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Anthropic/OpenAI may be spending more than $1000 for every $100 you pay them
- diogenescynic 3mo agoSo we're in the $6 Uber ride era of AI still?
- Mistletoe 3mo agohttps://en.wikipedia.org/wiki/Gartner_hype_cycle https://en.wikipedia.org/wiki/Gartner_hype_cycle I’d say we are at the peak of inflated expectations, exactly where they want things to be for the IPOs as they unload their bags on the public. There will be an absolutely massive crash that will destroy the stock market, you’ll finally be able to buy ram and a hard drive again, and then AI will really take your job in the plateau of productivity that comes much later.
- deleted 3mo ago[deleted]
- cmarschner 3mo agoNot comparable - drivers and space in a city is inherently limited, while there is no limit on GPU manufacturers, datacenter probividers, or LLM companies
- deleted 3mo ago[deleted]
- brianwawok 3mo agoUber rides were never going to get cheaper over time without robot drivers. A software product is not the same thing. It could get cheaper to serve over time.
- NotGMan 3mo agoIf this is the true cost of AI then the future might be dedicated extension cards for computers that hardcode entire models + weights. Downside: you need to buy a new one for each model. Upside: insanely fast inference and zero subscription cost, only one time purchase cost. Once a certain open source model gets good enough this might become viable. Right now the landscape is still shifting too fast. State of the art models might remain on subscription, expensive and might be used by large companies only. State of the art companies might also create their own hardware with hard-baked weights on chip that they don't release to the public, as it might just make more financial sense long term once they "stabilize" on a certain model.
- ath3nd 3mo ago[dead]
- amelius 3mo agoYes this is what I"m waiting for. I do hope these cards will not come with any kind of vendor locking though.
- Retr0id 3mo agoWhat kind of vendor locking would be possible?
- brookst 3mo agoIP-protected models manifested directly in silicon. Everything we’re using now is the equivalent of building a GPU on an FPGA: the hardware is general purpose at one abstraction level, and that comes with inefficiency at the next layer up. Collapse the levels, gain efficiency at the cost of generality.
- Retr0id 3mo agoThe whole premise of what's being described here is to bake the weights into the silicon. That isn't what I'd describe as vendor lock-in, any more than I'd describe a CPU that can only execute ARM instructions as vendor locked. To answer my own question, I bet they could figure out a way to still bill you per-token, if they wanted to.
- jqpabc123 3mo agoHang on to your wallet, you ain't seen nothing yet. The true cost of AI won't be revealed until after a large portion of the customer base has become "hooked" on it.
- verdverm 3mo agoI'm not sure I agree. Beyond the Anthropic world, we see 1. The GitHub Copilot pricing change that started a week ago already change buying decisions. 2. Small name open weight providers selling at what I assume, and hear through grape vine, is a profitable place. Claude is over priced for what you get, and if headline is true, expensive to run. I do wonder if their API pricing is profitable. That's the word on the street about Big AI, they are making money on the PayGo
- topaz0 3mo agoBy "word on the street" do you mean "word that they are leaking to the press so they get favorable coverage, and based based on opaque and questionable accounting"?
- verdverm 3mo agoThe press is not the channel I hear things through. New media is fundamentally broken right now and you should not use it as a source for quality information.
- deleted 3mo ago[deleted]
- mrbungie 3mo agoThat + when retail investors are the ones holding the bag.
- QGQBGdeZREunxLe 3mo agoCan you share some use cases of what you think will get companies to become hooked? I'm really failing to see a dependency link emerging either now or in the future. That combined with the relatively easy switching costs. It doesn't bode well for AI companies seeking to create a walled garden.
- trilogic 3mo agohttps://hugston.com/news/the-subscription-to-incompetence-is-low-iq-funding-ai https://hugston.com/news/the-subscription-to-incompetence-is...
- solomatov 3mo agoHopefully we will have more information about these companies when Anthropic IPO filing become public. There's too much speculation without them.
