This earnings season, rising AI and inference costs have started impacting company margins, with Meta, Shopify, Spotify, and Pinterest citing increased expenses.
Shopify noted that economies of scale were partially offset by higher large language model (LLM) costs.
This trend hints at the mounting costs underlying the high valuations of OpenAI and Anthropic, both expected to go public with valuations exceeding $800 billion.
These valuations assume market dominance and pricing power, with enterprise customers willing to pay premiums due to the lack of alternatives.
However, evidence suggests the landscape is shifting.
Advanced AI is becoming more affordable and accessible, with Chinese labs offering comparable work at a fraction of the cost, and Western companies like Nvidia, Cohere, Reflection, and Mistral developing cheaper, more efficient models.
By the time OpenAI and Anthropic file for their IPOs, their core market assumptions may already be challenged.
Source (CNBC)
