So what are the valuations and funding rounds for these companies actually signifying? Are these basically an indication of who will win the race for market share by burning money and who will sit it out and become irrelevant? There’s no way these companies can be profitable unless they charge more or go vertical by building their own chips or apps.
ben_w•4h ago
> Are these basically an indication of who will win the race for market share by burning money and who will sit it out and become irrelevant?
> There’s no way these companies can be profitable unless they charge more or go vertical by building their own chips or apps.
Disagree. Available evidence strongly suggests that they make money on inference, it's just that each model has a lifetime measured in (at most) months before it becomes obsolete, and training is expensive.
Until better hardware becomes a normal consumer item and everyone goes to local models, a singular winner can keep making a profit, as SaaS and at current prices… if, and only if, they can slow down on obsoleting their own models.
SilverElfin•4h ago
ben_w•4h ago
I think so, yes. An all-pay auction: https://en.wikipedia.org/wiki/All-pay_auction
> There’s no way these companies can be profitable unless they charge more or go vertical by building their own chips or apps.
Disagree. Available evidence strongly suggests that they make money on inference, it's just that each model has a lifetime measured in (at most) months before it becomes obsolete, and training is expensive.
Until better hardware becomes a normal consumer item and everyone goes to local models, a singular winner can keep making a profit, as SaaS and at current prices… if, and only if, they can slow down on obsoleting their own models.