Why Everybody Is Losing Money On AI
SMRTR summary
The AI industry faces a profitability crisis with companies burning through cash at unsustainable rates. OpenAI lost $5 billion despite generating revenue, Anthropic lost $5.3 billion, and companies built on their models like Cursor and Perplexity are sending over 100% of their revenue to model providers. Costly inference and complex "reasoning" models keep expenses high, with no clear path to profitability even as providers raise prices for enterprise customers.
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