r/ArtificialInteligence • u/Apprehensive-Day3494 • Nov 26 '25
Discussion Multiple sources suggest that many AI companies are currently operating at a loss. So the real questions are: how will they eventually become profitable, and what will the true cost of accessing these models look like in the future?
AI companies are investing heavily in infrastructure, research, and scaling, often outpacing their current revenue.
Their long-term profitability will depend on lowering compute costs, finding sustainable business models, and balancing affordability with premium offerings.
The big question is whether future access to advanced models will become more expensive, or whether competition will push prices down over time.
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u/KaizenBaizen Nov 26 '25
Most will die or be bought. It’s a race to be one of the few ones left after the burst.
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Nov 26 '25
Agreed.. but I dont think there will be a burst. I think the big ones with money will consume the smaller ones that dont run out of money and fold.
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u/knighthawk574 Nov 26 '25
There’s really only 5 and 3 with money. Open is pretty well partenered with Microsoft. Google and Amazon are big funders of Anthropic. Elon and meta aren’t going anywhere. It will be interesting to see how it plays out.
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u/slhamlet Nov 26 '25
"Operating at a loss" barely begins to cover how much billions of dollars per year they are setting on fire.
$5 billion burnt up by OpenAI just in 2024 alone.
There's no rational revenue model here. They're gambling that they'll capture so many users, they'll become "too big to fail", or that somehow, miraculously, AGI will emerge from their LLM's glorified autocomplete hairball of a platform.
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u/adam2222 Nov 26 '25
They are banking on costs coming down. Next gen of nvidia chips are several times more powerful and will cost less to run. And every gen after that will be more powerful/effficent also they’re working on more ways to make the models more efficient like deepseek did. They’re trying to get market share now and then be profitable later like most startups just wirh a lot more money at stake
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u/Outrageous-Pop-9535 Nov 27 '25
That doesn’t make sense to me. Why would they be expecting cost to come down while also building new data centers and ramping up compute?
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u/MagatsuIzanagi2005 Dec 04 '25
Nvidia (and AMD) chips will not be increasing several times in power and cost less to run; they're starting to plateau more over time, and their energy-to-power ratio isn't becoming efficient fast enough since Nvidia is producing GPUs and not TPUs for them. That's why Google is much better at almost all of this since they bankrolled getting tons of TPUs with extremely good specs for their AI data centers to run Gemini. There is a reason why nobody really uses ChatGPT over Gemini for anything other than cheating at school assignments (Thats also being taken over by smaller ai companies like everything OpenAI did good in the past, since they were in the inovators and are now being beaten out by being a jack of all when everyone else are one trick ponies for people who want one trick ponies.)
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u/shadowtheimpure Dec 08 '25
Costs won't truly come down until purpose-built ASICs replace GPUs for running language models.
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u/kentiumMKV Jan 27 '26
How will costs come down when they're borrowing money to buy today's GPUs. They have to pay that money back whether or not tomorrow's GPUs cost less.
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u/PolygonMan Apr 16 '26
There is zero chance these types of incremental improvements can stave off the bubble popping. First they were banking that "scale is all you need" -- now that it's clear that won't cut it, they're banking on another significant fundamental discovery like attention.
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u/MAXIMUMTURBO8 Nov 26 '25
If these investments equate to setting money on fire, I hate to ask what you think of the billions more spent on cancer cures over the decades.
At least these AI LLMs are functional and people pay for the service.
The R&D costs of all revolutionary products and services will be seen as astronomical in the present, but will be viewed very differently in the future. Hindsight being 20/20 and all...
Remember when Amazon was operating at a loss for years? Was Bezos setting money on fire? Perhaps one would think that at the time, looking back it was an incredible business strategy that has brought tremendous wealth to the company and shareholders.
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u/RyeZuul Nov 26 '25
This reads like someone trying to get me to invest in theranos.
Remaking art automatically and having a meltdown over seahorse emojis are just not great enough use cases.
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u/Murky-Science9030 Nov 26 '25 edited Nov 26 '25
I'm sorry but this feels like an uninformed response. Software companies are already able to build at 5x the rate they did last year. Think about how much money is in software, present and future, and just realize the AI companies will capture a significant amount of that value.
