Anthropic swung from a negative 94% gross margin last year to positive 40% this year, mainly by cutting inference costs. The speaker thinks 50% margins are optimistic and reaching 70% could take years, though the company will eventually be profitable.
No chance you can be competitive without that inference. But I do think it's important not to lose sight of the fact that for. Even though, I mean, you asked the question, oh my God, the anthropic inference costs were higher than expected, is there any leverage with your rhetorical economies of scale, Harry? Right. The truth is, remember last year they had a negative 94% gross margin, and this year they have a 40% plus or minus gross margin. Now it's not 50. So clearly the gross margins are improving substantially. So I think the real kind of in the middle boring comment is that there is significant leverage in inference costs and the P and L is getting a lot better. But it may not go all the way to the. It may take longer. We thought we'd be at 50, now you're at 40. It may take two years to get to 70 or you may never get there. You may Aston taught out at 60. So I think it's just the nature of the beast in nio. You're dealing with this totally new business product, totally new market. You have a hypothesis on where things kind of shake out, but it may take a while to get there. Fundamentally, however, I don't doubt the fact that a profitable and defined by that as free cash flow operating income business will emerge from something like. I mean, atropic is not going to not have a profitable business model because this clearly is converging. It's just a question of what scale does it converge at and what operating model does it converge at. Is it a 10% operating margin business or a 30%? Right. So it's getting better, but it's getting. It's getting there. It's getting a little more slowly than you might like if you're. But it's still massive. I mean, from negative 94% margins last year to positive 40 this year. That's a big move. I can ask Jason.
