AI vs. software companies

[Spekulatius]

I did a few queries in Gemini about  gross margins for OpenAI and Anthropic and the answer is that it about 40% and may right answer is 42 . Thats pretty low and the reason is that unlike traditional software, their service is expensive to provide because of the compute cost for tokens. This may go up over time but it’s not a certainty  because competition may eat into margins. So in any case, these companies will be valued lower than software cos (which can easily exceed 80% gross margins).

 

My guess is that business models will have some attributes similar to chemical processors because in the end they process energy via silicon into tokens that get consumed with by their customers. So besides model quality which determines the value of the tokens, the cost to produce these tokens is of immense importance which is likely why OpenAI gets into producing their own chips.

Edited 1 hour ago by Spekulatius