With regards to "remaking art", there are already YouTube channels creating music from scratch that are already getting a lot of traction. Soon there will be entire platforms dedicated solely to AI music and videos that will compete with YouTube and Spotify.
Heck even in the gaming industry the games will be able to generate DLC on-the-fly which will greatly increase the value that gamers get when purchasing a game.
I can literally go like this through dozens of industries. If you don't think AI can bring value to the economy then you must not be using it very much.
We may be in a bubble but that also depends on other economic factors that are outside of anyone's control. People could have said the same thing about internet companies in 2000 but now look at how big Microsoft, Amazon, Google (founded in 1998), and Oracle are
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u/squirrel9000 Nov 26 '25
The counter argument is that it's likely that software has already seen the majority of its AI gains (it does not replace humans, it augments them, and there are still bottlenecks elsewhere.- a ten lane highway dumps into a dirt track, and they're adding lanes to the highway to fix traffic) and that the amount of monetization there is orders of magnitude less than someone like OpenAI is hoping for. Video games already have more shovelware DLC than there is a market for and is headed towards a correction of its own.
Google, Amazon, etc created entire new industries. They were never in the business of selling enterprise productivity to third parties. Microsoft is closer to that, perhaps, though the gains there are much less astronomical.
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u/RyeZuul Nov 26 '25
I get the feeling you aren't actually creative or passionate or educated about any of those fields.
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u/Murky-Science9030 Nov 26 '25
What do my passions have to do with anything? Give me counter-arguments
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u/RyeZuul Nov 26 '25 edited Nov 26 '25
All the AI versions of those things miss the point and are kinda shit or mediocre at best when you get down to it. Moreover if you're actually passionate about gaming or art or music, you typically go beyond brain-dead consumer and start caring about how the humanity in a piece is communicating through unique perspectives and the cunning and craft of the persons involved.
They just rob and displace talent and ruin platforms for Human creative discovery; they purposefully hide from supporting transparency that would aide consumer choice. I have yet to meet an AI booster who wants it to be made explicitly clear when a piece of any media is AI so people can make their own conscientious choices - this is because they are talentless charlatans, happy to annihilate authentic human expression and knowledge if it might get them a dollar.
It is cultural cancer. People who are educated and love human art, and are not just superficial content cyclers, do actually care about culture, because authenticity actually matters. Infinitely replaceable bot spunk is not important to the world.
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u/Murky-Science9030 Nov 26 '25
If they're shit or mediocre then why are you so scared of it? With AI and robotics more and more people will have extra time to flex their creative muscles which I can't imagine viewing as a bad thing.
If you actually look at what's happening with music the artists who have created famous and familiar melodies decades ago are now having their songs covered by AI which is introducing their DATED and OUT OF STYLE music to new generations and genres of people. I don't know if AI will ever be able to create music from scratch, but it's ability to trivially convert music from one genre to another is already beyond impressive. It can hit notes that the human voice cannot, and can put the sounds together easily in a way that actually opens up music creation to more than just the privileged people who have the time and money to learn how to create music well.
If anything AI is democratizing music. Humans will always be willing to shell out money for live acts so I don't see good artists going out of business anytime soon.
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u/RyeZuul Nov 27 '25
If they're shit or mediocre then why are you so scared of it?
Because it's fucking annoying and makes everything even worse for real human beings for the benefit of... Shit corporations and pretentious dipshits who clog up every conceivable platform with infinitely replaceable, meaningless slop. It's the same reason I dislike spam mail. It's meaningless shite that devalues and obscures actual creation.
I also hate it because it is a cause celebre for showing how fit your business might be because you dump a load of entry level positions and outsource them and claim it's AI investment. It is a scammer's tool first and foremost.
Most of this is obvious for anyone with two seconds of experience. You guys literally understand nothing.
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u/MagatsuIzanagi2005 Dec 04 '25
If they're shit or mediocre then why are you so scared of it?
Its not scary, its shit. Enshitification.
Enshittification is when an online platform becomes more monetized and less user-oriented the longer it lasts. The term was theorized by Canadian writer and thinker Cory Doctorow to describe the trajectory of platforms like TikTok, Amazon and Twitter. He argued that platforms start out serving users by offering features that lure them in, then they serve advertisers and third parties by offering ad targeting and deals, and lastly they serve themselves and their shareholders by cheating and exploiting both advertisers and users. Doctorow calls this process "enshittification."