- dexterdog 3mo agoNot if they commit the kinds of market fraud that Musk's companies have.
- janim007 3mo agoThat’s probably because only a handful of companies manufacture GPUs, and they’re still expensive. I think that will change over time as competition increases. LLMs are also still in a relatively early stage. We’re already seeing models become both smaller and more capable—for example, GPT-4 compared to Qwen3-30B, which can outperform GPT-4 in many tasks while using significantly less compute. So if this trend continues, they will be making good profits on your $100
- LaurensBER 3mo agoNot to mention the rise of Chinese chips. GPUs that can run everything from Crysis to CUDA are a harder engineering problem to solve than creating a chip that's optimized for inference. Not to mention that inference is an excellent first step towards a full, competitive GPU as well.
- throwaway63467 3mo agoWhich chips are these? It seems the main challenge is data bus speed and memory capacity now and it seems no one can really compete with NVIDIA now? And i doubt NVIDIA is still optimizing for anything expect LLMs/AI, their last keynote had less than two minutes of gaming related content and they even canceled their new generation of gaming cards for now. And it seems all of these advanced chips rely on the most advanced lithography which is tightly guarded and supply locked by a few companies.
- LaurensBER 3mo agoI'm not nearly as knowledgeable about chips as I would like to be but I'm seeing lots of hype around the new Huawei Ascend 910C-Chips. These are in no way competitive with Nvidia for training but they're cheap for inference and seems to be winning market share inside China. China doesn't access to any of the latest chips technology but Huawei seems to have a roadmap to work around this by focussing on "3D chips" (vertical stacked). It's unclear if they can pull this off but if they can it might be a huge boost and allow them to further drive down inference prices.
- wongarsu 3mo agoThe headline claim assumes that Anthropic is operating the API at cost, and losing massive amounts of money on subscriptions My own impression based on inference prices for deepseek or other "open" models in the 1T range (including providers like DeepInfra with no obvious reason to subsidize their API costs) is that Anthropic is offering subscriptions at cost (on average, power users are a bit more expensive, casual users more profitable) and making good profit on API pricing. Profit that then is spent on model training, marketing and development, for an overall negative bottom line Edit: in case it gets changed: current headine is "Anthropic/OpenAI may be spending more than $1000 for every $100 you pay them"
- huflungdung 3mo ago[dead]
- LiamPowell 3mo agoThe assumptions are so much worse than that: > Methodology & assumptions: No caching This is absolutely absurd. Claude code is of course using the cache (and this can be verified by looking at the traffic). It would be an incredibly stupid design to resend the whole input without a cache for every input, every tool use, etc..
- gctwnl 3mo agoThe no-caching is explained in the linked conversation. The numbers are from actual use.
- deleted 3mo ago[deleted]
- gctwnl 3mo agoBy the way, there is caching (cache TTL is hort but during sessions it is active). E.g. Settings Status Config Usage Stats Session Total cost: $15.59 Total duration (API): 18m 3s Total duration (wall): 2h 13m 16s Total code changes: 232 lines added, 80 lines removed Usage by model: claude-opus-4-6: 1.5k input, 41.8k output, 26.4m cache read, 212.6k cache write ($15.59)
- b3ing 3mo agoThe future of AI is ads, free will have lots of ads and eventually go away. Low paid tier will have a few ads, the $2000 tier no ads. I just hope local llms keep getting better and ways to make them run faster on consumer devices improves
- cousinbryce 3mo agoSorry, you need to sign up for HN+ if you don’t want to be downvoted when pointing out the obvious enshittification that will occur with LLMs
- KingOfCoders 3mo agoI would think it depends on what you count in as cost, how long you can operate a data center, in which intervals you need to train new frontier models etc. There are lots of knobs to dial for your costs.
