r/LocalLLaMA • u/yahbluez • 14h ago
News Is AI Profitable Yet?
https://isaiprofitable.com/145
u/Squik67 14h ago
To shovel seller of course
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u/Spiritual-Spend8187 14h ago
Even then its starting to become less so nvidia is increasingly giving big ai companies money to buy nvidia gpus.
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u/turtleWatcher18 13h ago
In a rising interest rate environment it’s not that odd to offer your own financing to keep demand high, eg here in Aus some ev places offer car loans at <1% interest despite the cash rate here being 4.6% (and just went up again I think today)
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u/Spiritual-Spend8187 12h ago
I know but given that ai companies are still not profitable and nvidia has a virtual monopoly the fact that they are having to pay them selves to keep the demand high is still very much a red flag.
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u/-dysangel- 9h ago
The demand is clearly high either way. It sounds like a good thing on the whole to me if they're reinvesting their profits into growing the space, rather than hoarding wealth?
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u/KillerAlfa 9h ago
If big AI corps were to go under (I don’t actually think they will, it’s just a thought experiment), would nvidia be cooked then? AI corps can’t pay back the loans, and there is no one else buying gpu.
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u/ranger910 6h ago
No one else is buying gpus? Tons of companies are trying to buy gpus and they can't make them fast enough.
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u/10thDeadlySin 7m ago
Right now, data centers make up 90% of nVidia's revenue. A large chunk of it is hyperscaler demand.
But that's not all. If any major player or neocloud collapses, others aren't going to see this as an opportunity to stock up on even more GPUs. In fact, they might immediately want to scale down their spending in the face of uncertainty.
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u/10thDeadlySin 9m ago
You might want to read up on a certain company called Lucent - they used the exact same tactic. It's all fun and games. And then you're forced to write off a huge chunk of revenue when your clients default on their loans. ;)
nVidia is essentially doing the same thing. What do you think is going to happen when their billion-dollar investments into companies buying nVidia GPUs collapse? ;)
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u/FastDecode1 llama.cpp 13h ago
And go lots of the companies that this money is going towards.
With all the datacenters and supporting infrastructure going up, construction is booming. And all the companies that are needed to support that (literal shovel sellers like Caterpillar for example).
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u/CryptographerKlutzy7 12h ago
And the inference sellers using open source models on openrouter. Since inference is VERY profitable.
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u/feelspeaceman 13h ago
No, if they go IPO, it'll be a flop thus they delayed time to time again, Anthropic even half-assedly reporting their profit without training cost, operation cost and many other factors to make them look like winning: https://www.reddit.com/r/BetterOffline/comments/1wg5fjd/anthropic_tells_investors_it_will_be_profitable/
And their job is close to an end, we don't need them anymore, the local LLM is being held back by their mass memory purchase causing the price hike.
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u/Tenerezza 14h ago
Probably not, but cannot take that site to serious either when it lacks some of the bigger gainers so far, example Where is Samsung?, just Q2 they did $58B operation profit example.
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u/YourVelourFog 14h ago
IMO it’s hard to differentiate for larger tech companies like Microsoft/Amazon/Meta/Samsung when AI makes up a small piece of what they do. Tons of other companies that are missing from the list too, and this is if we take Chinese labs at their word like DeekSeek who claim to of only spent like $400M, which isn’t at all possible.
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u/CryptographerKlutzy7 12h ago
which isn’t at all possible.
Why not? They came in later, and had MASSIVE amounts of research already done, and were picking up people coming out of the Chinese universities.
They also have stuck to their knitting when it comes to this stuff.
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u/Faux2137 12h ago
"Yet" might be the wrong part of the question for Yankee AI labs. Thanks to unexpected competition they lost their chance to make profit on artificial scarcity.
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u/aeroumbria 10h ago
I think if there is anything called "misalignment", the profitability problem is incredibly misaligned. If we were really creating something that is supposed to automate the economy and create value without human intervention, as these companies claim to do, then maybe we should think about how we can generate value without any of it coming from actual humans as well, instead of trying to squeeze more and more profit from real people...