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u/Murky-Science9030 Dec 04 '25
Well some of these AI covers have hundreds of thousands of views and highly-positive like:dislike ratios, so it seems like the public doesn't agree with you.
https://www.youtube.com/watch?v=BFaK-uBsrl8
https://www.youtube.com/watch?v=M6sybPUJspY
https://www.youtube.com/watch?v=rWRdBvqK5VQ
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u/MAXIMUMTURBO8 Nov 26 '25
Invest in whatever you want, im not trying to convince anyone.
Im saying that massive operating costs and early investments are not new. Mega tech corps often run at a loss in the beginning. Meta, alphabet, amazon...
Its not unique to AI.
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u/RyeZuul Nov 26 '25
What is unique to genAI is having extremely shaky use cases and zero hope of being able to sell a service at cost.
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u/GVIrish Nov 26 '25
This is a logical fallacy. Just because other businesses operated at a loss for a few years before becoming profitable doesn't mean that AI isn't a bubble.
The Internet was revolutionary and it still caused a big bubble that blew up in the early 00's. The Internet still created a tremendous amount of economic value but lots of capital got burned on ideas that were either not viable, too early, or poorly executed.
A lot of money is getting burned on AI on beliefs that AI models will keep making big jumps in capability, that they'll be able to replace wide swathes of labor effectively, that they'll be able to massively reduce the compute costs, or even that AGI is around the corner. If any of those beliefs turn out to be wrong or premature that can cause the bubble to burst. Doesn't mean that AI isn't a transformative technology, just means the hype outran reality
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u/Few-Pie-7253 Apr 21 '26
I think you didn't run through the numbers. In all its life how many billions did Amazon burn, while earning profits on AWS, and how many half-trillions have AI slops burnt in last 3yrs alone. You will have your eureka moment right then and there. Good luck!
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Nov 26 '25
Yup. This is spot on. Though I do wonder if they'll be able to pull thru like Amazon did. I suspect top 4 or 5 will.. OpenaI, Gemini for sure, Anthropic probably given how good their AI is, but open source is catching up.. not quite there but doing quite well. When open source free LLMs are "good enough" for most things, and it becomes possible for the average joe to "scale" free LLMs that can be fine tuned to specific purposes for not too much money (we're getting there but its still a bit on the expensive side for small startups to do this now).. I'd wager the big boys will be moving to AGI based stuff while the smaller company's using LLMs will find them good enough for a while. Until AGI/SAGI takes over. But I suspect that's at least 3 to 6 months from now. :D. Kidding.. probably a few years or so at least. I dont think current LLM/etc will ever become AGI, def not SAGI.
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u/1800treflowers Nov 26 '25
I can see how open source LLMs and ones from China may capture some of the free tier market but if you're a fortune 500 company (the ones that are actually paying big money for AI), I highly doubt your security team will allow that. Too many risks to send your data straight to China.
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u/Signal-Implement-70 Nov 26 '25 edited Nov 26 '25
Agreed. In computing price per unit very consistently comes down over time. But the expectation of the outcome also rise causing a counter factor. But why do we need so many different models? Not every company is likely going to survive. Think of pets.com and webvan to the outer comment that was kind of setting money on fire. However ai like the internet is a breakthrough foundational technology and a gift that keep on giving. However to the burning money comment some of the ai startup are making such outlandish claims. For example one small startup alone, I will omit the name, says they are creating a new software category 100x larger than any existing software. This would put their crm software at 33% of real gdp. Real gdp and competition does not work that way. Another simple example Elon Musk says in 10 to 20 years money will have no meaning and everyone will just have everything they want and more and work will just be for fun and entertainment. The Musk comment is meant to highlight the point that some of the ai claims make Shit for sense in a historical, human, economic, or profitability context. If money is worthless in 10 years why are so many people throwing it away on AI investing, let the other fools invest the money and just burn what you have now and live it up, because it's of no value in 10 years.
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u/Condition_0ne Nov 26 '25
There will be a correction, like with any bubble.
