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Their revenue in the first half of the year was 16.3 billion. That is a big increase over the 1.2 billion over the same period last year, but assuming that continues, then their annual revenue is only 32.6 billion. That is revenue. Not profit. They actually still operate at a loss, 693 million in the same period this year. That is a major improvement over the 2.1 billion dollar operating loss from the same period the year before. The trend line is going up. But the fact of the matter is that they are still very much operating in the red and their current investors are not getting and payoff for their investment until they are profitable.
They cannot generate a profit without either cutting on hardware and infrastructure investment, making their models more compute efficient/limiting the use of less efficient models, or increasing token prices. They will definitely not do either of the first two things, so prices are going to spike as soon as they go public so they can attract more investors. That is my prediction. The current investors will also sell out their shares immediately and dump the stock price screwing over all of the early adopters. Mark my words.
Gets even murkier when you look at how OpenAI did guarantee a certain % to pre-IPO investors.
These cretins all practiced their bullshittery in the crypto space and are now shoving it down the market's throat via "real" IPOs
I don't think a price spike will work either, the market has already priced LLMs at their cap, any higher and it's cheaper to just hire more humans.
The problem with throwing in so hard with AI tools and using it to replace human labor is that when you inevitably decide that human labor is the cheaper option in the long term, it takes a lot of time and effort to find, and train and rebuild knowledge and specific skill. In the meantime, you are still relying on AI to fill the gaps. They were able to drop people fast and hard. They won't be able to do the same with AI becuase people require more time to source and acclimate.
That means that, over the short term at least, these AI companies have a lot of industry by the balls. If they want to increase prices, even if that is the straw that breaks the camels back and gets them to start turning back to human labor, they are still going to pay those higher prices until they can.
That is not a recipe for a healthy long term business strategy for the AI companies. That will almost certianly lose them revenue in the long run, even with higher pricing. But if your investors are getting desperate for any return at all on their investment, a good solid pump and dump strategy makes that happen. They bail out before the other foot drops, collect their ill-gotten winnings, and walk away richer while the new shareholders eat shit when the price tanks.
The AI companies know this is a bubble just like everyone else. But bubbles are profitable to a select few if they do it right and that is all they ultimately care about. When the bubble pops, we'll still have AI companies, but the market will settle somewhere far more reasonable and the tools will be expensive and niche and useful for special cases only. No AI company is trying to get to that point, it's the just inevitable outcome. What they are trying to do is maximize their big payout, all else be damned.