The Big AI Companies Are Going to See Their Margins Disappear

Arthur T Knackerbracket writes:

AI will indeed eat the world - if your world involves software-size margins:

The future of AI is unwritten, but the writing is on the wall - your margin is my opportunity.

Amazon founder Jeff Bezos said as much more than a decade ago in support of the e-souk's low-price, low-margin sales strategy.

That opportunity exists in the AI training and inference business. But perhaps not for long.

Two leading American AI companies, Anthropic and OpenAI, are not actually profitable at this point, but their pitch to investors is something along the lines of "just hang in there a few more years and keep sending cash."

Given reports that Claude Code subscribers paying $200 a month can potentially consume $5,000 worth of tokens and that OpenAI is also losing money on subscriptions, it starts to become a bit clear why Anthropic, OpenAI, Google, and Microsoft have already started pushing customers toward metered usage pricing. AI revenue needs to go up for frontier model makers to survive. And then AI adoption needs to grow.

Government agencies and large corporations that don't keep a close eye on fees may be terrified enough of AI-enabled exploitation to pay a premium for models like Anthropic's Mythos and OpenAI's GPT-5.5.

But more price-sensitive folk may shop for cheaper tokens. And they're likely to find them.

[...] Open weight models like GLM-5.1, Kimi K2.6, DeepSeek V4-Pro, and Qwen3-Coder-Next are already adequate for less demanding software development work and some, like Qwen3.6-27B, run quite well on suitably provisioned local hardware.

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