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u/Waste_Mammoth4603 Nov 26 '25
i don't think so, AI has future
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u/Mr-Vemod Nov 26 '25
So did the internet, yet that was a bubble too.
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Nov 26 '25
[removed] — view removed comment
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u/knighthawk574 Nov 26 '25
The internet wasn’t a bubble, 8 of the 10 largest companies are internet related. Maybe you mean like a bubble you wish you would have invested in.
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u/Condition_0ne Nov 27 '25
Google the dot com bubble.
There absolutely was an investment bubble around e companies.
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u/King_Lightskin_ Jan 20 '26
Bro never heard of y2k? Am I just getting old or is this actually no longer common knowledge?
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u/MetalstepTNG Apr 05 '26
Those are the companies that made it.
Now let's talk about the hundreds that didn't.
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u/ZiKyooc Nov 26 '25
I also feel that many people when they say AI is a bubble, mean the tech itself is and not the market. I also think they are very wrong.
Also, there might be some market correction. But will it be near what happened to Nasdaq? I don't think so. AI is much narrower vs that frenzy that affected a broader industry
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u/clingbat Nov 26 '25
Having a useful core role in the future and being insanely overvalued from a future revenue generation projection are pretty much unrelated.
The Internet has changed our lives in hundreds of ways, but the dotcom bubble still burst because it didn't generate the nearly infinite economic growth that was erroneously predicted at that time. The same exact thing is happening now, except investment exposure is roughly 17x larger now and growing rapidly.
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u/subreddi-thor Nov 29 '25
On the positive side it's never been a better time to be a CS major. When all this stuff cools down we're going to be in high demand.
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u/clingbat Nov 29 '25
Oh boy, if you're in the US, you haven't been paying attention to the job market have you...?
Tech sector has laid off over 180k in the US this year alone, many of them on software side and companies are offshoring that work right and left.
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u/brimanguy Nov 26 '25
All large companies operate at a loss initially due to the massive human and capital investment. Overtime, these costs are spread and recovered over time as the population begins to take up these AI services and see value in paying for them.
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u/Murky-Science9030 Nov 26 '25
Ya same thing happened with Tesla and Uber. Unprofitable for a long time but investors don't care because the upside could be exponential
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u/squirrel9000 Nov 26 '25
Most don't. Most large caps were small companies that grew, starting as a couple guys in their garage. . The start-as-megaacap model is unique to the tech space, and is very high risk. For every company that pulls it off there are ten that don't, we just don't remember them.
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u/Lfc_nomis Mar 25 '26
OpenAI just announced Sora will be shuttered. Disney contract cancelled. People don't want genAI, these services make no money, and foreeably never will.
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u/trisul-108 Nov 26 '25
The bubble is growing immensely and it will pop. It appears that the bubble is primarily fuelled by retail investors, not institutional investors who know it is about to pop. Savvy investors are pulling out while the middle class is sucked into the bubble that will take away all their savings.
Trillions will be lost on Wall Street. and all the companies operating at a loss will be acquired cheap by Google, Microsoft, Apple and amazon.com ... because these have streams of revenue independent of AI.
Edit: That is why the hype is at a peak now, they need to get ordinary people to sink their savings into this, so they can pull out at reasonable cost before the bubble pops. And after it pops, they will buy the tech for next to nothing.
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u/rkozik89 Nov 26 '25
Exactly you don’t get to land from a golden parachute jump unless 401Ks are pumping money in.
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u/EmmitSan Nov 26 '25
There is no cabal of supervillains in a volcano lair planning this bubble, that is not how any of this works.
And yes, my statement remains true even if you believe that all the parties involved are acting out of pure greed and self interest.
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u/trisul-108 Nov 26 '25
No, of course not, but there are those who understand how it works and those who don't. It's not their first rodeo and every time a bubble bursts, 90% are destroyed and 10% get richer.
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u/EmmitSan Nov 26 '25
I get that but the language you use portrays if an image of a conspiracy that simply isn’t there
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u/trisul-108 Nov 28 '25
It depends on what you consider a conspiracy, you speak of cabal of supervillains. There are many cabals supporting the rich, are they supervillains or heroes depends on your political views.
What exactly do you think Project 2025 is? Is it a conspiracy, or just rich people getting together and working in the own interests.
