There's absolutely no way these companies can justify their insane valuations unless they can legislate a barrier to entry and create an oligopoly.
There's no moat. I can literally sit here in Zed or Pi or any other third party harness and switch models in the middle of a task and it's typically fine. Sometimes a model will get stuck and that's just what I'll do.
Combined with competition and open weights models, that means the price is going to go to fall until AI tokens cost a small premium over the cost of the hardware and electricity.
That's assuming improvements in algorithms and specialized silicon doesn't eventually lead to an efficient accelerator that can run a frontier model locally. It'll be a while but I don't see any fundamental barrier. High bandwidth flash storage is coming, and that'll radically cut the RAM side of that cost. Pair that with a pipelined TPU accelerator and you're cooking.
Now look at Anthropic's proposed IPO valuation. It's insane unless they can own the market or share it with a cartel of maybe 1-2 other behemoths, and this is the only way they can do that.
There's no moat. I can literally sit here in Zed or Pi or any other third party harness and switch models in the middle of a task and it's typically fine. Sometimes a model will get stuck and that's just what I'll do.
Combined with competition and open weights models, that means the price is going to go to fall until AI tokens cost a small premium over the cost of the hardware and electricity.
That's assuming improvements in algorithms and specialized silicon doesn't eventually lead to an efficient accelerator that can run a frontier model locally. It'll be a while but I don't see any fundamental barrier. High bandwidth flash storage is coming, and that'll radically cut the RAM side of that cost. Pair that with a pipelined TPU accelerator and you're cooking.
Now look at Anthropic's proposed IPO valuation. It's insane unless they can own the market or share it with a cartel of maybe 1-2 other behemoths, and this is the only way they can do that.