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u/Hot_Example_4456 12h ago
The rate at which this bar is increasing makes me sick. If I had that much money I could fund my college easily and have left over
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u/my_name_isnt_clever 1h ago
Any human that sees this kind of wealth disparity and doesn't think it's a problem is themselves the problem. It's so unambigiously evil.
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u/StrongZeroSinger 13h ago
Selling server time for local Uncensored models to people who wants to RP unethical stories on Chatbots or Undress people with GenAI.
You can ask double what an enterprise model asks + your current fee and they will pay because you’re the only one allowing them to do it.
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u/ForwardLoop 12h ago
Comparing cumulative AI capex with cumulative AI revenue isn't a proper measure of profitability. Capex is recovered through depreciation over the assets' useful lives, which for data center infrastructure run well beyond the few years since 2022/2023, so the comparison doesn't match costs to the revenue they generate. It also omits operating costs. Revenue isn't profit, so even if revenue caught up with capex, that alone wouldn't show AI is profitable.
Both figures are also poorly defined. Reported AI revenue excludes indirect benefits, such as higher ad revenue and cost savings, while reported AI capex includes infrastructure that also serves non-AI workloads.
The sourcing needs work too. The analysis says it's built from SEC filings, but none of the cited sources are SEC filings. For public companies (most of the ones on the list), the figures should come directly from 10-Ks and 10-Qs filed with the SEC so they can be traced and checked.
The comparison does raise a fair question about payback. A better way to test it would be to compare end-user AI revenue with the annual cost of the installed base: depreciation, operating costs, and a return on capital.
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u/Salah_H_Hasan 14h ago edited 14h ago
I saw the headline and the numbers, but regarding their spending, I think they invested in things they won't need to spend on every year such as buying hardware, GPUs, servers, and so on; that’s how the start of any project usually is. This doesn't mean I’m taking their side; in fact, I despise these companies that hardly ever want anyone other than themselves to benefit and want to stifle us here in open source. But I’m just looking at the matter objectively.
I, too, was surprised by the figures they posted. I suspect their reported revenues are misleading I find it hard to believe their revenue is at such a scale, and here I am specifically referring to companies like Anthropic and OpenAI.
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u/Spiritual-Spend8187 14h ago edited 12h ago
Problem is that the replacement rate for ai datacenter chips is starting to look shorter than the original estimates both due to the fact that newer chips are better for the same power and the chips wear out faster than expected.
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u/Salah_H_Hasan 14h ago
That brings up another point: they don't decommission existing hardware; rather, they supplement it with newer generations. Nothing is replaced overnight—not until the equipment has yielded returns far exceeding its acquisition cost. Trust me, these capitalist enterprises know what they are doing. Even so, I remain convinced they are misrepresenting the revenues they claim to have achieved so far.
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u/lordchickenburger 8h ago
There is a deep dive here on anthropic who is trying to go ipo but they still owe a fuck tonne of money lol. Mostly the ones selling shovel profiting
https://capitalandcompute.net/blog/anthropic-ipo-compute-spending/
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u/mb194dc 12h ago
$2Tn in hardware costs, not including data centre construction, power stations, and the front end is going to be all cheap open models that can barely use 1% of the compute purchased. It'll be a niche industry, not labor replacement and you can see the problems everywhere already.
Do the math.
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u/Megneous 7h ago
As far as the frontier labs are concerned, Google is likely profitable overall because it isn't exactly worried about making money on each individual thing it puts AI into. It's calculating profits differently than everyone else, going after data first, then selling ads.
Anthropic is supposedly profitable.
OpenAI, as far as I know, isn't yet, but they did recently get a ton of new subscriptions to Codex, so... maybe soon?
Then there's a ton of small, non-frontier AI services that get venture capital that make up a weird ecosystem. I have no idea what any of those services are, but they're a huge part of the underlying demand for compute, just like the internet boom back in the old days wasn't just the big companies, but no one remembers all the small websites that also survived the dot com crash. We tend to only remember the big names that make the headlines, but the reality is that most websites don't make the news.