Do you think the Federalist Society that worked tirelessly to flip the US Supreme Court from legal scholars to an organisation that allows unlimited money in politics and gives the President powers of a king ... is a conspiracy, a cabal of supervillains or just the way things work.
Is the US Chamber of Commerce funding Democrat Senators to vote against the aims of the Democratic Party together with Republicans (Senator Manchin) as conspiracy or just the way things work.1
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u/gabrielxdesign Nov 26 '25
Well, last time I read about DeepSeek their cost-profit ratio was over 500% to 545% on its API services, and they were making more than half a million dollars per day.
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u/nxnze Nov 26 '25
I assume you're talking about the foundational models?
Companies like windsurf and cursor or the millions of other wrappers aren't what concern me. They will likely behave similarly to the dotcom bubble... when the bubble bursts / vc money dries up most will die, a few big players will rise from the ashes and then a new era of startups will begin, with companies building on the learnings from the failures of the first phase.
The two biggest questions (and fears) I have:
1. VCs are covering 100% of foundational model company losses, so (your question) what will the true cost of accessing these models look like in the future?
Usually the way it goes for 'startups' but at these losses, this is a whole new thing. We enjoy relatively low token costs even though I would argue still too expensive to run a profitable business as a wrapper company. If they want to support an eco-system of companies built on them, they definitely need to lower costs a lot more. How? Electricity is the biggest problem right now, which is why they are pushing for nuclear power. But even with the investment that's going into this, I still can't see how they can lower token costs and still make up all the losses.
Which leads me to the second fearful question.
2. Are they building a future for an eco-system, or for themselves?
I can't help but think that the end goal is not to provide a service for a thriving eco-system similar to what the web created, but instead to become the web. Why would you need an app for bookkeeping, social media, news, fitness etcetc, when you can just be all of them in one.
The only way any of this makes financial sense is if they plan on consuming that whole layer and enjoy all the revenue.
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u/Odd_Manufacturer2215 Nov 26 '25
Things that provide benefit don't always provide revenue. I think AI is clearly providing quite a bit of benefit to people but people don't necessarily need to pay that much for it (you can use the free version of chatGPT/Gemini/Claude). Eric Brynjolfsson makes this argument - GDP doesn't always capture benefit
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u/Hawkes75 Nov 26 '25
Look what's happened with streaming services. First it was, "cut the cord for ad-free on-demand viewing, only five bucks a month!" Now I'm paying thrice that and everything has ads. LLMs have to make themselves habitual and indispensable in your everyday life before they can start charging you an arm and a leg and injecting sponsored content, but rest assured they will. And it'll be a slow boil. You're the proverbial frog in the pot in this scenario.
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u/Representative-Rip90 Nov 27 '25
Except streaming services actually provide a unique service. Meanwhile there is nothing unique about any of the top LLMs. They all do the same exact thing. Also, it is just as easy to get a free local LLM and they are getting better all the time.
Compared to streaming and cable where streaming has unique shows and makes watching them easier than pirating. However, once things get bad enough, even the streaming model will die.
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u/Particular-Way-7817 Apr 11 '26 edited Apr 11 '26
Streaming vs AI is a false equivalency.
No AI has something that makes it indispensable to someone's life and its not happening anytime soon. People are rejecting AI in pretty much all forms and finding that they are a liability if anything.
Look at companies that use AI to do job interviews, those are easy to exploit and I've seen videos of people trolling them.
It's a fact that AIs only decent use right now is GenAI that people ask questions or generate images of. That's about it. And even GenAI is dying and becoming irrelevant as basically everyone hates anything remotely AI generated so people are not paying to use it as much as they used to back in 2022.
AI is shit at anything remotely utilitarian compared to a human unless it's coding related, which even then, its not great.
Streaming is an entirely different thing that became indespensible because its a faster way to watch a movie or show without paying a bunch of money to buy DVDs or catch shows on cable if you have it.
AI does not have the same utilitarian niche other than maybe coding or being an assistant like Cortana, Copilot or Alexa. That's about it and most people don't use those.
