I can exclusively reveal today Anthropic’s spending on Amazon Web Services for the entirety of 2024, and for every month in 2025 up until September, and that that Anthropic’s spend on compute far exceeds that previously reported.
Furthermore, I can confirm that through September, Anthropic has spent more than 100% of its estimated revenue (based on reporting in the last year) on Amazon Web Services, spending $2.66 billion on compute on an estimated $2.55 billion in revenue.
↫ Ed Zitron
These numbers do not even include what the company spends on Google’s services. Going through all the numbers and reporting, Zitron explains that the more “successful” Anthropic becomes, the bigger the gap between income from paying customers and its spending on Amazon and Google services becomes. It’s simply unsustainable, and the longer we keep this scam going, the worse the consequences will be when the bubble pops.
Sadly, nobody will go to jail once hell breaks loose.
It’s a shame really. They could be useful tools if they were backed by a boring, sustainable business model and promoted by honest, non-hypey marketing. And now it looks like the business wonks could break these nice things.
At work we use all sorts of AI tools, not to replace ourselves (nobody here has lost their job because of Cursor et al) but to multiply/speed up the work we’re already doing. Pretty valuable for that. Engineers have always looked for ways to automate their work — laziness is one of the three cardinal virtues of the programmer, after all.
I don’t want to toss issues of intellectual property and energy/material consumption aside though. Those are serious concerns that we have to consider when we’re adopting tech like this.
It is a gold rush. And some will become really rich when they hit a productive vein (no, it is not all fluff).
But of course like all good gold rushes, the ones that sell the pickaxe and the shovel are going to be the real benefactors. And today it is definitely, nvidia, and cloud providers.
(Google is a special case, where they both have their own AI / Gemini, and also build their own hardware TPU, while still selling cloud service on AWS. I think that makes a very clear winning combination either way).
It took almost a decade for Amazon to become profitable. I’m actually surprised, 2.55 billion revenue is already pretty significant.
This seems to be an unpopular opinion but even if the current big AI companies go bust, they’ll have contributed significantly to AI. Anthropic in particular have produced a very useful coding model, as well as important research (e.g. https://arxiv.org/html/2506.10139v1).
It is hard for me to phatom Thom’s perplexing whish to put people in prison when we talk about 2 private companings burning private investors money while they are scaling up. $3 billion is a tiny drop in Amazon’s $630 billion revenue. In a different comparision Netflix produced on average yearly $2 billion in negative operating cash flow for 4 years pre-pandemic and that was a public company, where anyone could invest and get burnt in the process. Last year the company made $7 billion in operating cashflow. Should have been any of the Netflix leadership prosecuted?
Of course Anthropic is not Netflix and I haven’t talked yet about valuation here (Netflix today 7% down by the way). For sure, to me $182B is a lot for Anthropic, but I am still poor after years of investing, unlike those who trusted the leadership of Netflix. So perhaps those who work with Fidelity or the UAE fund, know what they do. And of course, if Anthropic goes down the toilet, I am sure the investors from Fridelity or the UAE won’t sleep under the bridge. Of course if there is a IPO, the people who use the stock market as a casino, they will get burnt, but the last time I checked it was still legal to use the stockmarket as a casino. But ultimately these are still private companies with private investors, so why is the call for persecution?
There is good evidence that the top 8 or so AI companies have highly inflated stock prices and and it is unlikely that their revenues will justify the investment. It is very likely that this will lead to a major stock market correction. There is further evidence that this correction or recession will last longer than previous ones. The US government has less money for programs like quantitative easing. And the people running the US government have a lot less experience and capability than previous ones.
AndrewZ,
Stocks are not traded only on their current or near term revenue, but also their long term potential as well.
Is this a bet? Yes
Does it fail? Oh… so many times
However again, and again, one or more of these emerging companies will find success. It happened with Internet, it happened with social media, before that it happened with computers and gaming as well.
