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points by lovich 2 days ago | 0 comments
What AI lab is profitable?

And in before ‘JumpCrissCross chimes in about inference being profitable while ignoring all the investment costs needed to get inference to where it is.

[–] cosmicgadget 2 days ago
Profitability is an awfully narrow metric.
[–] gradus_ad 2 days ago
It's a powerful metric. It captures to what extent something is sustainably possible today.
[–] cosmicgadget 2 days ago
You'd think here, of all places, we'd look more toward adoption, disruption, and potential for future revenue.
[–] fn-mote 2 days ago
The full balance sheet captures the info. If the AI companies suck up all of our salaries and spend that money on R&D/training, they still aren’t profitable, right?
[–] gradus_ad 2 days ago
That wouldn't be sustainable, which is all I'm saying.
[–] zrobotics 2 days ago
>> Profitability is an awfully narrow metric.

I mean, if anything summarizes where we have gotten to as an industry this quote is sure it. From Uber using VC funds to subsidize growth to where the AI players are at...

[–] vanuatu 2 days ago
none (unless you count google and meta),

but profitability is a very narrow view on the labs, and investors are pricing in future free cash flow

you need to take into account the derivative, what is their growth? their opex and capex? their revenue growth? their moat? New product lines and applications?

Not saying that it's a homerun, but there is a case to be made for the labs being wildly profitable in 4-10 years

[–] adventured 2 days ago
Why have they needed to worry about profitability?

They have been chasing extreme growth with cheap money. That enabled them to hyper scale at a pace the world has rarely seen before. They have made the correct choice so far.

The absolute dumbest thing they could have done up to this point is slow down to try to turn a profit. They have not needed to. Market capture is the sole thing they should be focused on. Here's a hint: how many users does GPT have now versus three years ago?

There appears to be very widespread confusion about what purpose turning a profit serves and how business operations actually work.

Go back in time and tell Uber in ~2013-2015 that it needs to immediately become profitable and not focus on capturing the market.

[–] leptons 2 days ago
Market capture didn't work so well for Uber, and it won't work for AI, and even less so for AI because you can't get a driver in China to take you to LAX airport, but you can use cheaper Chinese AI.

Uber has to pay back all the billions of dollars it wasted trying to get people to use their platform, and now I can't afford most Uber or Lyft rides, it's way too expensive. So did market capture really work if they had to raise their prices so much as to make the service unworkable for most people? The only time I take uber is if my company pays for it, and that is getting less often.

AI is also going to have to become way too expensive so they can pay back the billions (trillions?) it is borrowing. And, when everyone is laid-off or fired because AI took their job, then who's going to be paying for AI? I guess the companies that lay off all the humans will, but when the wealthy business owners realize they've replaced everything with AI and nobody is buying what they are selling because there's no more jobs, then what?

Sounds like they should worry about profitability, and a lot of other things too.

[–] fn-mote 2 days ago
> market capture really work if they had to raise their prices so much as to make the service unworkable for most people?

Hate to say it, but in this case you’re not the market so you are irrelevant.

Here’s data from Chicago, USA, showing Uber and Lyft dominate the market now, so yes, it worked.

https://toddwschneider.com/dashboards/chicago-taxi-ridehaili...

[–] leptons 2 days ago
That's great that they dominate a shrinking market, because few people can afford to pay $80 to go 15 miles.
[–] adventured 1 day ago
Uber isn't dealing with a shrinking market. They're becoming critical transportation infrastructure and their business keeps expanding year after year.

$32b -> $37b -> $44b -> $52b -> $57b

That's Uber's sales growth year by year. And now they're solidly profitable.

The sole threat to Uber is the Waymo / Tesla automation angle. A merger is most likely there.

[–] lovich 2 days ago
Why do I need to care about profitability as a business if I can capture a shrinking market? /s

It feels like a related statement to someone willing to burn their own country to rule over the ashes.

[–] vanuatu 2 days ago
Huh? uber is an amazing success story given their market dominance and enterprise value created. of course the next kid on the block (Waymo) is going to do the same thing

The price of a given point on the intelligence frontier is only going to get cheaper, likely 10-20x over the next few years.

[–] redwood 2 days ago
Anthropic as of a few months ago.
[–] gamblor956 2 days ago
That explains the 80 Billion loss on their IPO disclosures.
[–] redwood 1 day ago
Have you looked at the difference between Q1 and Q2? There's a trend change where revenues have grown materially compared with costs
[–] cscheid 2 days ago
I mean, it literally does. Something like 70+ billion of those 80 billion are accounting adjustments because their debt is supposed to be handled in stock and their stock price skyrocketed.
[–] gamblor956 2 days ago
While I was being facetious, Anthropic is nowhere close to being profitable in the normal, i.e., GAAP meaning of the term. It's only using unicorn fantasy lalaland financials that they are "profitable."

Before someone else jumps in talking about "unit economics": unit economics only matters if you can sell the units long enough to make the initial (capitalized) investment (i.e., R&D) back. Models aren't commercially viable long enough for the unit economics to work.

[–] redwood 1 day ago
You're arguing the second quarter isn't representative of what they'll be able to sustain... that their revenue isn't durable? Let's see. But it's a profitable quarter
[–] lovich 2 days ago
Using GAAP or woo woo logic?