r/stocks
OPEN AI/ Anthropic IPOs will be a disaster
Free LLM subs ending exposes huge cash burn and poor ROI, making trillion-dollar AI IPOs a disaster as firms like UBER and SBUX pull back.
- LLM operational costs are abnormally high per token, destroying the economics of flat subscription models.
- Enterprises cannot prove AI tools generate revenue, but they clearly increase costs and create instability.
- Trillion-dollar valuations for unprofitable AI companies rely on massive VC cash flows, making them vulnerable to growth stalls.
Been reading/listening about all these LLMs being run aren’t giving out free unlimited subscriptions anymore and now the true costs of running these operations is being passed to the consumer who will have severely restricted access than they previously had. The costs are abnormal when paying per mile(tokens) compared to what we have been experiencing with flat sub fees. How many companies are gonna waste real money they burn through on a balance sheet when LLM’s actually cost bottom lines for the employees to use and it’s just not accurate/ stable enough yet(see all these companies pulling their ai agents/products like Starbucks or UBER to name two).
Theres also no tangible way to actually see if these apps and tools make your company make more money, however it’s incredibly easy to point out the ways it’s making problems or costing capital. Now that the free joy unlimited subscriptions rides are over how is open ai or entropic supposed to become profitable? These companies are IPO’ing at trillions and they make no money at all. They can’t do anything without massive venture capital flows due to their cash burn rate.
Any stalling of growth at all when these companies are projected to make hundreds of billions by 2030 yet there is already talk of customers being concerned with how much LLM’s actually take to run now that the free months/ coupon subs they were getting have run out.
They are rug pulling everyone even their own employees who ran up billions of total in wasted token usage because these companies were screaming at them to adopt it in anyway possible. This is all coming undone in the past few months as the true cost of LLM’s is being passed down instead of eaten by these companies who took massive losses to allow their product to be used with no restrictions.
It’s a classic business tactic actually you get everyone on your software for basically free or massively reduced price/deals. Then you bait and switch them with massive increased pricing with business model changes once you’re in the ecosystem.
People buying into these IPOS are going to lose money. These are companies that have never been profitable from inception and never will be profitable.
Ice been in the LLM wagon since the start from an Academic standpoint.
All the major chatbots at this stage have almost identical capabilities yet Claude and Anthropic has by far the best PR and marketing.
Their IPO will not be a disaster simply because at this stage smoke and mirrors are way more important than actual valuation.
Any insight to what's going to raise from the ashes after this insane hype cycle is over?
I've been professionally orthogonal to classical ML, and riding alongside the LLM explosion since '18. But I really don't know applications outside my subject matter focus (molecular modeling). My science brain want specialized predictive infrence modles for biological graph networks. We probably don't have enough public data but whatever.
GenAI will revolutionize digital humanities. There is too much work to be done and too few people to do it and areas like content enrichment, addressing the language barrier, accessibility, assisted curation will boom.
Of course there is going to be a lot of low quality efforts but at the other side of the tunnel GenAI will help bring knowledge to the public in a way similar to how the Web first did in the nineties.
As long as best practices and RAG are done properly GenAI is ridiculously efficient in content management.
As for ML it is already revolutionizing practically every industrial process both in terms of automation and in terms of optimization and it is completely independent of the Chatbot hype/fad.
Yes many effort will be crushed by realty like a bawl of eggs like back in the .com days, but the tech is here to stay.
Can we wait for spacex disaster. One at a time so all the bandwidth (dry powder) we have.
Good luck with that thesis.
Pricing will figure itself out. It’s a brand new technology.
Companies cannot afford not to use AI. Otherwise, they’ll be left behind by those that do.
The personal chat subscriptions are just a small fraction of the revenue opportunity. Anthropic is going to transform the enterprise in ways we cannot even imagine today.
Do you have any examples of “companies being left behind by those that do?” Or are you just spouting the same tech CEO drivel as everyone else?
He doesn’t have an example. I’m still waiting for someone to explain to me why Waste Management and Clorox need LLM’s.
I am spouting my own experience.
Claude Code is at least 10X more efficient than any software developer at writing code. I cannot imagine developing software without AI anymore.
If you’re not blown away by the capabilities of LLMs then you’re not paying attention.
This! I do not even bother to start coding. I feed my need to AI and let it spit out the code. My job is to check for accuracy. The issue I see is that AI better get better because the kids coming out of college are not going to have the real experience it takes to troubleshoot when AI hallucinates.
Jesus christ, I'm a programmer and this 10X bullshit is the biggest scam ever.
all sources I've seen show LLM token usage going up. Do you have a source saying otherwise?
I could see an argument that people are going to switch from claude to cheaper models due to lack of moat, but I can't understand an argument that the models "don't work in the real world." They're helpful with a whole host of use-cases.
The issue isn't if cutting edge LLM's are economically useful, they are. The issue is there is too much competition at the top and right behind them are open source models. There's not much room for profit margin here.
And if one of them manages to invent an AGI good enough to replicate itself, then they have no value anymore.
I think AI is here to stay and will be a huge part of everyones life but AI model companies are gonna be a loser long term, no question imo.
Senior SWE at meta here: yes it is
The tech is constantly improving. If you’re not amazed by some of the things LLMs can do, you’re not paying attention.
Software engineering is already revolutionized. Code is the first thing LLMs were trained on so naturally this discipline is ahead of others. But LLMs are coming for a wide range of tedious jobs.
Like accountants and biologist.
Ai alone is not a product. Ai is a feature. Google is the clear winner because they are not trying to create a product around Ai.
Google has many products with AI as a feature that makes them much better. The Google AI subscription has so much more value as it integrates into Gmail, workspace, sheets and includes 5 TB of storage. And includes a family plan you can add 5 people too. For the average user the choice is clear.
I lead AI at a global consultancy firm. We worked with a global insurance company and reduced a complex global policy renewal process from 90 days (it wasn’t fully manual, leveraged RPAs and ML) via 7 AI Agents to make it done in under 7. All the human data validation, extraction, audit, linkage - run by agents. The first PoC converted a $17M process to a $6M process with the added consumption costs. LLMs host a dynamic rules engine which runs real time checks on the regulations. Anyone who says AI output isn’t realized is a sheep