These “corrections” are natural part of the cycle, as long as there is no government meddling, or people going crazy (over-leveraged gambling — I won’t call that investing), we should be fine.
sukru,
I know you are strongly anti-government meddling, and I concede government regulation can be too heavy handed or done in bad faith. However let’s not forget that most economic disasters take place in periods of deregulation caused by capitalistic policies that throw away stability for the sake of greed.
Unregulated laissez-faire is good for a small subset of the population, who often don’t care about the rest of the population, but it’s typically the middle class and below who pay the costs as wealth and power are increasingly concentrated towards the top. It’s painfully clear that’s not been a great outcome for most people. Regulation is important for fairness and stability, however not all regulation produces the right incentives. All the pros and cons need to be factored in. I don’t think it’s a good to have extreme policies in any direction, but for better or worse this is exactly what happens when we introduce hyper-partisan politicians – all sense of balance is lost to extremists.
Alfman,
We can argue all major stock market crashes including great depression were ultimately fueled by government action.
They enabled the leveraged “investment” craze by printing too much money, and flooding the market with cheap loans. that ended in disaster.
In contrast, if you are investing your own money, on average the upside is much higher than the downside. even if you see downturns, or some of your stocks go literally to zero, you cannot lose anything more than you invested (should be your excess savings in the first place). and if you invested in a broad index fund, you always win in the longer (decades -> retirement) period. nothing beats that.
However most people are afraid, when they see that 30% drop during COVID they pull out (and “lock in” their losses). Others are greedy and get a margin loan, wiping them clean in the next fluctuation. Some are pushed by the “financial investment” sector (they really “hate this one trick”… almost no investment consultant has ever beat the market the long term. Even people like Warren Buffet are basically doing “value investment” — which is very close, but they do some active selection)
Anyway,
The bottom line is the best thing government could do would be enabling financial education, and stop printing money.
sukru,
I believe balance is the key to good policy. Most if not all market collapses in our lifetimes could have been prevented by keeping forces in balance. The problem is that those pushing for deregulation never stop at a balancing point when things are going well and keep pushing until the economy inevitably falls off the cliff again. So we end up in this perpetual cycle where things are heavily regulated after catastrophe and then the march towards deregulation happens again. This would be ok if the deregulation stopped at a point of balance with soft adjustments beyond that. But instead the deregulation continues unabated until we end up falling off another cliff. This is all predictable and preventable, but unfortunately it’s hard for “balanced regulation” to prevail given the extremist politics involved.
Yes, long term investments are good for people who have money to invest, but the wealthy are privileged in that most of their income can be invested and they don’t have to worry about a disproportionate share of their income needing to pay for expenses. I’ve invested in some stocks long term, but any big purchase like a house or paying for the kids to attend university could wipe us out 100%. Hell even a new car is painful at $50k. For those who are wealthy, they don’t need to touch the principal to maintain their lifestyle. This makes a big difference between middle and upper classes owning stocks.
That sounds good, but we still need regulation to prevent the kinds of abuses that keep happening.
Alfman,
I’m not against regulation, but rather against “help” (which is almost always counter productive).
For example, reporting laws, insider trading protections, small shareholder rights are very important, If we have “wild west” then larger fatcats could easily sway the companies to override the will of the public, and pocket everyone’s money.
However at the same time, the government, or rather out politicians are some of the worst offenders of these. People with at best a doctor salary make sometimes tens of millions of dollars worth of “stock gains” while working at various committees regulating those very same companies. (I will not name names, but there are online sites which track all the trades of these politicians. We are lucky we are being ruled by such intelligent people who can foresee all the market movements!!!)
At the end of the day, most Americans own some stock, and if there were better financial education, this would cover even more. There is nothing wrong with investing in and taking profit from our own best companies.
sukru,
That’s too ill defined for me to be able to agree or disagree 🙂
The fatcats swaying companies is what we have today though. Not only because their wealth enables them to own most of the stock, but also because they hold privileged class A shares for themselves while selling non-voting class B shared to the general public. I question whether this should even be allowed.
