It's hard to take this piece seriously if he's citing _Ed Zitron's_ math, and equally hard to make the blanket statement that flat-rate plans = "the current AI pricing". But yes, those pricing models were pretty silly and unsustainable.
Claiming that there's some small subset of their services (like inference per token) that's "profitable" doesn't mean anything when it relies on everything else that company is still paying for. If you could make money from it at current prices - why aren't they?
Otherwise it's just "how much they're willing to subsidize".
At my work are multiple developers bragging about overnight AI usage to solve problems hands off. Yes they are wasting money and resources but the fad is here. People be vibe coding for now.
In like 6 months when all the costs need to be paid and the prices go up, we will see if these companies stay profitable. But I'm of the opinion that the vibe coding tech bros are more than enough to sustain a short or even medium term profit for these companies. Just on fad-energy alone (see OpenClaw)
The fad probably collapses soon after. I hope anyway, the waste I see is nauseating.
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I dunno where this is all going. But I do have faith in human ingenuity still. Things are changing, possibly for the worse, but we need to make the best of it.
The worst of behaviors is wasteful and blatant fraud. There's something useful here though.
And "growth at all costs" makes sense if there's lock in and you can monetize those "now locked-in users" later - but that doesn't really seem true on the consumer side. It seems pretty trivial to switch out which model and provider on the consumer side.
Any "lock in" has then to be on the model or inference side, and that's still advancing in multiple areas from so many different sources I'm not sure I'm comfortable saying that will also be a "winner takes all" situation either.
My approach is generally "enjoy using it while it's cheap and subsidized, but understand that might not last forever". If it does remain cheap after the subsidies end, great, you can just keep using it. But if it doesn't and you've lost the ability to work without you'll be in for a world of hurt.
I think the idea of "all growth is good no matter the cost" has been taken to an extreme.
Kimi K2.6 is 1T-A32B with a slightly less computationally efficient architecture, and is served at around $3.50/Mtok out by 9 US ZDR providers.
Unless you think that either the generally accepted size estimates for Anthropic/OpenAI models are wildly off or those companies are a lot worse at serving models efficiently, Anthropic and OpenAI are probably making around 5-8x margins on their API costs.
The cost of training new models is of course a major factor not counted here. Depending on how you want to think about that this may or may not make them net profitable. I remember one of those CEOs gave an interview a while back where they described it as a series of independent investments, where each model they train is net-positive in revenue by EOL just from its own inference, but I don't know whether that's still true or not.
Regardless, the point is that if they stopped training new models today, both Anthropic and OpenAI are making incredibly generous profits on their API inference.