> but as far as I can see all the AI companies are not making money on inference alone

The numbers aren’t public, but from what companies have indicated it seems inference itself would be profitable if you could exclude all of the R&D and training costs.

But this debate about startups losing money happens endlessly with every new startup cycle. Everyone forgets that losing money is an expected operating mode for a high growth startup. The models and hardware continue to improve. There is so much investment money accelerating this process that we have plenty of runway to continue improving before companies have to switch to full profit focus mode.

But even if we ignore that fact and assume they had to switch to profit mode tomorrow, LLM plans are currently so cheap that even a doubling or tripling isn’t going to be a problem. So what if the monthly plans start at $40 instead of $20 and the high usage plans go from $200 to $400 or even $600? The people using these for their jobs paying $10K or more per month can absorb that.

That’s not going to happen, though. If all model progress stopped right now the companies would still be capturing cheaper compute as data center buildouts were completed and next generation compute hardware was released.

I see these predictions as the current equivalent of all of the predictions that Uber was going to collapse when the VC money ran out. Instead, Uber quietly settled into steady operation, prices went up a little bit, and people still use Uber a lot. Uber did this without the constant hardware and model improvements that LLM companies benefit from.