There’s no doubt about it, however a lot of the time politicians are corporate stooges, with massive dark money contributions going into Washington despite the obvious conflicts of interest.
While you raise some valid points, but I feel you clearly don’t have an idea what middle class is. First, you also don’t need to live of an upper class lifestyle, if you don’t have the money. If you need to touch your savings to buy a car, then you can clearly can’t afford a $50.000 car. That’s a car for the top 5% of society, but somehow the top 20% thinks that they are rich enough to buy one.
If 2 parents with median income (let’s say $50k each) and 2 kids can’t save while owning a comfortable 2 bedroom 1000sqft home and a 10 year low milage compact car (like a Mazda 3 or a VW Golf for about $10K), then it is not just the stockmarket that is inflated,but certain people’s ego too. I don’t mind if people spend their money and they don’t save, we live only once and it is everyone’s personal decision when they want to enjoy life. But I think it is very disrespectful to those who are indeed in need if we equate the problems of the bottom 50% with the top 50%.
msgnr,
I didn’t pull that $50k out of thin air, it’s the price for the average new car now.
https://www.freep.com/story/money/cars/2025/10/21/new-car-prices-average-kelley-blue-book/86752269007/
If you want to make the case that the middle class shouldn’t be buying $50k cars, I understand the soundness of that financial advice. However, it speaks directly to the struggling middle class that I am talking about. New cars/house/education/etc used to be squarely within middle class means.
Used cars used to be the domain of kids working side jobs in high school. Now since everything is getting priced out of reach for the middle class, families are buying used cars as the primary car.. Including me BTW. Even used cars cost several hundred percent more than they used to and so does the maintenance on them. We had sticker shock on a repair bill for a 13y/o hyundai. You do what you gotta do but we should acknowledge that this affordability crisis has been harming the middle class for decades. It’s so bad that mechanics are now offering financing services for car repairs..
So I don’t wish to contradict your point that maybe only 5% of society should be buying new cars at their current prices, but would you concede that it represents a major erosion of middle class buying power over generations?
I’ve heard that many families are just giving up on saving practices. To me this does not seem like a good financial move, but I’d acknowledge it’s not really their fault that they have less discriminatory spending than older generations used to. We’ve been talking about big ticket items, but even the basics like grocery store food are going through the roof. Productivity and profits are at all time highs, overall there isn’t a lack of money in the economy, all of these gains are very real, but they’ve been kept at the top rather than distributed to the working class.
You’re right. I would acknowledge people with moderate wealth can feel middle class struggles in areas with high cost of living (ie $1M only gets you a condo). But the higher you go in wealth the more disconnected you become to middle class struggles.
I just re-read what I wrote: “it’s not really their fault that they have less discriminatory spending than older generations used to”. Yikes! Haha. Not sure if I typed that or if it was a spell check replacement, but I meant to say discretionary spending.
Just to mention I think we both talk about what was until earlier this year. We have an AI bull rally on the stock market, but most sectors are already in recession/near recession. I don’t think that AI valuations are much relevant for the real economy, I am speaking only about valuations that are unrealistic and they will normalize overtime. The real economy has more problems due to tariffs and high debt levels than the AI investments.
On the matter of the health of the middle class, first I would say I used the used car ownership as an example, because if you want to invest, you need to save somewhere and owning a new car is the antithesis of that. It is true today, but it was true in the past, in the 70s and the 80s, when life was harder. You can look at the data, even in 1990, the average house size was 2000sqft (today it is 2500sqft), a proper work computer was around $3000 (around $7000 in today’s prices), the F-150 in 1990 was the size of today’s Ford Ranger, while it had less torque and in price it was comperable. There was a huge difference, the FED interest rate in 1990 was 8%. Also, the unemployment rate was 6%. So yesterday’s money is hard to equate to today’s money.
Afterall, we had 20 years of low interest rate environment, which encouraged people to take more loans, and this pushed up the demand: nicer car, nicer home, more holidays and so on.
