I have a theory that xAI has one of the largest clusters but with far less traffic + tokens to process bc its less popular than its competition, and xAI can pass the savings on to the end user.
I have a theory that xAI has one of the largest clusters but with far less traffic + tokens to process bc its less popular than its competition, and xAI can pass the savings on to the end user.
Why would having more costs and less income allow them to pass savings on to the end user?
They already invested in the massive datacentres of GPUs sitting idle. They have fewer users so they can deliver more inference per user - more thinking, larger models.
Don't they just rent them out to the frontier AI shops? They're not sitting idle.
There are various difficulties with renting GPUs, especially if your setup is very custom.
The competitor would have to port their training systems to your specific network architecture, system design, rdma Vs ethernet vs infiniband Vs nvlink etc.
Getting it running might not be too hard, but getting it running efficiently and making good use of all those flops will require considerable human effort and wall time.
Add that to the fact most frontier labs seem to have a single huge training run - and to my knowledge nobody has figured out how to distribute that training run between data centers effectively.
I'm not saying this as a hypothetical -- I believe xAI is already renting their GPU farm out to frontier labs. Whatever logistical challenges exist, enough of them seem to have been overcome.
Surely rented GPUs would be used for inference, which runs anywhere and needs to scale much larger than a training run.
They do, yes.
So where are these mythical savings coming from? You're saying they have spent more per user therefore can charge each user less or something? I'm not following.
The (optimistic?) take is that xAI is genuinely better at building datacenters at scale than anyone else, and the freedom to use Nat Gas as the primary energy source allows them to have lower marginal costs.
The (pessimistic?) take is that they have loads of idle GPUs and want to get some revenue out of them rather than none. Compare this to OpenAI/Anthropic where every token used by a consumer has to compete with enterprise spenders, and there’s not enough to go around for everyone.
It's also sensible for them to provide a cheap, intelligent model to users if they have capacity, then once they built a user base, tighten the screws. All the other AI providers have done that.
It’s basically a clearance sale, is the theory.
More like they have a less focus on margins and more on cost recovery.
Definitely. They had insanely low rates on TTS up until a month or two ago ($4.20/1M) for example, which they only recently started increasing.
As their models get more competitive I'm sure prices will catch up.
“We lose money on every rack, but we make up for it in volume!” - Elon Musk, probably
SpaceX, like Tesla, seems to have the same "portrayals over profits" mindset investors. So it doesn't even really matter whether or not xAI is making any money.
xAI had $2.5B in operating losses in the past quarter. What savings are being passed on?
they are renting parts to google for like 1b a month
really dont think they have a lot of idle power
If they've got billions to rent out, they're not using it...
Profitability is never a constraint for Elon companies. He has always been able to be able to extract money from the middle east, government, banks, retail investors (or these same parties through his other companies) whenever they need more.
His net worth is orders of magnitude bigger than the cumulative profits his companies have ever produced (even if you only count the profitable quarters)
It's really easy to do this actually. You just create cars that drive themselves and rockets that land themselves and people start throwing money at you.
I paid for a car that drives itself in 2018 and I haven’t received it. Any updates?
2018 cars get FSD 14 lite this month. Not a great situation but not bad for an 8 year old car.
> Not a great situation but not bad for an 8 year old car.
Not bad to get a product that underdeliver 8 years late ?
When can I get a Tesla that drives itself? About six months?
From your local Tesla dealer. Technically, you do still have to "supervise" it, which basically means making sure the little camera that watches your eyes doesn't catch you with your eyes off the road too much.
My sister-in-law's mother drove one from Florida to the northeast without touching the steering wheel or pedal/brake, right down to the parking at each end.
I've been a humongous fsd sceptic for a while, but had to lay that aside after I went for a test drive (test ride?) in one of these things.
What that technicality means is that you are liable when the car kills someone, not Tesla. Level 3 self-driving is a completely broken idea. People cannot closely supervise a process that never requires their input - when you suddenly are needed you will not be prepared to respond quickly enough. Either you are driving the car, or you aren't. If you are liable, you are driving it.
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No need for theorizing. xai is selling their excess capacity to Anthropic and Google with large markup