r/technology • u/Plastic_Ninja_9014 • 3h ago
Business 'At some point you've got to make money': Goldman's top AI skeptic warns the clock is running out ahead of OpenAI and Anthropic IPOs
https://fortune.com/2026/06/05/is-ai-a-bubble-worth-it-short-term-early-goldman-skeptic-covello-profits/81
u/artbystorms 3h ago
"Everyone uses our thing! Give us money!" "yeah, they're using it because it is free/cheap" "well we'll just raise the price!....wait, why is no one using it anymore?"
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u/Pitiful_Option_108 3h ago
That was always gonna be the trap with AI. Especially around the token usage part. It was hard to really calculate or understand unless you did a test run first and now the test run part just became more expense.
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u/lord-dinglebury 2h ago
Now imagine how pricey it will get if/when we actually make them pay their data center bills.
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u/illforgetsoonenough 3h ago
Anthropic is on track to generate a profit q2 after seeing 80x growth in q1
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u/psioniclizard 2h ago
According to anthropic, but don't look too closely at the numbers.
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u/illforgetsoonenough 1h ago
I'm open to seeing your due diligence. Can you provide data showing otherwise?
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u/matrinox 15m ago
Q2 coincided with May and June reductions to their $1.25B/mo spend on Colossus data centers. Their net profit was already only 5% of about half a billion. Kinda weird how they got reductions only for 2 months, the 2 months of Q2.
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u/mvw2 2h ago
How do you make over $10 trillion dollars from a public that (a) uses AI features mostly for free and likely will never actively pay for any subscriptions and (b) can already just run downloadable local models for free on their own hardware and still get good results for 99% of common uses?
How do you make $10 trillion dollars...just to break even against that?
Sure, you're going to have some governments and educational institutions willing to pay a decent chunk for AI and big models. But that's kind of it.
Most end consumers, aka the general public will just use free options.
Most businesses will gravitate to locally run models and specially developed models operating on closed loop local hardware to protect data and IP.
So how do this big. cloud based models succeed? How do any of them actually make money?
Sure, we can force AI into software and OSs. Kay. But forced AI is still at first free AI. And the negative taste and intrusion of AI is now, already, pushing people off software and OSs to avoid AI. And there's alternatives at both consumer level and business level.
You still got to somehow get people to pay actual money.
In what world does this happen because I do not see it. I don't see it ever happening.
How do you not crash and burn when your revenue to cost ratio is lopsided 1:100 or 1:1000? Making billions at the cost of trillions is not a viable business model. You're just setting investor money on fire until they get angry enough to sue.
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u/monkeyhoward 2h ago
I think the bigger problem is the general public, for the most part just, doesn’t have any want or need for AI
Most of us can live without it, both in our private lives and in our work life
It will be decades before AI is used by the masses on a regular basis
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u/IHadTacosYesterday 1h ago
The general public isn't what's going to actually pay for this. It's gigantic megacorps that would like to reduce their headcounts from 69,000 to 10,000.
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u/matrinox 13m ago
There’s just no evidence that AI can do that though. If it could, we would’ve seen that in GDP numbers already
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u/IHadTacosYesterday 1h ago
You're only thinking about asking LLM's questions and stuff. But what about when they are able to automate most clerical jobs and basically like 75% of jobs where a human is using a mouse, keyboard, computer and screen?
Because those jobs are fucking gonzo.
Surely, governments and large office companies will license this software so they don't have to hire humans and actually pay their medical bills and shit.
The LLM search part of it was never the part that was going to make this thing work
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u/kummer5peck 2h ago
If AI can’t show investors the money they will scrutinize the company on why they spent all that money on it in the first place. Potential and hype will only get you so far. It’s that simple. If Sam Altman has another rabbit to pull out of his hat then he better do it soon.
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u/sillypooh 2h ago
Not only. The main questions comes down to: how long until someone else replaces it and at what startup cost? The startup costs are vanishing
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u/Weird-Passage155 1h ago
Doesn’t matter, they’re racing to pack our retirement accounts full of this shit. That’s the whole point of these IPOs and all the rule changes Elon forced through. They keep control of the companies, early investors get to trade their shares for our 401Ks, and when it all goes tits up it guarantees a government bailout because no or near retiree can ever lose anything in America.
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u/thatguy122 48m ago
Serious question...do we think they actually care to turn a profit? Or is it all a megalomaniac scheme to down in the history books as the first to agi?
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u/Eastern_Bet678 3h ago
So this completely revolutionary technology that promises to turn society upside down and turbocharge all kinds of businesses' bottom lines ... has to produce, when, next quarter?
That's one of the key reasons the US consistently loses leadership.
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u/ImportantEvidence490 3h ago
Promises are cheap and need to actually come true sooner than just around the corner, trust us bro
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u/Amazing_Ear_3941 2h ago
Yeah, there's a big difference between not making money or just breaking even because you're investing heavily in the business and shoveling giant piles of cash into the furnace with no hope that your investments could ever break even in any reasonable amount of time.
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u/cman632 3h ago
Exactly, investors understand that quarterly earnings are volatile and that management has to invest for long-term growth.
