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> The reason why AI companies are spending so much money is to rollout data centres to run the AI in the first place. These expenses are one-off purchases, not regular operating expenses. Once all the data centres are built, AI spending is going to plummet.

Fatal misunderstanding.

Datacenters are not warehouses. Amazon.com being borderline-profitable owing to massive ongoing capex on warehouse expansion is not at all like AWS becoming borderline-profitable owing to massive ongoing capex on LLM datacenter build-out and SOTA model training (it's CAPEX, but carries OPEX affect because of GPU depreciation schedules and competitive hardware upgrade cycles), and opex of delivering LLM inference services, and being able to price it all competitively.

(edit: expand explanation of why it's a misunderstanding)

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Thanks for pointing that out. That has been my concern as well. Sure the post says "they make $2.08 for every $1 of compute" but that seems to only be accounting for OPEX. If we start accounting for CAPEX and variations with interest rates things look a lot less rosy. I mean a lot of folks are suspecting Anthropic will get a junk bond rating when it rolls out to public markets.
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Yeah and what happens if none of those data centers translate into more clients? Its not a one off, its a gamble too.
Please, Giancarlos. Let's all behave with the times... I think it's culture-appropriate to say "You're absolutely right. Datacenters aren't more clients. We build. What if they don't come? It's not just a one-off. It's a massive gamble."

/s

(edit: fix name)

To be clear: it's a tongue-in-cheek riff, macroexpanding Giancarlos's (I think humorous) comment. I don't mind the downvotes---acerbic / black comedy is risky business :sweat-smile:
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Zero cash flow is not the same as zero earnings. They may end up with negative earnings sometime in the future depending on how much additional capex they spend, how long they take to depreciate the capex, how fast revenue grows, etc
GPU seem to last lot longer than expected.. And have good resale value for other use cases. The $2 for every $1 inference cost quote from Anthropic I presume includes all opex.
I reckon it depends on how hot they run GPUs for how long. Running any chip at clock or overclocked (likely) will burn it out faster than "business as usual" workloads.

Defraying of capex also depends on how the hyperscalers scrap used hardware.

AFAIK, all hyperscaler hardware is effectively a consumable. Disks, memory, boards, chips; all the high-value pieces do not get refurbished into new computers for sale into secondary markets. The commercial and legal liability is too high---leaking their own proprietary IP as well as leaking customer IP, not to mention secrets and hardening configs and so forth.

I can't recall where I read it, but if a datacenter is modeled as a bunch of black-box hot-swappable shipping containers, then for pre-LLM workloads, per-container unit economics works only as long as a container delivers over 30% capacity. After that you got to swap it out, and send the black box into a furnace to recover them rare earth metals for the next generation of chips.

To a first approximation, high-throughput, gpu-maxxing math workloads (LLM inference) are surely harder on chips and memory, than are bread-and-butter SaaS / data lake / ETL / RDBMS workloads. Speculating further, I'd guess that the ~40% operating margin of datacenters is due to the relative compute-friendliness of non-math workloads for lack of better words.

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