In the short term labs are not profitable, although supposedly Anthropic is close. But Amazon was also famously unprofitable for many many years, and then won huge. Current profits or lack thereof are not necessarily important to investors: what's important is they believe in your future potential profits.
In this case, Elon clearly believes much of the economy will be run by AI in the future, and the economic value of a token will rise faster than the cost of generating the token — including the amortized cost of training the model to produce that token. Thus he is building a lab to train models and charge for inference of those models, and — he believes — it will eventually become profitable even if it isn't now.
You may or may not agree with him (and you may or may not agree he's capable of beating Ant/OAI), but current profits aren't a great indicator of whether he believes future profits are attainable. Tesla and SpaceX were also very unprofitable, until they weren't.
Personally I agree with him that there will be massive profits in the future, although I am not as confident in his ability to beat Ant/OAI, at least given his recent difficulties in retaining researchers.
Amazon was 'unit profitable' very early.
Yes - it's not unreasonable for Elon to bet long horizon ... there are after all many car companies, why not AI?
He's already winning gov. contracts, that could continue.
It's an odd bet but not entirely wrong or dubious.
And token costs vs. raw compute+electric cost is unit profitable too.
A diverse market full of choices keeps it from becoming the browser wars all over again.
Google wants its AI to be pervasive in everyone's daily life. Merely being the best at coding is not how you get there.
I am more bullish on Google in AI than most folks, I think, as they have been focused on efficiency in a way most US vendors have not. They've published a ton of papers on ways to make LLMs more efficient and capable on smaller devices.. Google wants to own the on-device market for AI, and I don't see many credible competitors in that space.
Apple similar, without the “stay close” bit.
It's an unbelievable failure.
Google wants nothing more than the world to remain stuck in 2000 - 2020 where search was king. Their organisational inertia will fight its AI progress every step of the way and this very well explains why they are not leading the AI pack despite inventing the technology.
Viewed from a consumer lens, the AI the average person interacts with daily, Google seems like the clear leader, especially after locking in Apple as a customer for iPhones.
The team is mostly H1Bs. Do you think they don’t have every incentive to benchmax? Do you think top tier talent wants to work there?
I don't think that necessarily follows. It could just be old fashioned capacity issues, for example. If nothing else nvidia are able to charge an insane markup on their AI chips at the moment so even if google TPUs aren't competitive in a pure performance sense they are surely competitive from a pricing perspective.
Citation needed. The gemini app has 750 million MAU, hardly a dead business.
Terms like "Google it" have been completely replace by "Ask AI".
I personally mostly use google to find businesses close to me and to search reddit and wikipedia.
They have one of the more compelling cases for rolling their own.
That's assuming their flagship product remains relevant in an AI-powered world.
Which brings to mind: most of the big shops product (chatgpt, claude, grok, etc...) ALL rely on search, and NONE of them actually have a running search stack.
Which means, they must all be calling Google, no?
How does Google make money from that?
The big advantage Google has, in my opinion, is Android. I think there is a decent chance that people stop downloading the ChatGPT, Claude, etc. apps if they perceive that the phone just does the same out of the box for free. And I reckon the majority of people will prefer free, ad-ridden AI chat vs. paying subscriptions, at least for personal use. And on the B2B side, they have Workspace deeply embedded in a huge number of companies. So I wouldn't count Google out.
Despite this I cannot get my business partner to switch to Gemini (including all the very easy and convenient to use features that come with her Pixel phone) over her $100 a month ChatGPT Pro subscription.
The public perception of Gemini (or Google AI, specifically) is becoming quite poor because of the questionable results in "AI Mode" in a typical Google search. Google is really shooting themselves in the foot, because Gemini is quite good; they're creating an anti-brand.
Google also owns 15% of Anthropic and Hassabis, the leader of Deepmind, also is an early angel investor in Anthropic.
When you really break it down, it's not totally clear that Google would even care that much about being the SOTA LLM.
Incorrect. Alternate search providers exist, such as Bing (used by DuckDuckGo, for example) and Brave.
And it really does not matter.
The real question is: which search service do they use anyways.
But I think they don’t tell you because they sometimes use residential proxies to scrape search results the same way they used residential proxies to scrape the web.
Don't they? Based on traffic to some websites I run the big AI labs are very actively doing a lot of crawling.
Crawling isn't the same as search. Crawling is just the very bottom of a proper search stack.
There's a lot of layers and a shitton of infrastructure to run and/or pay for.
Mind you, it's possible they actually did re-implement all the layers, but why would they when there are already lots of suppliers out there and they are all already chronically short on compute resources.