- jabart 3mo agoI really don't now how these other code bases are structured. Our team ran cc-usage and our cost is right about what we pay as our monthly license. This is only those on the team pro side. Our code base is not small, millions of lines of code. It does not take $65 in tokens to solve an issue. I'm running 3-4 claude code terminals at the same time and i'm still pretty close to what it would cost per a token for usage. I don't know what we are doing right with our code or claude.md to make this happen and I don't want to change it to break it.
- brianwawok 3mo agoAlso worst case. If it takes $65 to make one PR? I’m paying $100-$300 for a human to make one PR. There was zero math around the human developer cost saved.
- graemep 3mo agoThere seem to two doubtful assumptions being made here: 1. That the API pricing is required to make a profit, rather than being effective market segmentation to make a larger profit. 2. That if subscriptions are loss making, it is not worth having loss leaders.
- beering 3mo agoAs usual, there’s no factual basis for the claims other than “I made it up” and author doesn’t seem to have technical experience with ML experience. A lot of weasel words doing all the heavy lifting here.
- halJordan 3mo agoAnd yet the crazy thing is that this stuff is par for the course human-wise and yet HN continues to rise up with pitchforks in hand complaining that ai is going to replace whatever this is. Like we're losing something.
- gctwnl 3mo agoThe data is given and not made up. The data based on actual use and on analysis of public numbers.
- Yizahi 3mo agoI'm sorry, were you speaking about this topic post or about posts authored by Sam/Amodei and the like?
- pjjpo 3mo agoCan you clarify what you are saying here?
- Yizahi 3mo agoWell, since all LLM companies are very secretive about their finances, the only public information from them about their revenues or profits or liabilities are as the top commenter said are without any "factual basis for the claims other than “I made it up”" and their CEOs are seemingly not very well versed in ML judging by their public statements and usually use a lot of weasel words themselves. So my comment was a joke, that it is rather hard to distinguish who is making stuff up - LLM corporations defenders or critics :) .
- tcp_handshaker 3mo agoAnd this is the reason, why the AI companies, are now preparing a bailout by the US government. We will be moving quickly from your 401K is their exit liquidity to US Treasuries are their exit liquidity... Meeting next week at the White House by coincidence just before the SpaceX IPO. Message to investors will be dont worry the US has your back... At which point the corruption is sooo big, that an Empire crumbles under its own stench? "Trump to meet AI leaders to discuss US investment in their companies" - https://www.bbc.com/news/articles/c98r8r7dz5no https://www.bbc.com/news/articles/c98r8r7dz5no "Trump Officials Held Millions of Dollars of SpaceX Ahead of IPO" - https://finance.yahoo.com/markets/stocks/articles/trump-officials-held-millions-dollars-114500115.html https://finance.yahoo.com/markets/stocks/articles/trump-offi...
- syllogistic 3mo agoIs he headline strictly about subsidized subscriptions? Anthropic announced their first profitable quarter.
- adam_arthur 3mo agoAnthropic is absolutely not profitable on a GAAP basis. Companies may state cash flow positive, operating profit, EBITDA positive, but this is not a true profit in aggregate, just when stripping out many other expenses. If anyone has evidence to the contrary, please share. Once they go public it will all be free to review, at least.
- gctwnl 3mo agoYes, th enumber is based on subsidised subscriptions and he article makes that clear.
- dminik 3mo ago> Anthropic announced their first profitable quarter Free: https://www.cnbc.com/2026/05/20/anthropic-revenue-explosive-growth-ipo-profitable-quarter.html https://www.cnbc.com/2026/05/20/anthropic-revenue-explosive-... Paywall: https://www.wsj.com/tech/ai/mind-blowing-growth-is-about-to-propel-anthropic-into-its-first-profitable-quarter-7edbf2f4 https://www.wsj.com/tech/ai/mind-blowing-growth-is-about-to-... Actual article: > Mind-Blowing Growth Is About to Propel Anthropic Into Its First Profitable Quarter Condition: > The startup expects a 130% revenue surge to $10.9 billion in the June quarter and its first operating profit, defying skeptics of the AI boom Ah yes, if revenue grows by 130% and expenses don't they might make a profit of $500M on $11B revenue. I wish people actually bothered to at least read the titles.
