Thoughts on Ed Zitron’s pessimism?

“There Is No AI Revolution” - Feb ‘25:

https://www.wheresyoured.at/wheres-the-money/

Ed Zitron plainly has no idea what he's talking about. For example:

Putting aside the hype and bluster, OpenAI — as with all generative AI model developers — loses money on every single prompt and output. Its products do not scale like traditional software, in that the more users it gets, the more expensive its services are to run because its models are so compute-intensive.

While OpenAI's numbers aren't public, this seems very unlikely. Given open-source models can be profitably run for cents per million input tokens at FP8 — and OpenAI is already training (and thus certainly running) in FP4 — even if the closed-source models are many times bigger than the largest open-source models, OpenAI is still making money hand over fist on inference. The GPT-5 API costs $1.25/million input tokens: that's a lot more than it takes in compute to run it. And unless you're using the API, it's incredibly unlikely you're burning through millions of tokens in a week... And yet, subscribers to the chat UI are paying $20/month (at minimum!), which is much higher than a few million tokens a week cost.

Ed Zitron repeats his claim many, many, excruciatingly many times throughout the article, and it seems quite central to the point he's trying to make. But he's wrong, and wrong enough that I think you should doubt that he knows much about what he's talking about.

(His entire blog seems to be a series of anti-tech screeds, so in general I'm pretty dubious he has deep insight into much of anything in the industry. But he quite obviously doesn't know about the economics of LLM inference.)