I remember when Amazon was going to go broke every year for over a decade.

Until they didn't.

▲ kryptiskt an hour ago | parent | next [-]

That wasn't what it seemed like at the time. Amazon didn't post profits, sure, but they sure as hell weren't a giant money suck either, they didn't need billions in financing to run their business. There were a lot of Amazon bears, but they were concerned about the high valuation, not about them going broke (since even the most pessimistic bear can read a cashflow statement).

▲ anukin 2 hours ago | parent | prev | next [-]

That’s because they were reinvesting the profits. I think they had given a profitable quarter just to show that they could do it.

▲ aurareturn 43 minutes ago | parent [-]

And I'm sure Anthropic would be immensely profitable if they stopped investing their inference profits into training newer models.

▲ oersted 32 minutes ago | parent | next [-]

And then everyone would stop using their inference as soon as a better model for a reasonable price came out.

The R&D expenditure is a critical requirement for the inference profits, to the point where we should probably lump their financials together, at which point is definitely not profitable.

What will it look like when R&D plateaus (and yes it definitely will, but it could take a while), investment falls, and a few main competitors remain in the music chairs?

It's very difficult to predict. The inference profits we are seeing the profits of a company that is temporarily ahead, but the revenue will level-out in a more stable market, depending on how many survived. It's also hard to tell where the costs will be at the end of the game, with constant efficiency optimisation mixed with cost increases for higher intelligence.

I think it will be quite similar to the semiconductor industry, where, yes there are some key monopolies, but they are not the initial big players, and none of it is actually very profitable; while the real profits are reaped by those that make popular consumer products based on the foundational tech. I guess the main difference is that OpenAI and specially Anthropic have been quite effective at directly tapping into the consumer market rather than remaining technology providers.

	▲	aurareturn 16 minutes ago \| parent [-]
		`And then everyone would stop using their inference as soon as a better model for a reasonable price came out.` Exactly. It's competition now that is driving high training costs - not a business model problem. There will be winners and losers. The losers won't be able to keep up with the training costs forever. See my post here: https://news.ycombinator.com/item?id=49119265

▲ stnikolauswagne 36 minutes ago | parent | prev [-]

For how long though? If Amazon never built AWS the core business conceivably would still be around today, if Anthropic stopped providing new models two years ago no one would care about them now.

▲ matwood an hour ago | parent | prev | next [-]

Amazon had a close call around the .com crash as capital markets froze, but they were not going broke every year. They were purposely (and rather famously in business circles) investing every dollar made in order to grow the business. It was clear early on the original business worked.

Amazon also added/pivoted to AWS, which is where a huge part of its value comes from today.

▲ lelanthran 2 hours ago | parent | prev [-]

I remember when hundreds of dotcom companies were going to go broke, and they all did.

Not sure what your point is.