I'm actually very curious to learn what they actually do wrt Search.
And that changes, then that's all the more reason for them to be investing in AI.
This is a great analogy but I worry you might be implying something I don't agree with but you didn't explicitly say what I'm worried about, so let me call it out:
Microsoft played a dirty game with I.E, but they are in the dirty game business. It wasn't only I.E, it was their OS, Office suite and everything else they do business in.
Google Chrome took advantage of that dirty game and now you have the Chromium engine that powers a lot of browserlike frameworks.
No one born in the LLM age even knows what I.E means or stands for, as it should be - a horribly designed, poorly working product foisted upon users via the Windows distribution system - a dishonorable product from an ethically corrupt company forever lost in history, right alongside Clippy and DCOM.
OTOH, I am glad that Microsoft played a dirty game with I.E and didn't just stop playing dirty there - they jacked up the price of Windows if an OEM even dared to bundle in Netscape Navigator instead - who knows, if they hadn't done that, there wouldn't have been a Google or Apple. We would all be using Windows and Windows Search and Windows Phone.
And without Google, we might not have had the modern LLM as we know it. We would have had some trashy Windows Autocomplete Copilot Clippy. Ugh!
As one of my first jobs involved getting a website to work with IE6 I surely hated it, but when it came out, it seemed to have pushed the web technologies in general.
The problem was not the browser technology, but microsoft abusing it's monopoly to don't give a shit about (open) web standards.
There used to be 4+ major browser engines. Now there's only two, and Google owns almost complete share & following standards? Google prefers their monoculture.
More diversity in browser engines was a good thing & standards were lovely.
Not everything has to be a slug-fest between #1 & #2.
& personally I'm glad there's Grok & Gemini to keep Anthropic & OpenAI on their toes even more than the competitive band of open weights models already do.
The corporate models tend to be defensive and sound like HR has approved every word of the script. Not a fan.
GDM ... not so much.
It is very valuable when you have various bundles of services, such as satellites, AI, and so on, to keep pace with the majors so that you keep pace with their valuation.
These stacking valuations are not additive, they're multiplicative because you additionally market investors to the synergy between them.
Having the third best model statistically is extremely useful in this context.
Starlink doesn't qualify? Because that's a practically unbelievable track record. It's easy to say it's obvious, but it was only obvious in hindsight (or perhaps to Elon, but I think the reason that it was successful was actually more about him just being relentless)
I'm not an Elon acolyte, but as with his other enterprises (SpaceX, Tesla), he succeeded where others (Irridium etc) repeatedly failed.
It's really hard to argue that he got lucky when he keeps pulling these really extremely high capex and hard-tech and business successes off so cleanly, especially when you see the entrenched opposition (govt, politics, competitors) that's been arrayed against him.
> The pattern is unambiguous. In townlands still unserved by mid-2026, LEO provider Starlink has grown relentlessly and now accounts for 14.3% of fixed samples, approaching one in seven. In townlands where fiber arrived in 2021 and 2022, Starlink’s share has remained below 2% for five years, with no growth despite the same marketing, pricing, and availability.
(The context is that Ireland has spent the last six years building a fibre network for every rural premises in the country, which is now almost done; it will be complete late this year or early next.)
The problem for Starlink is, it works okay as a business model... Until fibre arrives. Then it's dead. So, long-term, Starlink's market is, essentially, countries which are too poor to do a rural fibre rollout (and bear in mind that it has become much cheaper to do so). Like, what's the bull case for Starlink? In a decade, you've got to assume that areas unserved by fibre won't really be a thing in the developed world.
Fiber is better once it's installed, but installing it is hard.
Rural areas in the United States have been promised fiber for a very long time and it's still nowhere close to universal. Some policymakers have decided that we should fix this with massive federal subsidies but the rollout botched so thoroughly that it became the anecdote of choice for Ezra Klein as he promoted his "Abundance" book.
I was just at my in-laws' in rural PA; unreliable Internet that runs at about 6Mbps down costs around USD$70 a month, and that was after my father-in-law haggled to get the bill down. I pitched him on Starlink, which is now cheaper than that.
It's a lot cheaper to put up a 5G tower than to run fiber. I'm not sure about Starlink's costs to launch but I know for sure they don't have to deal with the provincial fights that happen over trying to be the second service provider in a municipality.
Whether or not Starlink can build a business on selling broadband to <10% of the developed world I don't know.