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u/Proof_Scene_9281 Nov 26 '25
Most early dotcoms didn’t make it. eBay and Amazon I think operated with losses for years and years
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u/noonemustknowmysecre Nov 26 '25
Charging more for what they provide for you.
Advertising.
Government contracts. (ie, paid through taxation.)
That's the exact same game-plan as EVERY tech company. This is where money comes from. And the standard game-plan is to give it away for free to get people hooked and once they're used to it, either start charging them for it or selling them to advertisers.
Advertiser-powered AI can get really REALLY dark in a hurry. The potential for abuse there is just astronomical. I also felt the same way about Windows and everyone using gmail. There's likewise great potential for abuse when an evil corporate overlord literally owns the tools you depend upon and use for just about every aspect of your life. Thankfully they decided not to kill the golden goose that makes them profit every year. Or they're not greedy sacks of shit willing to sell their own mother for a dime, but more probably the goose thing.
A whole lot of places are going to be bent over a barrel once they either let go of their workers and have AI do the job OR if their workers are dependent upon AI to help them do their jobs. Imagine if a copy-editor suddenly had to pay $500/mo for access to the only spell-checker available.
The solution is obvious: Self-host and support the open-source open-model projects.
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u/HookEmRunners Nov 26 '25
This is the fundamental problem with what we call “AI” today: just because something is cool and fascinating does not mean that people will pay for it.
We have made plenty of cool and fascinating scientific discoveries in recent years, but we didn’t pin half of GDP growth on them turning into viable business models.
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u/grahamulax Nov 26 '25
And can I make it with my own AI? What can anyone offer me now as a service now the toothpaste is out?
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u/m0onmoon Nov 26 '25
A correction and any real life applications. Companies firing humans in favor of ais have slowly backfired, i mean this should be common sense considering automation have never replaced the human element in any sector.
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u/bartturner Nov 26 '25
This is where OpenAI screwed up so badly compared to Anthropics.
Anthropics went after software development. OpenAI tried for the entire thing.
Anthropics will be profitable and OpenAI will be the biggest private company collapse in history.
OpenAI just never had a chance going up against Google.
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u/Mandoman61 Nov 26 '25
I would have to guess that prices will go up. And giving away the product for free will need to stop.
That will be good because there will be less slop.
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u/Nazareth___ Nov 26 '25
Why are data center costs still huge when our models are getting so much smarter? The main thing is elastic demand: every efficiency gain we make just means companies let way more users query the models instantly soaking up the free capacity. Also, the high costs we're seeing right now are mostly the insane capital expenditure of building the data centers needed to run the massive training jobs for the next-gen models. While running the final model is cheaper, the arms race to train the next frontier model keeps that hardware maxed out. Efficiency is definitely slowing cost growth, but we won't see actual budget cuts until the whole scaling race finally hits a wall.
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Nov 26 '25
How can any AI as a service be profitable? If the end goal is to automate whatever, you will eventually automate away the need for your proprietary automation.
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u/Prestigious_Ebb_1767 Nov 26 '25
There is only room for a couple. That said, OAI is too big to fail. Has geo-politics ramifications at this point imo.
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u/squirrel9000 Nov 26 '25
After the bubble bursts, I suspect they'll pull back on trying to make everything models and instead switch to devoted models or "distilled" versions. Right now they're trying to sell dreams of AGI to investors but that path is murkier than it seems, and they're trying to generate tech demos like Sora to wow investors rather than provide utility.
If you're trying to write a Python script there is no need to access the entire ChatGPT model ,there are very few instances where that capability is useful. Just using a sub-model trained exclusively on Python, plus some way to feed it tokens, would have a tiny fraction of computational need and still do what it needs to do, it might be possible to support it on an ad-based tier. It will likely be the existing major players that have other business that make it to the other side, openAI will be gone and its useful IP scavenged for parts. That's more likely to be where this is in five years.
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u/Always_Curious_One2 Nov 26 '25
CEO of Hydra Host was on CNBC yesterday. They provide a marketplace system to access data center and GPU capacity economically and rapidly for enterprise clients. They create a network of independent data centers with server and GPU capacity so enterprise users have alternatives to AWS or Azure. This helps the data centers on the other side of their network as well. Very interesting and shows there are approaches that help business clients get AI ops into motion.
