I get worried when thinking about Mistral because they make mediocre models and I don't think they will be able to defeat their competition.

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alastairr 3 hours ago | parent | next [-]

That may be true, but there's a non zero chance that frontier AI becomes a controlled export, and that 'local' production becomes a prudent play.

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skeledrew 39 minutes ago | parent [-]

Highly improbable given China is ready to pick up any slack.

	▲	alastairr 22 minutes ago \| parent [-]
		That's true now, but given the strategic importance of AI to nation states and the fractious relationship many have with China, I wouldn't expect the eagerness to use Chinese AI to continue indefinitely.

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ludvigk 3 hours ago | parent | prev | next [-]

Same here. And I doubt 3B EUR will do anything (remember the >$100B investment round that OpenAI got?)

In the EU it seems we are very much at risk of being cut off from frontier AI if the US government should decide to do so.

	▲	0xDEAFBEAD 2 hours ago \| parent \| next [-]
		OpenAI also indirectly depends on ASML, but sadly Europe seems too cowardly to leverage this dependency at the moment.
	▲	cbg0 2 hours ago \| parent \| prev \| next [-]
		Blocking EU from those services would crash the valuation of US AI companies, so I'm not expecting it to happen.
	▲	slopinthebag 2 hours ago \| parent \| prev [-]
		You'd still have access to the Chinese models though right? Even if you want to argue they aren't truly SOTA they're still pretty dang good.

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loehnsberg 3 hours ago | parent | prev | next [-]

Maybe true for frontier LLM, but there's plenty of space in the niches. For example, I think their TTS/STT models are pretty good, speaking from personal experience.

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aurareturn 3 hours ago | parent [-]

Is there money in niche models?

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catdog 3 hours ago | parent [-]

Is there money in frontier?

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vineyardmike 2 hours ago | parent [-]

Yes...?

Is that not self evident by the insane revenue from frontier labs?

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mastermage 2 hours ago | parent | next [-]

Revenue is not profit.

https://isaiprofitable.com/

	▲	aurareturn an hour ago \| parent \| next [-]
		AI is profitable. Gross margins are high. The only reason OpenAI and Anthropic are making a loss is due to training new models to keep up with competition - not because the industry is flawed in terms of business model.
	▲	slopinthebag 2 hours ago \| parent \| prev [-]
		Lol that chart is hilarious when you look at Nvidia. Always sell shovels in a gold rush I guess

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pbmonster 2 hours ago | parent | prev [-]

> Is that not self evident by the insane revenue from frontier labs?

No...? Of course not?

Because revenue is only one side of the equation. Did you ever look at total cumulative OPEX and CAPEX, and how long it will take them to even just break even at current growth?

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aurareturn 2 hours ago | parent [-]

Anthropic is growing 10x revenue every year.

They're likely over $80b ARR by now. They'll be at $800b ARR next year at the same rate. Let's say their growth gets cut down to 3x instead of 10x - that's still $240b ARR by this time next year.

When you are growing so fast, you don't need to make a net profit. You just need to make sure your unit economics are good - which it seems like they are given reports that their gross margins are at 60-70%.

	▲	surgical_fire an hour ago \| parent [-]
		> They're likely over $80b ARR by now. They'll be at $800b ARR next year at the same rate. And they will be 800 trilion ARR in a couple of years, following that same rate! 8 quadrillion by 2029! > When you are growing so fast, you don't need to make a net profit. You just need to make sure your unit economics are good - which it seems like they are given reports that their gross margins are at 60-70%. If their margins were anywhere near this good, they wouldn't need to raise so much money so often. If you create a machine that turns 1 dollar into 3 dollars, you don't dillute your ownership of the machine, you use your fabulous profits to expand your machine's capabilities.

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koe123 2 hours ago | parent | prev [-]

They’re in the EU. If they are a year or so behind and things start to plateau they’ll catch up. Americans perhaps don’t realize we can also tariff their digital goods to protect our own. There is a scenario where Americans and Chinese foot the bill and EU gets out cheap, e.g. similar to the Apple approach to AI.