Ed Zitron's style isn't for everybody, I understand that. But if these numbers, and the direction they're going in, are correct... to me this points to a significant AI bubble deflation coming soon. It just isn't sustainable, it seems.
I think this is a minor speed bump and VC’s believe that cost of inference will decrease over time and this is a gold rush to grab market share while cost of inference declines.
I don’t think they got it right and the market share and usage grew faster than inference dropped, but inference costs will clearly drop and these companies will eventually be very profitable.
Reality is that startups like this assume moore’s law will drop the cost over time and arrange their business around where they expect costs to be and not where costs currently are.
> Based on discussions with sources with direct knowledge of their AWS billing, I am able to disclose the amounts that AI firms are spending, specifically Anthropic and AI coding company Cursor, its largest customer.
> through September, Anthropic has spent more than 100% of its estimated revenue (based on reporting in the last year) on Amazon Web Services, spending $2.66 billion on compute on an estimated $2.55 billion in revenue.
Well I don't have to scratch my head any longer and wonder why Amazon hasn't jumped on the AI bandwagon with their own Gemini or whatever. They are sitting pretty and selling shovels and pickaxes to the AI fools. Not a bad strategy for them...
“Spend” requires a grain of salt here. AWS “invests” in Anthropic and then Anthropic buys AWS. If you follow the money with marked bills, AWS is buying this compute from itself and then claiming revenue.
There’s a lot of that sort of thing going on at the moment in the AI bubble.
One day we will westerners will learn why the Chinese are releasing models that are optimized for cost of training n yet good enough to run locally or cheaply.
when the music stops, suddenly a lot of people won't just sit on the ground but plunge into the depths of hell.
Just a reminder, Ed Zitron is neither an AI researcher, nor an Engineer, nor a Financial Analyst, nor an Economist nor an Insider and has ZERO clue in multiple dimensions (technology, investing, unit economics, growth, TAM) to analyze any of this
Numbers are always interesting, assuming they're real, but I just want to comment on the Cursor thing: Zitron has been insisting for 6 months that Anthropic screwed Cursor somehow by raising prices on them but the claim has always been gibberish. It's not that it's false, it's that it's impossible to figure out what Zitron claims happened. He cannot describe (here or in https://www.wheresyoured.at/anthropic-and-openai-have-begun-...) what the bad change actually was. We know everyone moved to more usage-oriented pricing earlier this year. He cannot explain why this was a price increase for Cursor. He is unable to draw a distinction between a price increase for end users (it's not even clear that it was a price increase for the average end user) and a price increase for Cursor.
It would be hilarious if all this was a devilish scheme to burn the excess money that was printed during COVID. Unfortunately, what is more likely is another bailout if the bubble bursts.
I have sat with these numbers for a great deal of time, and I can’t find any evidence that Anthropic has any path to profitability outside of aggressively increasing the prices on their customers to the point that its services will become untenable for consumers and enterprise customers alike.
This is where he misunderstands. Enterprise companies will absolutely pay 10x the cost for Claude. Meta and Apple are two large customers, you think they won't pay $500 a month per employee? $1000 a month per employee? Neither of those are outrageous to imagine if it increases productivity 10%.
I've been unable to find it but early in the railroad boom did rail companies undercharge for freight in order to build demand and interest? Given that they were also given land in exchange fro building, it would have been in their interests to do so. They could also amortize rail costs over a long time as rails are useful for longer than GPUs - but I am also curious if there was an unsustainably low entry price for railroads like Ed is implying for AI tools.
Does it seem strange that this has 121 comments within 4 hours and somehow is ranked 131st on HN? I would think this would be front page with those type of numbers.
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[ 4.9 ms ] story [ 38.5 ms ] threadI don’t think they got it right and the market share and usage grew faster than inference dropped, but inference costs will clearly drop and these companies will eventually be very profitable.
Reality is that startups like this assume moore’s law will drop the cost over time and arrange their business around where they expect costs to be and not where costs currently are.
Anthropic: "$2.66 billion on compute on an estimated $2.55 billion in revenue"
Cursor: "bills more than doubled from $6.2 million in May 2025 to $12.6 million in June 2025"
Clickthrough if you want the analysis and caveats
so he got a leaked copy of their AWS bills?
Well I don't have to scratch my head any longer and wonder why Amazon hasn't jumped on the AI bandwagon with their own Gemini or whatever. They are sitting pretty and selling shovels and pickaxes to the AI fools. Not a bad strategy for them...
There’s a lot of that sort of thing going on at the moment in the AI bubble.
when the music stops, suddenly a lot of people won't just sit on the ground but plunge into the depths of hell.
All bubbles (dot com, housing, tech, crypto, etc) have a lot of losers and a few big winners.
That is less a reflection on the market of the bubble and more a reflection of the number, skill and risk taking of the prospectors.