta has spent almost 4 years worth of its net income for FY2025 on AI going by this website’s data, and counting.
We are decades since Web 2.0 took off, almost 20 years since the iPhone launched, 50 years of Apple Computer. Software isn’t some new industry anymore. There isn’t an industry left that hasn’t completed its digital transformation. These spray and pray economies would have died off years ago if it wasn’t for the fact that software companies have uniquely low cost structures where they don’t need to build factories or distribution networks to get their products to their customers. These low cost structures might just be concealing the fact that it’s not going to be a growth industry forever.
And also: AI is basically the only thing anyone is talking about. Yeah, Uber existed and it's known about and was advertised and such. It has not overwhelmed every topic ever like the current LLM mandate has been. People are getting sit down and told they MUST engage with this stuff.
How has the sheer saturation of LLMs not resulted in profit? It has dominated the conversation, center stage, of every news outlet for like 4 years now. It is the most known-about thing currently out there.
And we haven't been able to convert that much captured attention into profitability yet? That seems... bad?
But why would you make it profitable now? We are still in the early innings and its growth at all costs. Growing from sustainable cash flow isn’t fast enough for investors, they want HYPERGROWTH (now with RAWBERRY)
Right! I think the only example that comes to mind for me as far as “bled money for years and eventually became a cash cow” is YouTube. Most other ventures that bled money that long ended up dying.
Maybe Reddit is an example? But my impression is that they ran a modest operation before going public.
ChatGPT is the 5th most visited website in the world. Gemini.Google.com is ranked above amazon.com. Where is the profit?
I am relatively pessimistic about the profitability of those panning for gold in the downstream AI market.
The core bottlenecks are power and computing capacity, and they actually trace back to the exact same issue. It all comes down to the physical energy it takes to flip or move a single bit inside the ram or disk storage. This concept is subject to fundamental physical barriers.
There are a few ways to tackle this, like improving power efficiency, reducing model size, or pushing hardware further. However, achieving orders-of-magnitude improvement in any of these areas will cost a massive amount of time and money. I wonder if governments, corporations, and investors have the patience to wait for these tech breakthroughs.
Yeah, my first impression when I saw this was: if this is accurate, the situation is not nearly as bad as I thought.
I do wonder why Nvida is included, though. If you include the company that all of the frontier models are pouring money into, of course the net (expenditure - profits) of the collective is going to be closer to zero :-)
If Nvidia is included, does that mean that the money Amazon, Microsoft, and Oracle get for selling compute to the frontier models are included in their revenue?
Because for Amazon in particular, the situation this pages shows is actually much WORSE than I expected. I thought they were making a killing selling compute for model training.
The critic I see most frequently on the unprofitability of AI is Ed Zitron. I am sincerely curious if he shorted Facebook's, Amazon's, or Google's stocks. Or if he's in index funds which have tech stocks like those.
For example: I have index funds which have some of these stocks. So I, by process of revealed-preference, don't think it's a bubble, or I think I will keep my money in through the bubble's pop. I don't have that much else to say!
For the record: I would respect the creator of this site equally or more if he/she said, "I'm shorting these stocks and this is why."
Right, especially given that majority of this investment is into GPUs and data centers that are amortized over a longer period of time. This is actually very hopeful.
Given how the curves look like in terms of ramping of spend, these are very healthy numbers.
Oh really? A 195% cost to revenue ratio isn't bad at all? I'm not a biz expert, but I spent a few minutes looking this up (e.g., what are usual cost-to-revenue ratios for new lines of business), and this sounds like BS to me.
Oh wow, they already got 50% of investments back in roughly three years? This is going to be insane money making machine. Or is it not the point op was trying to make?
AI startups taking unprofitable risky ventures in search of growth opportunity and future returns makes sense to me.
Maybe most of them or all of them lose on their bets, but there's potential for a future where revenue grows beyond the immense capex and research investments.
Oracle though... Immensely risky capex to service a startup industry with what will soon be a commodity...
It goes back to the whole, you don't make money mining gold, you make money selling shovels. Nvidia has been playing every tech hype cycle recently. Question is, what will be next.
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
The site doesn't suggest anything useful. It's more of a fun meme.
Building a datacenter that will produce hundreds of billions of dollars worth of tokens over a multi-decade life shouldn't surprise anyone that it's in the red in year 1 or 2. There's a lot of front loaded capex in this business. If someone built a tractor factory you wouldnt expect 1 year payback.