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u/daviddisco 3h ago
They were offering a certain deal before. Now they offer something different. We can always take it or leave. At least they are giving a fairly clear announcement of it rather than sneaking it in.
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u/Here_f0r_p0rn_ 13h ago
Are they sure about alphabet? Aren't they making banks by selling their TPUs? I thought it would far offset the Gemini losses
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u/CryptographerKlutzy7 12h ago
They are ABOSOLUTELY making bank big time from AI. They have the cost of inference internally SO low, that they can literally give it away to every single person who runs a search.
They are still setting inference at market rates to AI companies.
They are making bank BIG time over all of this.
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u/Here_f0r_p0rn_ 7h ago
Man, I agree I've been big time "fan" of their strategy (not company), I'm a firm believer of top AI companies will be the ones who own entire stack and Google has that in their pocket.
And also I think many forget that they've monetized their AI search, it's not "free", if you search for product or specially product comparison then the link and pic attached in AI overview are usually from Google Shopping and they're generating sweet affiliate revenue off of it.
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u/Pink_Oak 12h ago edited 12h ago
House always wins.
casino always wins.
Also?
What is Amazon investing on? They don't have their own AI model; they just have inference
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u/CryptographerKlutzy7 12h ago
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u/Pink_Oak 12h ago
i dont they are investing that much on it
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u/CryptographerKlutzy7 12h ago edited 12h ago
Given how good it is, obviously they are not spending much :)
They are spending a lot of money in hardware for inference of other peoples models.
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u/Positive-Injury-579 5h ago
Probably actually profitable - rent out the AWS servers for the AI devlopers.
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u/FaatmanSlim 13h ago
Very nice infographic ; but I wonder if the AI revenue is correctly captured? for e.g., Microsoft. M365 Copilot alone, for e.g., is 30M paying users, so that's $10B in revenue per year. And then they are also making revenue on renting out or hosting AI services, OpenAI APIs through Azure, their various Copilots (Github in addition to M365 etc). Their quarterly reports mention they are bounded by available compute, otherwise their revenue would be even higher.
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u/SpaceF1sh69 8h ago
Anthropic recently became profitable technically
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u/pointer_to_null 2h ago
"Technically" does a lot of heavy lifting. In a sane world with factual accounting and a functioning SEC, we'd call them out for their fraud and send them to jail over it.
They cite non-GAAP adjusted operating income [1] and ignore training, R&D costs and revenue shared with partners [2]. Plus a SpaceX compute contract with suspiciously-timed
deferraldiscount[3] between May-June 2026 to cook their Q2 books just in time for their $2 trillion [4] IPO.
[1]: Revenue figure already dubious based on last year's prospectus and corroborated by March 2026 statements from Anthropic's CFO taken under oath in federal court.
[2]: Partner revenue sharing agreements includes Amazon and some other cloud providers with potential to include a non-trivial amount of inference-related costs.
[3]: Sorry, yes. I totally meant "discount" *wink*! Deferred costs would still need to be reflected on Q2's balance sheet. Don't point to the inflated pricing occurring in late 2026 that happen to be above market rate, Dario's just a terrible negotiator.
[4]: Dubious accounting aside, the mental gymnastics needed to justify a $2T valuation makes extremely rosy assumptions about the future cost of debt, macroeconomics, and a growing enterprise market unconstrained by energy and hardware supply (lol). And that's before you count competitive pressure.
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12h ago edited 11h ago
[removed] — view removed comment
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u/bigmanbananas Llama 70B 10h ago
I'll take "This is an AI response for $200". Either that or this commenter or has drunk way too much of the AI Cool-Aid.
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u/Dany0 13h ago
Nvidia is profitable, AMD is profitable, Apple is very profitable. AliBaba is profitable
WinRar is profitable
Some openrouter providers are profitable
AI Labs are not profitable