I was pretty sceptical of NBI when it was announced, but it really does seem to have worked out. If Ireland, which is historically very bad at big state projects and which has an unusually dispersed rural population (we were much later to restrict ribbon development than other developed countries), can do it, I don’t see why any rich country can’t.
Are you arguing that there's no economic value to bringing internet to underserved regions like vast territories? Or that those people would be unwilling to pay for it? (They seem to be quite willing to buy mobile phones.)
Ultimately, it’s hard to be high margin as a telco.
Between Tesla, SpaceX, X, Boring Co and Neuralink they probably want the capability internally for a lot of different applications.
If the whole data centers in space thing works out AND people keep protesting/blocking data center build outs on land SpaceX will eventually dominate the entire AI industry just based on escaping scarcity.
https://www.wsj.com/tech/ai/mind-blowing-growth-is-about-to-...
But we don’t know.
If someone proudly announces they and their partner could afford to eat at a particular fancy restaurant every night last week, but for that specific week the restaurant had a BOGO deal, and they also didn’t disclose how they determined that they could afford it, you don’t really know if they could sustainably afford to eat there every night, right?
Anthropic is definitely profitable now, in fact, they’re crushing it.
I'm personally skeptical of Grok but maybe they can pull off a profitable niche with Cursor integration once Claude loses it's edge.
And the reason they can do this is because they can create a $1Tr company in 5 years, so they know the investment will pay off.
Why Elon wants his own model so much is a good question with many possible answers, but if Cursor/xAI can produce a truly good model at competitive pricing I don't see why many people won't jump on it.
I’ll be the first to admit it seems ambitious / implausible to try to (1) undercut the megalabs (2) move everyone’s focus back to tweets and then (3) profit.
A bit like handing out free horses to undercut Standard Oil so that you can go back to reaping the profits of your wheel tapping business.
untrue. There's a full thread about it: https://news.ycombinator.com/item?id=48837162 - but as much as I love Claude products, nothing's more aggravating than it refusing to help me diagnose a stack trace because it "violates Anthopic policy".
Other then that there is the whole alignment issue. Models that are 'nerfed' in just about any manner tend to exhibit reduced performance is seemingly unrelated areas.
That said Grok doesn't appear to be close enough to the frontier for that to matter. Maybe if they catch up it will.
There is/was the official bot on Twitter that you can tag with a prompt, like "@grok put this spacesuit on a horse on a moon", that's not equal to being uncensored.
Not sure that is a good thing.
Capital markets are excited by AI.
By tying his rockets to AI with his vision of “orbital data centers”, Elon turned an $8 per share IPO (at least according to financial times and morgan stanley) into a $135 per share (1.8T) IPO.
My hypothesis is that all the top providers realize that, lacking vendor lock in, all SOTA models in a year or so's time will be similar in capability. Also, open weights models are continuing to catch up in a year's time, sometimes less.
So they are trying to lure you in with differentiating, superior capabilities into their proprietary, non-open, non-standard agent harness.
It's the Hotel California playbook: These amazing capabilities are to attract you like moths to a flame and keep you warm and alive around the flame but waterboard and shock you if you attempt to move away from it. Like AWS Egress charges.
we're literally looking at insane margins over compute, as energy gets cheaper, margins get wider - china focusing on cheap solar is probably going to be a key reason why their AI is so much cheaper
Elon's reaction to these kinds of statements is oddly predictable.
And as others said here, xAI is also probably throwing money into AI and hoping for a breakthrough. Except in this case it's a rocket company, social media company, cloud compute provider, and satellite ISP all rolled into one that can not only bankroll the development and perform all kinds of crazy accounting shell games but can potentially benefit from any breakthroughs in other lines of business. If those Google and anthropic compute contracts hold, a lot of investment is recouped.
Maybe I'm desensitized from the launching of the Tesla Roadster into space, "bulletproof" cyber truck, and the boring company flamethrower, but this doesn't seem too wild to me.
However, Grok also seems to come out consistently as the most balanced of the chat-based LLMs...
So I'm not sure how to reconcile that.. maybe that's in line with "free speech absolutism", and if so, that's something I can get behind.
https://arxiv.org/pdf/2603.23841
https://www.washingtonpost.com/technology/interactive/2026/0... (X post about it: https://x.com/genejchan/status/2070099701547090340)
GPT
Qwen
Gemimi
MiniMax
Claude
Ollama
GLM
Kimi
DeepSeek
Don't trust, but verify. etc
No one sane would use this platform.
https://news.ycombinator.com/item?id=48828648
Also Elon has a grudge with Sam Altman and wants to beat him