The growth slowed and operating profit has swung to a loss. The company can still make money, just not at a pace that has a chance to pay off the investments.
Also, the author conflates AI's technical potential with the market potential, naively assuming the demand will also grow as technology matures.
AFAIK GAAP Operating Income has stock compensation packages in it and is susceptible to valuation changes(?)
https://www.sec.gov/Archives/edgar/data/2130357/000162828026...
(I have not much experience with that stuff so please do not take that as reliable information and more as a question)
I don’t think this is naive at all; it’s quite rational that demand increases as price decreases, which does seem inevitable.
But that's not what OC is saying, isn't it? Frontier models becoming better and cheaper at the same time are not a given.
Near-frontier models that have 99% of the capabilities of frontier models, at a tenth of the cost of frontier models, might ironically be what pops the bubble.
The distinction between frontier/non-frontier models doesn’t matter much here, for the overall market. With CPUs, for example, Pentiums got better and cheaper while Cyrix/AMD did the same.
I recently joined a software dev team in which nobody is using any AI at all. They weren't conceptually against it, they just didn't feel the need to change their process.
There's a lot of room to grow.
This is not necessarily wrong, but neither is it right; it is underspecified. Even if we were ignoring other factors and taking into account only the assumptions of a classical economic model, the shape of the demand curve still depends on the size of the market and the price elasticity of demand.
The author talks about revenue growth on the basis of Anthropic's S-1 filing, but ignores the third quarter results which were posted later.
As far as I know, Q3 for Anthropic wasn't the best because:
* OpenAI killed it with their models in Q3
* US Government ban on Anthropic models, including temp restricting Mythos/Fable
* They decided to dedicate more compute to training in Q3 instead of inference
* Opus 5 was a disappointment and Fable 5 was too expensive to inference
* They saturated all their available compute in Q3 and didn't have anymore to sell
Their growth rate has ramped up in Q4 since Opus 5.5 if OpenRouter data is a good proxy.
That is not the claim. Author uses Anthropic's filing as an example indicating growth of the whole industry. While questionable on its own, it is also not given in full, which I pointed out.
Anthropic is one company in a gigantic ecosystem.
You want to understand the eco system. Got to flyover the jungle, not just stare at one elephant herd.
Read annual reports of NVIDIA, atleast one from Microsoft/Amazon/Google and atleast one representing activities of Enterprise projects (Accenture/IBM/TCS). Then look at govts budgets/programmes for AI US/EU/UAE/S.Korea.
Do it with a group like a book club.