But the site sort of implies that these companies are selling tokens for less than it takes to inference them. As if this is some sort of COGS ledger. Especially by throwing Nvidia in there. Don't take it too seriously.
> This suggests that Gemini tokens are actually profitable, or at least not extremely unprofitable.
Out of all the companies, considering their own silicon etc. I wouldn't be surprised. Though I do wonder in terms of total CapEx and R&D where it would be at...
I mean yes they are serving ads off websites they Plagiarized with AI. So if you use ai to serve up content you don’t own as your property then perhaps you can make money. The cost is that they are completely killing the creators
I don’t think this website is fair. It does not factor in productivity increase and ROI from other areas that utilize AI to complete what they were doing. For example, if a new operating system was built into AI, the profit for that would go towards increased sales of licenses but this site seems to only track return on AI businesses
Apparently their strategy is to dump a fuckton of money in hopes that that will make them dominate the market, just like they did with the metaverse thing. It's like a hobbyist who buys the most expensive gear on the first day of trying out a new hobby.
Reminds me of the “Has The Turing Test Been Passed” website. It says no, but if you read on they cite “The relatively minimal funding allocated to AI research” as one of the reasons AI hasn’t been achieved “yet”. Website stopped being updated before it became relevant, so you will never see it say “yes”, similarly to how the Loebner prize mysteriously vaporized when GPT-2 came out, just when winning it for real started becoming an interesting possibility
Assuming you're not trolling, there's a few other things to consider -
1/ User targeting is complex - you can charge more for ads if the users you're showing the ads to click
2/ Ads impact user retention - you need to balance making money and keeping users around
3/ AI generated ads - this is a pretty big thing now, where instead of bringing your own media, you just describe your target audience and the AI will A/B test media + CTAs for you
4/ Integrity - you want to vet the ads against laws/site policies
Probably forgetting a few, but there's a reason the ad industry employs so many
Gemini now remembers you wholesale and makes good analogies and shortcuts knowing youres personal capabilities. You are already hooked and paying starts any day now. Or maybe it starts recommending some marvellous products somewhat related to your query.
That's pretty funny. For the "yet" part I would have expected a more recent cutoff, rather than the whole history of the companies. (Do they all have some kind of enormous debts they're going to need to pay off for decades once they do become profitable?)
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.
Yes, I spend my days writing lots of code using AI (I do rigorously review it, it's still much faster than hand typing) and I get paid enough for it to pay mortgage and send kids to college.
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.
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
In what ways do common accounting standards and amortizing the costs (this is tricky for ai and the current batch of gpus I hear!) change the data presented here? Does it detract from the point? Completely contradict it?
You can turn your drive-by dismissal into something really informative if you want to.
First of all, the whole website is based on what the CEOs said they're going to spend. Not the actual money spent. So there is no real 'data' presented here or to contradict.
Second, even if you take CEOs' words at face value, they didn't distinguish the capex for hardware, electricity, software and salary. You can make up whatever the percentage for hardware and the depreciation rate you believe and fit an arbitrary narrative.
To be honest whatever author wanted to say there three categories of AI related companies: hardware manufacturers, cloud providers and purely AI companies.
Only the later have something to lose if AI bubble gone by tomorrow. Everyone else will just stay with grown capacity and reuse infrastructure for whatever.
Not listing other hardware companies is just dishinest. AI is not a crypto mining where resources are just burned.
And the money these companies are blowing on all of this shit is banking on them being ‘the’ dominant player in a completely world-changing commodity industry.
I haven’t heard any compelling use case, in the event of an industry implosion, for many many many billions of dollars of GPUs that were already proven too unprofitable to operate for the industry they were built for.
Dark fiber, for example, had a much more compelling use case.
I just wanna know how the OpenAI/Anthropic shell game works long-term. So both companies made equity deals with infrastructure providers; OpenAI on Azure, Anthropic on AWS, GCloud, and Colossus. They get a loan of compute credits and then pay for the compute with the credits. So the PaaS are effectively giving them free compute, then book it as revenue; and the AI provider lets them do inference and books that as revenue. So, it's like both types of company have a buffet, and let each other eat there for free. But somebody has to actually buy the pasta salad, with real dollars. Afaict, those real dollars are.... the cash reserves of the PaaS.
How long are they going to eat into that cash? Microsoft and AWS don't really have their own models, whereas Google and SpaceX do. And while Google has tons of cash, SpaceX is perpetually looking for cash. So the only player here that can actually afford to keep doing this, or leave the game entirely, is Google.
Either the actual revenue of paying customers ramp up or the bubble will pop at some point
I expect the paying customers will actually be companies buying ad, not people buying AI subscriptions
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.
