So thinking this through to come up with your numbers, total investment through 2027 is ~$2T and interest on debt is over 7%, which makes servicing this ~$140B/yr. However, failure rates on H100-B300 installed HW have been over 12%/yr even as the power and cost efficiency per token of the later builds has risen ~5x. So depreciation on the data centers is conservatively $240B/yr ignoring power costs (likely only $30B/yr at $0.05/kWh). Conveniently, this is $20B/month and if 5% of the population uses it, that's only 400million people so it's $50/mo or $600/yr, only if the AI-vendors make zero profit and $100/mo if they make 50% margins. Realistically, the OpenAI and Anthropic go to zero or it's $600/year.

I don't know where the 5% of world population came from, because that's clearly not just professionals or people making a lot of money. That's Uber drivers, and retirees in the developed world or tech workers in Asia making <$10000/year. Those don't look like great markets. This needs to be 2x higher value than their cell phone and internet that they might spend $300/year on today (that's a new iPhone every 3 years on an ATT plan). It's not like it can replace their plan, because they need that connectivity to use it!

Who's getting this value other than SWEs? There aren't 40 million SWEs and I don't see them spending over $6000/year. If their business does, it still has to pass on the cost to consumers and/or fire SWEs.

betting on a compute bottleneck sounds like a recipe to get thrashed when the bottleneck relieves itself.

At the investment scales being discussed, CUDA/architecture and other advantages do not matter - you could spend 1 billion on building a new chip architecture. The ram/fab inputs have been a commodity market for years. Heck, even the model bottleneck doesn't seem real when it's only 1-4 billion or less to get a state of the art model.

At some point the compute bottleneck will be relieved, you can see NVidia hedging their strategy with both open models and on-device chips targeted for local inference. The 200 dollar a month plan will absolutely be taken over by local hardware in the future.

Enterprises will pay tens of millions a month, millions of individuals will pay $100 a month and there will be a long tail as they offer cheaper pricing and perhaps ad-supported pricing.

The average American family won’t be willing to pay more than a Netflix subscription.

I think in five years, it will only be power users that use a model in its raw form - everyone else will mostly consume using wrapper apps.

“Only 5%”

We still have 2billion+ people offline. Looking at global population is the wrong reference frame for selling a $100/mo service.

Dario Amodei has apparently recently suggested that Anthropic might become only only private AI company in the entire world, which obviously it won't.

There is competition everywhere, and it is intensifying and catching up, not fading away. Open weight models are becoming more common, both within the US as well as elsewhere. Treasury secretary Scott Bessent just praised Meta's open weight models.

There is demand for AI at all different price points, and as all models at all price points become more capable, it seems that increasingly developers are seeing the most expensive ones as specialized tools, not daily drivers.

Compute/memory may be constrained for a few years until production capacity catches up, but this does not mean that demand for cheaper and open weight models will go away, else it would already be happening. Anthropic would like to sell an expensive Ferrari to everyone on the planet, but 99.99% of those people have no need for anything more than a Yugo.

Sure, they "just" need to exceed Netflix's global subscriber count, at a significant multiple of the monthly cost of Netflix in their most expensive markets, all in time for an IPO that is rumored to be happening later this year. No problem.

Why that many people per month? What timeframe were you considering for them to pay off their expenditure? For that matter what are you estimating their total expenditure to be?

I highly doubt 415 million people will find enough reason to purchase $100 worth of Anthropic, especially when the price of intelligence keeps going down and smaller models become more and more capable to meet the average person's needs like drafting emails, customer support, basic RAG.

I would be curious to see if they ever publish detailed statistics on this. I'm sure as others have said the average family will not be paying much if anything for AI. Just within the HN bubble I have been paying a bit for it just for my hobbies and it's been fun, enlightening, incredibly useful for rewriting other peoples code and asking it all the dumb questions that I would get entirely roasted for here. Curious to know how many others are using it that way for hobbies, silly questions, rewriting other peoples code, finding and fixing vulnerabilities, debugging performance bottlenecks, etc... rather than strictly professional use cases.

That's because the implicit sales pitch is: "We will create a tame AI overlord and rule the world with it!"

They are worth (on paper) so much that there are not enough retail money to buy them anymore. All these companies can do is put Uncle Sam on the hook to print money for them. There is no other way.

Yes they do. They have to file an S-1 with the SEC, which will be made public about a month before the IPO.

The S-1 has to include, among other things, three years of audited financial statements, plus interim statements (unaudited). It will cover both revenue and expenses, the latter breaking out things like cost of revenue, R&D, sales and marketing etc.

Based on the (unofficial but reported) IPO target date of late Sep to early Oct, the S-1 will have to be made public in a few weeks from now.

Yes, they have to file an S-1 with the SEC as part of the process. This lays out business operations in detail, including risks. For instance, here is the SpaceX S-1: https://www.sec.gov/Archives/edgar/data/1181412/000162828026...

They do, but the accounting rules change based on context. They will file an S1 today outlining how they are rolling in profits then, come tax time, suddenly they are hemorrhaging money. Flesh-and-blood investors have lost all trust in financial filings. See SpaceX.

No, as i understand it: the underwriters are the banks that write out the shares and give a sort of guarantee. So they decide the price of the IPO.

Of course they do. The HN braintrust is mostly financially illiterate and sees conspiracies and fraud everywhere.

This is the biggest capital buildout on history. Saying money will be wasted is not insightful, it's obvious.

Scratching my head too. Why? Spend a lot of money and effort, to share info you don’t have to, which can only create liability?

"There is like zero positive side to disclosing audited financial statements and massive liability."

Why are you posting about stuff you have zero clue about?

Oh theres no positive side... yes there is. There is a huge amount of failure risk weighing on both OAI and Anthropic - investors don't care about how great you claim your technology is gonna be. They want to know if a viable buisiness model is taking form and whether you will be around long enough given the investment time horizon of the investor.

Right now China is making that failure risk even larger. This directly affects the IPO.

We already know they are not profitable in the truest sense w.r.t valuation.

FCFF = EBIT(1-t) - Reinvestment.

This is how the operating assets are valued via intrinsic valuation.

Could they generate immense earnings and cash flows net of reinvestment? Sure. DO I believe so? Nope. They've got way too out infront ahead of their skies about where this technology belongs and operates best.

Do we know this as a fact? Do we have proofs it is profitable? I haven’t seen any evidence so far, it’s mostly something repeated and accepted as fact

And its only transitory.

Both OAI and Anthropic tried to time their pricing to look good heading into an IPO window.

They got screwed as China has kept up. Wonder how they're gonna overcome this problem - protectionism? Maybe.

Most developers would rather use Claude or Codex than mess around with anything else. Codex has 15+ million users.