If people want cheaper cars, you need to reduce demand similarly to the past.
So if you have to pay 12% interest on an auto loan, like in 1990, then the average purchasing price of a car will go down quickly. People will need to save up for a new house at those interest rates too, that means that the saving rates will increase. At a 10% rate, the stocks would fall 50% in price quickly, so now you have less ineqaulity.
After 2008, Steve Eisman said that the banks mistook leverage for genius, I think this is true for the state, the rich and the middle class too. Those people who think that paying 30 years of profit for $1 or $300 for $1 of a tech company, I don’t feel that is normal. It works now for those people, but it is in reality leverage, it is extermely risky.
But I still feel that people don’t realize that there can be more equality while everyone is poorer. One can lose a few hundred billions of the stock market, or the middle class might give up a room and go back to buying station wagons, but if unemployment goes back to 80s level, or we have 10 years of stagflation like in the 1970s, that will hit the poor worst.
I hope modern LA, SF, NY or Philly not heading to the same place where 1970s Detroit or NY were.
msgnr,
Taken to the logical conclusion this take implies that middle class investors shouldn’t have cars and should go use public transportation instead because that’s all they can afford. I do follow your reasoning, but regardless of this justification for it, it doesn’t really refute my point that affordability is steadily getting worse for the middle class.
Even if you don’t think family income is a problem, keep in mind that modern families are dual income earners whereas in the past it was more common for families to have a single income. The feminist revolution brought females into the workforce, which was important for equality, but unfortunately family incomes have not scaled proportionally. We are down relative to economic output. To be clear it’s not that wages went down so much as inflation taking up most of those gains.
That’s a problem too. I don’t know how much you follow the news, but the lack of affordable housing in many places is creating a crisis of sorts for first time home buyers. Builders have no incentive to make affordable housing when they can sell a premium house instead for 50% more catering to wealthy buyers who want a 2nd or 3rd house as vacation/rental/investment properties. This is sad to me because it’s killing the American dream, but alas no one is entitled to an affordable house.
I despise what the banks are doing to everybody’s cost of living. I am convinced that things would be a whole lot more affordable if the banks disappeared. The existence of bank loans directly skew the prices that everyone has to pay to buy houses. In a hypothetical world without banks, let’s say a house had a free market valuation of $50k cash. Now take this same world and add $500k bank loans to the mix. People who were willing and able to responsibly pay $50k are ultimately going to be outbid by those who got $500k from the bank. Even people who want to be fiscally responsible are NOT going be competing against “real money” prices, they’re going to be competing against the new inflated bank money prices. And so now it means that, because these bank products exist, even more responsible people are forced into using banks if they want to realistically buy a house.
Yes we can tell the middle class to stop buying steak, stop buying cars, stop going on vacations, to set one’s sights on a cheaper community college, and so on down the list…these are logical responses to the affordability problem. But it doesn’t hide the fact that the cost of living and raising a family just keeps getting more expensive. Yes we can ask the middle class to make tons of sacrifices to stretch their income. But I do think it’s disingenuous to insist it’s their fault when there have been such massive gains on productivity and the GDP over decades. The truth is that none of these hardships needed to exist at all except that the economic elites have been skimming more and more off the top and are asking the middle class to sacrifice more in order that the non-working class get to keep more of the pie for themselves.
msgnr, Alfman,
What kills middle class (in addition to financial illiteracy) is the housing costs.
Housing is the ultimate driver of everything else, and a necessity that cannot be avoided. (There is also energy and food as absolute essentials, but they have been dwarfed by housing inflation)
And that is caused by a parasitic system that basically eats their young.
“Back in the day” one could order a whole house kit from Sears:
https://en.wikipedia.org/wiki/Sears_Modern_Homes
For a $3,000, you could order all your materials from Sears Catalog, and build it anywhere you want. Well… the land was also free, since we had a concept of “homesteading”
Today you can order similar from Amazon for about $30,000.