- himata4113 3mo agoAnthropic and openai has the most efficient tokens per unit of compute on the planet and honestly that's their current moat. They're able to serve tokens at half the cost of any opensource provider. Here's the costs to serve opus 4.7 in china on aws according to one of my connections that operates an enterprise account in the region: Input: $0.257 Output: $1.286 Cache read: $0.0257 Cache write: $0.322 And I have zero doubts that using batching and other optimizations that subscription users are being served at an even lower cost. Most of their expenses likely come from training as we're far into the diminishing returns terriority. We will know once anthropic is required by law to report these numbers so there's no point in continued speculation that "anthropic is losing $9 for every $1" because 1: unless there's some subsidies going on it's not true and 2: we will be told directly from anthropic what the numbers are in the near future.
- deleted 3mo ago[deleted]
- maxglute 3mo agoMy understanding is there's local API resellers who provide gateway access to bundle claude/openai with other cheaper PRC models via routing to water down price. The resellers are bulk generating pro accounts / trials i.e. basically 100% subsidized by Anthropic/OpenAI. Resellers also sell for cost or below cost because they're intercepting training data to resell. The economics of PRC token is divorced from Anthropic and OpenAi, i.e. PRC gray market tokens are most "efficient" for shadow trial resellers (who basically pays for disposable sign up sim) and least efficient (as in negative sum) for providers who convert none of the subsidized trial accounts into paying.
- himata4113 3mo agoNot the same thing, these are actually gateways into opus models hosted on hardware at AWS in china. https://www.amazonaws.cn/en/about-aws/china/ https://www.amazonaws.cn/en/about-aws/china/ Also abuse of free accounts/trials wouldn't work since it would destroy cache and it maintains 97% cache rate.
- johnbarron 3mo agoArticle flagged by the HN moderators owning pre IPO shares on said companies discussed in this article: Anthropic, OpenAI and SpaceX
- gctwnl 3mo agoWait, what?
- whodidntante 3mo agoI see combined estimated revenue for Q1/2026 to be $15B to $20B, depending on source. I also see combined estimated spend Q1/2026 at $15 to $20B, depending on source. Someone or something is having an hallucination that would make an AI jealous
- gctwnl 3mo agoThere are no revenue estimates in the article). Only as serious as possible estimates of cost per task.
- whodidntante 3mo agoright, author did not bother to do some simple queries for actual revenue vs actual costs banks used to lose a lot of money on those toasters, amazing they are still in business
- mannanj 3mo agoAnd how much money are they making off our non-training data? Or what is the ROI short and long term of that massive valuable data set? Surely there's at least a valuable subset of ideas that if executed better than the incumbents nets them massive value. I find it disingenuous when people narrow in and focus on the cost of tokens as if thats the only way the companies make money. They are doing a massive data grab and stealing and thieving your IP and data, non-training data sharing cannot be opted out of.
- gctwnl 3mo agoWhy was this flagged? The article is a serious attempt at observation and analysis.
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- herunan 3mo agoThe people pushing the “AI is heavily subsidised” narrative don’t realise it actually flatters Anthropic and OpenAI more than the alternative. If it is subsidised, fine – the incumbents absorb the losses, or lean on hyperscalers like Google or Microsoft who can cross-subsidise across other revenue streams. But if it isn’t, that’s the worse outcome for them: inference is just cheap, competition kicks in, prices crater, end users win. Either way, local models win. If the incumbents are forced to turn a profit, pricing goes up and as local compute gets good enough to handle most use cases, people flock to it. And if inference is just cheap, that means the compute requirements are lower than we thought, and local hardware gets there even faster. Bullish on local either way. We’ll find out once the Anthropic S-1 drops.
- returnInfinity 3mo agothey are profitable on tokens. if company itself is profitable is unknown and we will see it soon.