Growth curves mean nothing if you're selling $0.90 dollars. You have to show a growth curve when price > cost. It's not even clear that value > cost.

I absolutely love Anthropic; but I am worried about the fiscal wall they will hit that will ratchet up my opex as they will need to steeply raise prices.

So the critical question here really is whether they are selling API access to their models for less than the unit cost it takes to serve them.

I don’t think it is only that consideration

While Gross margins numbers are estimates vary widely, 40-60% numbers some analysts throw around seems realistic.

In an equity only company that is good enough metric , but all the major players have long since now transitioned to also raising debt.

The debt would need to be serviced even if fresh training investments stopped fully .

The cost of debt servicing would depend on the interest rates and the economy etc inaddition to the risk of the debt itself.

Quite possible that model companies would need to jack prices even with good gross margins to handle their debt load.

You have to include the carrying cost per customer as well which is mostly labour. Most of SaaS undercounts the payroll attached to a subscription which is why it is so hard to get to positive net margins and maintain lifetime value.

I am sceptical an LLM foundation model company can get away with low human services either directly on its own payroll or by giving up margin to a channel of implementation partners. Thats because the go to market requires organizational change on the customer sites. That is a lot of human surface area.

But inference is cheap! If they stop doing everything and become Inference Inc., they'll be profitable.

Until China drops another open weight model you can run yourself at cost price.

Are you saying that in next 10 years they'll make more money that there's an atoms in the universe?

have you seen their cost curves and projections as well?

The area under that curve is quite a bit less than 50B.

that is like 3 data point my man and you think you can project them just straight up forever and ever. this is bubble thinking.