Yet… it is practically illegal to build it.
For one reason or another…
Now people are convinced (tricked) into thinking that cheap housing was a bad idea, but we should be paying lots of money to land, contractors, inspectors, and various fees.
In Palo Alto for example 15% of the building cost is just fees. Yes, extra money that basically does nothing to add value. In many places in California, it is impossible to build anything for less than a million dollars (that that for middle class)
If we were a logical nation, we would eliminate that cost, and than discuss whether $50k car on A $70k budget makes sense (it does not, it is expensive, but…)
sukru,
I agree with your points. Housing is obviously very expensive. I’d sure love to get relief on housing prices, but the thing about inflation is that it kind of effects everything. Sure it might only be $5-$10 more at the grocery store, a couple bucks more at the pump, $30 bucks more on heating oil, etc. These small purchases seem harmless individually, but it adds up with every transaction, and the amount accumulates exponentially over time.
Healthcare expenses can wipe people out. Think of what something should cost, then add one or two more zeros to it. Several years back we had a $7k ER bill (with employer insurance because the fuckers denied coverage for tests performed “out of network”). Thankfully the affordable care act helped outlaw the worst practices and improved medical coverage for millions of people. However the legislation is now on the chopping block again and republicans in congress want it to lapse. This is what the government shutdown is about.
Inflation is no single thing, it’s the culmination of everything.
Alfman,
I agree, healthcare became extremely expensive, thanks to combination of terrible government action, and the large fatcats that have those politicians in their pockets.
However it is still minuscule compared to housing costs. An average family can spend 30%, 40, %50, or even 60% of their gross income to just have a roof on their head. Take other fixed costs like taxes, it leaves almost no room to pay for anything, including healthcare.
Say, instead of paying $3,500 for a rental, people were paying $350 to own their homes. The remainder would give enough freedom to cover many costs.
(That does not mean we should not fix healthcare, too. For example we can start by removing barriers to entry. We literally have doctor quotas. We limit drug purchases from overseas, and manufacturing domestically. We ban doctors from owning hospitals. There are many other nonsensical rules that help only established players become richer at the expense of all of us).
sukru,
I pulled up a w2 from this year box 12 DD…
https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-forms/code-dd-box-12-w-2/L2k8YhM4p_US_en_US
Fortunately our family is covered by my wife’s policy, just take a guess how much the group health insurance cost…. $28.7k/yr. And that’s just the premiums it doesn’t cover deductibles or out of network charges. Before we got married I was paying insurance premiums out of pocket through Cobra and IIRC it was like 1/3 of my income. So no, I would never agree to call it “minuscule”.
Obviously I do agree with you about housing crisis too, but it all adds up and given current events in congress the loss of healthcare subsidies could be what breaks the camel’s back for many households.
Alfman,
Ouch, that is a lot of money.
I haven’t checked mine. But I have a high deductible plan. So might be cheaper.
In any case…
Just a few years ago that would give you a “premium” plan (whatever that was called) with zero deductible, covered everyone and everything in your family.
End of subsidies is harsh. I don’t have a solution. (It just passes the buck around in a “who pays?” question)
But at some point we have to stop feeding the monster (that eats up 18% of our GDP).
sukru,
You’re right, it seems like something that costs so much should cover everything, no deductable, no co-payments, no surprise bills in the mail, fully covered medicine.
It’s so ironic that the only time we ever had a $0 deductible with no co-payments is when my wife took maternity leave and she lost employer coverage (which is kind of messed up when you think about it). That’s when we qualified for government medicaid coverage and there were no deductibles/copayments/surprise bills in the mail! These negatives only came back once we were back on private employer insurance.
It’s utterly insane. I have no idea how they justify the large sums of money everything costs. Start with a sensible cost and pad it with a couple extra zeros as mentioned before. I suspect the entire pipeline is a huge sieve and the majority never reaches patient care at all.
If you need that much computing power, you need your own servers.