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.com/item?id=48241012
[2] https://news.ycombinator.com/item?id=48179021
[3] https://news.ycombinator.com/item?id=48148337
[4] https://news.ycombinator.com/item?id=48168626
I sure hope more people think like this, because it's going to leave a lot of money on the table (for me)
And if they are right then what? You won't get a lot of money?
Seems like a weird mix of inflated ego and lack of business understanding by you on this comment.
I don't know what your statement is but if you are an employee, then as your employer is forcing you to tokenmax and forcing you to use slop and creating leaderboards for these token spend which will all end up forcing the company to bleed money afterwards they might even lay off people.
If you are an employer then there are still long term issues associated. For example, cloudflare is a company which hasn't been in profit but it has burnt through 5 million dollars per month for AI as it first created an incentive (shrewd even) for employees to use it (for everything) only to please the investors but in the end, its still unclear how profitable all of it is for cloudflare.
Perhaps I have misunderstood you but I really don't understand how its going to leave a lot of money on the table, the only thing I see is a race to the bottom.
the market cap of a company is computed by the current price of a company's shares, the last price paid; not all the shares of the company were bought at that price, the ones who got shares cheaper are showing paper profits, unrealized. Those who have already cashed out have money in their bank accounts that was transferred from people who wanted to get in. If the company goes bankrupt, their shares will be worthless, but the money they paid for them still remains in the accounts of people who sold their shares: the money was not lost even if some people lost money.
I'm not going to keep going through it but the reason it works to value things the way we do is that the values are comparable and they frequently work out, so snapshots of the economy and the participants are comparable. But "losses" are not like taking gold and feeding it into some deep fold in the earth where it will disappear into the molten middle of earth.
Stock valuations are "expectations for the future". Those expectations weren't money, they were lottery tickes where the lottery consisted of human creativity and human effort. People buying and selling share are moving real money around to trade the expectations. The money didn't go anywhere, it's still there, it's just that expectations for the future have been reduced. It all boils down to humans trading some of their time and potential on a bet that things work out. Some people's effort gets more rewarded than others. Not every team wins the world cup, but people like to play and like to watch.
If they fail then the negative impact ripples through the economy due to misallocation of resources.
And I think we passed the threshold for crash down for AI, even if AI companies wont be that profitable. Nvidia/cloud providers will be profitable as long as there is demand for AI.
If AI companies aren't that profitable...then they're going to stop spending so much money on GPUs to train AI models. A gigantic amount of Nvidia's profits would go bust overnight.
Claude code and others are here to grow even if they don't do any further training.
The weird thing is that so many people believe that inference is unprofitable. There are large open weights models that companies run at a profit while charging far less than what OpenAI and Anthropic charge. Deepseek V4 just made their 75% off deal permanent and it was already very cheap.
Yes, you have to consider costs of training the models, but as usage grows it’s going to become a smaller and smaller part of the business.
I think we will see some data center businesses and AI companies blow up, but I think the people expecting the entire AI scene to blow up because prices quadruple are going to be disappointed.
You have no idea whether those companies are making a profit.
1. All it takes is one of them operating a loss to gain market share to force the other ones to lower prices to compete.
2. There’s not reason to expect that these relatively small companies are correctly pricing GPU depreciation.
How so? Big corps got home safe. Not the people. People committed suicides and lost their livelyhoods.
The stock market. Stocks crash, companies go belly-up, tons of people get laid off, unemployment spikes, people die. I don’t give a shit about the companies themselves. I do give a shit about who they employ, both directly and downstream, and the job market that will result from many of them losing their jobs.
Oracle likely structured everything the way that its gonna be everyone else problem before they go down. No?
We can look at a “success story” like Uber and it is still net negative over its entire existence. This is a business that’s in a literal monopoly/duopoly status in most markets it operates in with vastly reduced regulatory burden compared to the industry disrupted. Literally the ideal scenario for printing money and yet it hasn’t made any. It’s the poster child for the unicorn exit that founders dream of.
The end result is that Uber and companies like it are a financial instruments that transfer dollars away from one set of investors to another set of investors.
If Uber hasn’t yet made its investment back, I struggle to wonder how some of these AI ventures will ever make that money back when their expenditures make Uber look like a small little side project.
Meta has spent almost 4 years worth of its net income for FY2025 on AI going by this website’s data, and counting.
