Seeing a lot of tricks similar to how ridesharing companies tried to be "profitable" before going to IPO. Caveat: Thing have materially improved but really Uber is carried by its insane Ads margins

The idea of removing model training from your costs is a little wild tbh.

The profitability of being able to serve a query wasn't really under question (nor is the margin expected to be anything less than 80%+) I think.

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embedding-shape an hour ago | parent | next [-]

> The idea of removing model training from your costs is a little wild tbh.

Yeah, I didn't believe they'd claim something like that. But yes indeed, from the article:

> Anthropic's gross margins are above 80% before accounting for revenue shared with distribution partners, including Amazon (AMZN.O), opens new tab, and the cost of training its model,

Is this how all AI companies calculate if they're profitable or not, by removing the highest costs? What a circus.

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_diyar an hour ago | parent | next [-]

> Anthropic has told shareholders that its adjusted operating income will be positive for a second straight quarter, the Financial Times reported on Sunday, citing multiple people with knowledge of the matter.

Note this claim is about „operating profit“, which commonly is the revenue - operating expenses (COGS, rent, payroll). This does not include RnD cost.

>Anthropic's gross margins are above 80% before accounting for revenue shared with distribution partners, including Amazon (AMZN.O), and the cost of training its model, the newspaper said.

Gross margin is typically (revenue - COGS) / revenue. Thus, both statements above seem generally in line with commonly accepted accounting standards.

	▲	yread 30 minutes ago \| parent [-]
		If you are sharing revenue (royalties, licenses based on revenue, costs that scale directly with revenue) doesnt that count as cost of goods sold?

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sandeepkd an hour ago | parent | prev | next [-]

The way I read it, they are convincing the investors that they can fool the larger population convincingly. At the end of the day the investor term is misnomer for big institutional investors, given that these people are managing other people money where they always make out a certain percentage of fees despite the outcome.

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SlightlyLeftPad an hour ago | parent | prev [-]

I believe this is a new accounting method called “phantasmagorical accounting.”

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itkovian_ 21 minutes ago | parent | prev | next [-]

I can’t count the number of times I’ve heard variants of ‘they’re losing money on every query’ and ‘I’m getting 10k worth of tokens for $200’ over the last year. People clearly believed serving margins were -ve

	▲	gcr 12 minutes ago \| parent [-]
		I think the latter half of your post is missing

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aesthesia an hour ago | parent | prev | next [-]

> The profitability of being able to serve a query wasn't really under question

In one sense, yes, but I do see people question it regularly.

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TSiege an hour ago | parent | prev | next [-]

I think part of the big push to "slow down AI development" is to add some sort of regulatory pressure that will give them sort cover to train less models and slow their burn rates

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awongh an hour ago | parent | prev | next [-]

I didn't realize how much money Uber makes from ads.... Why does every business devolve into an ad platform?

	▲	s1artibartfast 2 minutes ago \| parent \| next [-]
		Because consumers don't care much about ads and prefer them to even minor cost differences.
	▲	agentultra 41 minutes ago \| parent \| prev [-]
		Might be because most hit their maximum growth but need to keep growing indefinitely or risk becoming a “mature” company?

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JumpCrisscross an hour ago | parent | prev | next [-]

> idea of removing model training from your costs is a little wild tbh

It's one of several metrics and tries to estimate steady-state profitability. It's the only one being leaked because it's the most sensational one. But don't assume cash-flow profitability is negative just because you don't know it.

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throwawaysleep an hour ago | parent | prev | next [-]

> The profitability of being able to serve a query wasn't really under question (nor is the margin expected to be anything less than 80%+) I think.

HN had long debates about whether AI inference could even be affordable from a compute perspective.

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sphinxterai an hour ago | parent | prev [-]

Well then you haven't listened to Ed Zitron or any of the other AI bubble doomers. His contention is that its worthless and they lose money on every query.

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embedding-shape an hour ago | parent | next [-]

But isn't he taking all the costs into account, that created the experience? Rather than just literally the inference/serving infrastructure? Bananas way of calculating things if so, doesn't match reality at all.

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JumpCrisscross an hour ago | parent | prev | next [-]

Zitron is worthless–lying about numbers and not correcting the record when you're called out means you aren't trustworthy. Worse than that if you directionally agree with him, which I do.

	▲	rowanG077 an hour ago \| parent [-]
		He makes his money and fame by spewing bulshit as many grifters before him. Which unfortunately probably hides the real truth. That large labs do have potential problems with long term profitability.

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freejazz an hour ago | parent | prev [-]

isn't that when the training costs are actually accounted for?