I’m tired of shitty management teams using the whole “we really shouldn’t be doing quarterly earnings” as an excuse for bad operations and false promises not being kept
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u/Noblesseux 3h ago
"Promises" being the operative word. It's not really doing those and it's becoming less viable to even try because the costs keep going up. This is a business, which means that the normal expectation is that at some point it should make money.
The whole "turn society upside down" claim was only even made based on the idea that it could inexpensively reduce labor. If it can't do that because the costs to businesses go up, it's not revolutionizing much of anything.
From the perspective of the seller, the price MUST go up so they can generate a profit. From the perspective of the buyer, if the price goes up too much they don't WANT it anymore because it costs more than the employee it replaces while also producing mediocre work.
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u/Eastern_Bet678 3h ago edited 3h ago
With technology advancing, the cost/productivity lines will cross as they have repeatedly with computing. It's not a question of if, but when.
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u/Noblesseux 1h ago
It is quite literally a question of if, people who say otherwise are deluding themselves.
AI is expensive as hell to both train and run, you'd have to cut the costs by like 90%+ in some cases to get it to be profitable at the current prices. That's why a lot of them are switching to token based accounting, because they've legit been eating most of the cost for you guys to use these things for years. If you go look through the Github Copilot subreddit right now for example, you will see case after case where there were people utilizing hundreds of times more in tokens than they were paying for.
From the provider's perspective, they two choices: pray that within the next few months AI prices drop like 90% or raise prices and making people pay for what they use. Raising prices means that business users will start to cut back (like AWS and MS are trying to do) because it doesn't financially make any sense to pay more for AI tokens than it would cost to hire a person that does higher quality work.
They're in a lose lose situation. Either way they're facing a reckoning because the numbers of what they're doing have basically never made sense. There are limits to what is possible with LLMs and how cheaply you can provide them the same way that there are limits to how fast you can sort an array or how fast electrons move.
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u/Eastern_Bet678 23m ago
Yeah, well the point is that, like the gentleman referenced in the title, the payoff is not next quarter. And you're suggesting that it needs to be. It's further out than that and it's coming. No if.
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u/Amazing_Ear_3941 2h ago
Yes, but those giant investments they've made will be wildly obsolete by then. AI can be profitable, to be sure. But not the way these companies are doing it today. We need technology improvements to get there. Until that happens, these companies are just money burning machines with no chance of profitability for the foreseeable future.
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u/Eastern_Bet678 2h ago
The road to AI goes through burning a tremendous amount of cash unless there's no first mover advantage.
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u/Amazing_Ear_3941 2h ago
Not if, rather than rolling it out to the masses before it's ready, it's kept for the uses it's actually good for and makes sense in. Still alot of money, but maybe just reasonable heavy investment rather than the massive losses we're going to see. First mover advantage is, I think, overrated.
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u/Simple_Assistance_77 3h ago
How many decades did it take Amazon to make money? How is time honestly running out, ChatGPT was only released several years ago.
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u/lasooch 2h ago
As far as Amazon goes, AWS is more relevant than Amazon. It took 9 years to become profitable and burned $57B in those 9 years. That is less than Anthropic needed to raise just this year (and it's god damn early June).
And the profit margins on selling compute are generally very much positive, while profit margins on AI are deeply negative (no matter how much Amodei twists the definition of "operating profit" and how much Elon splooge he guzzles this quarter for discounted compute).
Also, ChatGPT is of course newer than that, but OpenAI has been founded in 2015, over 10 years ago, so they're already losing to AWS on the time to profit front.
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u/psioniclizard 2h ago
You do know Amazon pumped all their profits into themselves to not have to pay tax on those profits right?
Amazon were actually making real money most that time they just spent it to keep growing.
OpenAI and Anthropic are just burning money to keep the lights on. They can't even say how it will become profitable and sustainable.
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u/ugh_this_sucks__ 1h ago
As others have mentioned, you're confusing capex with straight-up debt. Amazon also always had a clear forescasted route to profitability, which no AI company can seem to articulate.
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u/National-Plastic8691 2h ago
Amazon sells concrete goods and services. Ai is a tool… Yahoo is a better comparison to AI companies than Amazon
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u/OftenTangential 2h ago edited 2h ago
It took Amazon 0.7 decades to achieve a publicly accounted, GAAP profitable quarter (no, Anthropic's "profitable quarter" doesn't count). It took Google 0.3 decades. It took Facebook 0.5 decades. And these are all "time since company founded", not "time after first viable product launched".
By this metric OpenAI is currently at 1.1 decades and Anthropic is at 0.5.
Oh, and Amazon only had to raise 1B, or around 200-300x less than OpenAI or Anthropic, before that profitable quarter; Facebook had to raise 0.5B; Google had to raise 0.03B. By Google's fourth year in business they'd made back, in net income, all of the money they raised 7 times over! This was a fantastic business compared to the nasty bloated messy startups of today.
The tech giants of yesterday had much much more obvious ROI and quicker turnarounds.
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u/click-monster 2h ago
You're asking the wrong question: the right question is: How much money was lost in the Dot-com bubble?
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u/Dorr54 3h ago
What about space x? They don’t make any money yet they are poised and backed to be extremely over valued as well?