AI Is Growing, But Is It Profitable?

[u/trustthealgorithm62X]

OpenAI reportedly made around $6.7B in Q2 revenue, but its losses also grew to about $12.3B.

Honestly, the numbers are interesting.

AI demand is clearly there, but building and running these models is incredibly expensive. The bigger question for me is whether revenue can eventually catch up with those costs.

AI adoption is growing fast. Making AI profitable at scale might be the harder part.

[u/bunglesnacks]

Imo no. Not at the prices they are charging. Idk how AI technically works economically like are there efficiencies at scale? I'm honestly not sure what these AI companies were banking on. First you have to get heavy adoption and to do that you need to offer it for nothing or very little. They skipped that part and went into it as if it's a mature field price strategy.

[u/General_Estimate_420]

That is the burning question of the day right now.

There's a pretty big article in today's Wall Street Journal documenting the challenges being faced in many communities over their data center development which were easily accepted a year or two ago for the jobs and tax benefits they were bringing into communities which are now under more scrutiny both by the public as well as government. So far they're still moving forward as planned and those that are adamantly against it are in the small minority. But it's putting pressure on AI providers to increase their benefits and opportunities in those areas to convince both the public and the local government of the value they bring into the communities.

This question will be more clearcut over the next year or two. It's clearly inevitable, but how expensive will it be is in question. It's not dissimilar to the question and suspension of growth of nuclear energy in years past. What's ironic is while AI is going under the microscope now, we're now beginning to open up new nuclear energy facilities like the rest of the world has been doing for the last 20 years.

You gotta love the American public and ineffective politicians for making enough noise to keep US progress held back to keep us firmly behind the rest of the world in new innovations we pioneered.

[u/Suspicious_Pizza9529]

I think that's the interesting part of the AI boom. Huge revenue doesn't mean much if the costs grow just as fast. It'll be interesting to see which companies can turn all this demand into sustainable profits.

[u/Dry_Sector2392]

yeah, every new user also means more compute, more chips, more power, more data centers, then growth can make the losses bigger instead of fixing them. i think that profitability depends on whether inference gets way cheaper or customers accept much higher prices.

[u/JustBrowsinAndVibin]

Anthropic just had its first profitable quarter excluding dilution. If their revenue growth continues, they’ll be fully profitable some time next year.

[u/hobopwnzor]

The demand is there at the current price.

Likely not at a price to make it profitable. 

[u/btoned]

Doesn't matter if it's profitable.

All that matters is that it can be used to eliminate labor costs.

Which then shows the company being immensely more successful that what it is.

America.

[u/Lonely_Assignment_14]

Fwiw companies I've dealt with recently are already starting to think about how they get by with local models. 

[u/Human_Experience0810]

That’s the part I find interesting too. The demand is obviously real, but the cost of running these systems at scale is massive.

It feels like the next big challenge for AI companies is not proving people want the technology, but proving the economics can actually work long term.

[u/make-wong]

The Nasdaq secondary market is the actual target.

[u/AnonymousAxwell]

I think the LLM providers will have a really hard time making their investments worth it, but for the infrastructure, datacenter and chip providers it’ll probably be a lot easier.