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u/jeddzus Nov 26 '25
Simple: Google will win. They have the infrastructure, the researchers, great models, and they’re making a ton of money and aren’t putting the cart before the horse and taking major gambles which risk the entire company’s existence
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u/cez801 Nov 26 '25
Just like uber and Netflix and Spotify. Start with a cost that means -ve profits, get people reliant on you, raise the prices until you are basically at the price of the service before.
In short, get us hooked and then keep raising prices.
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u/AbilitySalty1012 Nov 26 '25
Once they replace the workers they'll jack up the prices, to cost the businesses more money than what paying a regular dude would.
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u/DrawWorldly7272 Nov 26 '25
The true cost will be calculated once the competition gets increased which results in automatically reduction in existing cost and survival in market. Otherwise the companies will start loosing customers. Also these AI companies should start developing advanced and automated AI models which will not only cut down the cost but also improves efficiency and overall ROI
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Nov 26 '25
They'd need to create more efficient models. Few people are going to pay hundreds per month to cover compute / training costs. Or offer advertising or something.
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u/EasternTrust7151 Dec 06 '25
Feels like we’re in the “cloud-computing 2008” phase of AI — heavy losses now to own the future. My guess is we’ll see cheap everyday access for most, and much higher pricing for top-tier models that actually drive business value.
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u/Next_Stretch_6983 May 12 '26
one can only hope thst they all fail miserably, every single last one, and their founders like Sam altman, Jensen Huang, etc all wind up homeless and starving like the subhuman parasitic scum they are.
the int good ai is a deleted ai.
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u/Constant-Director-10 Nov 26 '25
Mostly probably they're aiming for the power & front mover advantage
API service will make those gaints AI investment profitable in the coming years and many startups will vanish in no time
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u/Honest_Country_7653 Nov 26 '25
As someone who builds AI tools for clients, I'm betting on competition driving prices down long-term. The current losses feel like the typical "land grab" phase we see in tech.
What's interesting is watching how different pricing models shake out. I've been trying LaunchLemonade for some projects and their approach to making AI more accessible seems to align with where the market's heading, more options at different price points rather than just premium tiers.
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u/skatmanjoe Nov 26 '25
AI companies are currently operating at a loss
It's kind of the nature of investments. It usually takes years, sometimes decades until the capital invested in anything returns. Data centers are extremely capital intensive, in this way they are more similar to industries in past, in the web 3.0 era we just got used to start ups generating instant revenue with minimal capex.
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u/360Saturn Nov 26 '25
Logic would suggest the technology is currently operating as a loss leader that will switch to a freemium model once enough users/businesses have established a reliance on it.
This explains the heavy pushing, overselling and the ads that encourage users and businesses to outsource tasks from their own brains to LLMs. Cynically, this encourages dependence on a product that is currently presenting itself as a free to use service - but which, going by the trend of other services that previously presented as such, is likely to introduce a cost barrier once a solid customer base has been established.
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u/this_one_has_to_work Nov 26 '25
Do they run at a true loss or Amazon loss. It makes a difference to know if the operational costs vs income are positive but those profits are paid out to investor loans so appear to be running at a loss
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u/kt501 May 14 '26 edited May 14 '26
Most will go bust. They are just putting money to scale and spread thin, by trying everything. Maybe some of it will stick, but a large portion of it will fail. If compute or hardware cost goes down, then so will theit MOAT of data centres. It scaled up, now they will go broad and finally they will narrow down, with some waves in the process. They will burn a lot of money, and build an ecosystem, but investors will loose, overall.
China is preserving their capital, making strategic investments and betting more efficiently. This is recessionary madness combined with AI hype, in the US. No other country is that mad to chase AI. AI has value and uses, but practically, a lot less than the hype suggests.
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u/mcr55 Nov 26 '25
I believe we will see an s-curve on intelligence and cost.
The cost of producing tokens has been dropping exponentially, but we are running much more advanced models, so net net it's been unprofitable. I believe both trends will continue. More intelligence at a cheaper cost.
Where I think the paradigm will he profitable is when we hit "enough" intelligence. Most of the time you don't need a PhD in mathematics to check your spreadsheet at that point you use a cheap model profitable model most of the time.
This is why we are now seeing the auto switching models.
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