We are decades since Web 2.0 took off, almost 20 years since the iPhone launched, 50 years of Apple Computer. Software isn’t some new industry anymore. There isn’t an industry left that hasn’t completed its digital transformation. These spray and pray economies would have died off years ago if it wasn’t for the fact that software companies have uniquely low cost structures where they don’t need to build factories or distribution networks to get their products to their customers. These low cost structures might just be concealing the fact that it’s not going to be a growth industry forever.
How has the sheer saturation of LLMs not resulted in profit? It has dominated the conversation, center stage, of every news outlet for like 4 years now. It is the most known-about thing currently out there.
And we haven't been able to convert that much captured attention into profitability yet? That seems... bad?
Maybe Reddit is an example? But my impression is that they ran a modest operation before going public.
ChatGPT is the 5th most visited website in the world. Gemini.Google.com is ranked above amazon.com. Where is the profit?
The core bottlenecks are power and computing capacity, and they actually trace back to the exact same issue. It all comes down to the physical energy it takes to flip or move a single bit inside the ram or disk storage. This concept is subject to fundamental physical barriers.
There are a few ways to tackle this, like improving power efficiency, reducing model size, or pushing hardware further. However, achieving orders-of-magnitude improvement in any of these areas will cost a massive amount of time and money. I wonder if governments, corporations, and investors have the patience to wait for these tech breakthroughs.
I do wonder why Nvida is included, though. If you include the company that all of the frontier models are pouring money into, of course the net (expenditure - profits) of the collective is going to be closer to zero :-)
If Nvidia is included, does that mean that the money Amazon, Microsoft, and Oracle get for selling compute to the frontier models are included in their revenue?
Because for Amazon in particular, the situation this pages shows is actually much WORSE than I expected. I thought they were making a killing selling compute for model training.
https://www.youtube.com/watch?v=xUbJDrL6ZfM
For example: I have index funds which have some of these stocks. So I, by process of revealed-preference, don't think it's a bubble, or I think I will keep my money in through the bubble's pop. I don't have that much else to say!
For the record: I would respect the creator of this site equally or more if he/she said, "I'm shorting these stocks and this is why."
Given how the curves look like in terms of ramping of spend, these are very healthy numbers.
Maybe most of them or all of them lose on their bets, but there's potential for a future where revenue grows beyond the immense capex and research investments.
Oracle though... Immensely risky capex to service a startup industry with what will soon be a commodity...
The only way to get consistently rich in any bubble economy.
Yet this site suggests that tokens are very unprofitable
Building a datacenter that will produce hundreds of billions of dollars worth of tokens over a multi-decade life shouldn't surprise anyone that it's in the red in year 1 or 2. There's a lot of front loaded capex in this business. If someone built a tractor factory you wouldnt expect 1 year payback.
But the site sort of implies that these companies are selling tokens for less than it takes to inference them. As if this is some sort of COGS ledger. Especially by throwing Nvidia in there. Don't take it too seriously.
Out of all the companies, considering their own silicon etc. I wouldn't be surprised. Though I do wonder in terms of total CapEx and R&D where it would be at...
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.
Would be weird if they're raising $10 billion after spending only 0.3
https://newsletter.semianalysis.com/p/deepseek-debates
Probably more like 3-4 billion by now?
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...
1/ User targeting is complex - you can charge more for ads if the users you're showing the ads to click
2/ Ads impact user retention - you need to balance making money and keeping users around
3/ AI generated ads - this is a pretty big thing now, where instead of bringing your own media, you just describe your target audience and the AI will A/B test media + CTAs for you
4/ Integrity - you want to vet the ads against laws/site policies
Probably forgetting a few, but there's a reason the ad industry employs so many
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.
https://www.cnbc.com/2026/05/20/anthropic-revenue-explosive-...
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.
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.
Oh it doesn't fit the narrative. Never mind then.
You can turn your drive-by dismissal into something really informative if you want to.
Second, even if you take CEOs' words at face value, they didn't distinguish the capex for hardware, electricity, software and salary. You can make up whatever the percentage for hardware and the depreciation rate you believe and fit an arbitrary narrative.
Only the later have something to lose if AI bubble gone by tomorrow. Everyone else will just stay with grown capacity and reuse infrastructure for whatever.
Not listing other hardware companies is just dishinest. AI is not a crypto mining where resources are just burned.
AI is exactly like crypto mining in that Nvidia is the one who profited from both
No matter what happen with the AI bubble text, image and video and other generative neural networks are here to stay.
Whatever you like it or not this tech already changed a lot of industries and there is no going back.
Dark fiber, for example, had a much more compelling use case.