SemiAnalysis has calculated how big that gap really is. After testing subscription tiers from both OpenAI and Anthropic – running long-horizon coding and agentic tasks until weekly...
If you’ve got a toy project that you want “AI” to give you a hand with, do it now.
Pretty soon all these companies are going to have to pay for all that investment in compute resources they’ve been busily soaking up over the last few years, and then they’re going to have to pay back their investors, and then they’re going to have to try and make a profit
This is the golden time for cheap commercial AI. Already the noose is starting to tighten, and it will never again be as cheap as it is now.
In five years once this RAM nonsense is over you’ll be able to run a comparatively high quality local LLM for very little money. I can’t see how these companies will ever make their money back.
I’m slightly optimistic that manufacturers will return to the retail market eventually. Every AI company is racing to hyperscale right now but there will be a point where the infrastructure is built and at that point the growth will slow down quite a bit. In that scenario there will be ongoing demand for components to be replaced as they become obsolete but I can’t imagine the demand will be the same level it is right now as everyone rushes to build.
That’s assuming this all works the way they want it to. If the economics aren’t viable and the bubble bursts…
Their Datacenter buildout doesn’t work they want to. Most projects are very much delayed, and those that even started getting built are over budget. OpenAI and Anthropic will collapse in the next years, and this is coming from someone who absolutely sees the good things about the technology itself.
There is no way, absolutely NO WAY to recuperate the amount of cash burnt on those two companies, and that is not even counting the amount of AI Startup whose cash is currently flowing towards to those two.
How about bailouts? GPT integration with Visa? IPOs sucked into funds? There’s a lot of money they can and will try to vacuum, don’t you worry about that. And banks will do their damnest best to help with all of that - just look at SpaceX.
Yeah they’ve been pushing Claude code at work for us non coders jobs to come up with stuff that would help us. We’ve gotten a few surprisingly useful programs out of it, but our assumption is perfect them now before pricing goes through the roof. We are also only creating programs that do not require ongoing AI use. Just a bunch of relatively simple things that make our jobs easier.
I am still pushing my boss for some local hw as I think as a group we’ve spent a couple grand in the last month and that is the least of my reasons for wanting a local llm vs subscription.
Yes we’ve begun to track “token use” all over my company so it doesn’t spiral out of control, as it easily can do when you have agents managing agents connecting to MCP servers that themselves use the models to generate responses. The engineers around me say that they basically have multiple agents cranking full time and just keep an eye on them every so often. They will even queue up things to run overnight to make use of the time. They never actually close their laptops. This is an insane amount of usage, well beyond what anyone can do in the ChatGPT application by typing with their fingers, and there’s no way it can continue like this.
If you’ve got a toy project that you want “AI” to give you a hand with, do it now.
Pretty soon all these companies are going to have to pay for all that investment in compute resources they’ve been busily soaking up over the last few years, and then they’re going to have to pay back their investors, and then they’re going to have to try and make a profit
This is the golden time for cheap commercial AI. Already the noose is starting to tighten, and it will never again be as cheap as it is now.
Sounds like it’ll never be worth it.
In five years once this RAM nonsense is over you’ll be able to run a comparatively high quality local LLM for very little money. I can’t see how these companies will ever make their money back.
If manufacturers are willing to sell components to us in five years that is.
Of course if the colllapse happens before then the story might be different…
I’m slightly optimistic that manufacturers will return to the retail market eventually. Every AI company is racing to hyperscale right now but there will be a point where the infrastructure is built and at that point the growth will slow down quite a bit. In that scenario there will be ongoing demand for components to be replaced as they become obsolete but I can’t imagine the demand will be the same level it is right now as everyone rushes to build.
That’s assuming this all works the way they want it to. If the economics aren’t viable and the bubble bursts…
Their Datacenter buildout doesn’t work they want to. Most projects are very much delayed, and those that even started getting built are over budget. OpenAI and Anthropic will collapse in the next years, and this is coming from someone who absolutely sees the good things about the technology itself.
Stop, I can only handle so much good news!
There is no way, absolutely NO WAY to recuperate the amount of cash burnt on those two companies, and that is not even counting the amount of AI Startup whose cash is currently flowing towards to those two.
How about bailouts? GPT integration with Visa? IPOs sucked into funds? There’s a lot of money they can and will try to vacuum, don’t you worry about that. And banks will do their damnest best to help with all of that - just look at SpaceX.
“Hyperscale” is utterly meaningless MBA jargon at this point. Equivalent of verbal slop from industry shills and CNBC/Bloomberg sell side simps.
Sorry if that’s true. I understood the word to mean aggressive growth at any cost to try and shut out competition before they can get established.
🤞
Yeah they’ve been pushing Claude code at work for us non coders jobs to come up with stuff that would help us. We’ve gotten a few surprisingly useful programs out of it, but our assumption is perfect them now before pricing goes through the roof. We are also only creating programs that do not require ongoing AI use. Just a bunch of relatively simple things that make our jobs easier.
I am still pushing my boss for some local hw as I think as a group we’ve spent a couple grand in the last month and that is the least of my reasons for wanting a local llm vs subscription.
Yes we’ve begun to track “token use” all over my company so it doesn’t spiral out of control, as it easily can do when you have agents managing agents connecting to MCP servers that themselves use the models to generate responses. The engineers around me say that they basically have multiple agents cranking full time and just keep an eye on them every so often. They will even queue up things to run overnight to make use of the time. They never actually close their laptops. This is an insane amount of usage, well beyond what anyone can do in the ChatGPT application by typing with their fingers, and there’s no way it can continue like this.
Unless there are actual major efficiency innovations. But yes, current LLMs are sold cheaper than what they cost