Matthew Hughes

Marley!!!

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Anthropic Is In Real Trouble - And The Current Cost Of Doing Business Is Unsustainable, Meaning Prices Must Increase I’ve come away from this piece with a feeling of dread. Anthropic’s costs are out of control, and as things get more desperate, it appears to be lashing out at its customers, both companies like Cursor and Claude Code customers facing weekly rate limits on their more-powerful models who are chided for using a product they pay for. Again, I cannot say for certain, but the spike in costs is clear, and it feels like more than a coincidence to me. There is no period of time that I can see in the just under two years of data I’ve been party to that suggests that Anthropic has any means of — or any success doing — cost-cutting, and the only thing this company seems capable of doing is increasing the amount of money it burns on a monthly basis. Based on what I have been party to, the more successful Anthropic becomes, the more its services cost. The cost of inference is clearly increasing for customers, but based on its escalating monthly costs, the cost of inference appears to be high for Anthropic too, though it’s impossible to tell how much of its compute is based on training versus running inference. In any case, these costs seem to increase with the amount of money Anthropic makes, meaning that the current pricing of both subscriptions and API access seems unprofitable, and must increase dramatically — from my calculations, a 100% price increase might work, but good luck retaining every single customer and their customers too! — for this company to ever become sustainable.

I don’t think that people would pay those prices. If anything, I think what we’re seeing in these numbers is a company bleeding out from costs that escalate the more that its user base grows. This is just my opinion, of course. I’m tired of watching these companies burn billions of dollars to destroy our environment and steal from everybody. I’m tired that so many people have tried to pretend there’s a justification for burning billions of dollars every year, clinging to empty tropes about how this is just like Uber or Amazon Web Services, when Anthropic has built something far more mediocre. Mr. Amodei, I am sure you will read this piece, and I can make time to chat in person on my show Better Offline. Perhaps this Friday? I even have some studio time on the books.

I see no path to profitability for Anthropic, which means agreeing to fund it further is committing to an eternal money pit. Raising prices on its enterprise customers is a horrible but inevitable consequences of the inherent unprofitably of Large Language Models.
www.wheresyoured.at/costs/

The Subprime AI Crisis Is Real, And It Can Hurt You I realize this has been a long, number-stuffed article, but the long-and-short of it is simple: Anthropic is burning all of its revenue on compute, and Anthropic will willingly increase the prices on its customers if it’ll help it burn less money, even though that doesn’t seem to be working. What I believe happened to Cursor will likely happen to every AI-native company, because in a very real sense, Anthropic’s products are a wrapper for its own models, except it only has to pay the (unprofitable) costs of running them on Amazon Web Services and Google Cloud. As a result, both OpenAI and Anthropic can (and may very well!) devour the market of any company that builds on top of their models. OpenAI may have given Cursor free access to its GPT-5 models in August, but a month later on September 15 2025 it debuted massive upgrades to its competitive “Codex” platform. Any product built on top of an AI model that shows any kind of success can be cloned immediately by OpenAI and Anthropic, and I believe that we’re going to see multiple price increases on AI-native companies in the next few months. After all, OpenAI already has its own priority processing product, which it launched shortly after Anthropic’s in June. The ultimate problem is that there really are no winners in this situation. If Anthropic kills Cursor through aggressive rent-seeking, that directly eats into its own revenues. If Anthropic lets Cursor succeed, that’s revenue, but it’s also clearly unprofitable revenue. Everybody loses, but nobody loses more than Cursor’s (and other AI companies’) customers.

Anthropic also appears to have turned on its largest API customers, introducing Priority Tiers in late May that directly impacted AI coding companies like Cursor, who were forced to change their product to reduce costs. Its AWS costs doubled in June, and never came down.
www.wheresyoured.at/costs/

Anthropic’s Costs Are Out Of Control, Consistently And Aggressively Outpacing Revenue - And Amazon’s Revenue from Anthropic Of $2.66 Billion Is 2.5% Of Its 2025 Capex I have sat with these numbers for a great deal of time, and I can’t find any evidence that Anthropic has any path to profitability outside of aggressively increasing the prices on their customers to the point that its services will become untenable for consumers and enterprise customers alike. As you can see from these estimated and reported revenues, Anthropic’s AWS costs appear to increase in a near-linear fashion with its revenues, meaning that the current pricing — including rent-seeking measures like Priority Service Tiers — isn’t working to meet the burden of its costs. We do not know its Google Cloud spend, but I’d be shocked if it was anything less than 50% of its AWS bill. If that’s the case, Anthropic is in real trouble - the cost of the services underlying its business increase the more money they make. It’s becoming increasingly apparent that Large Language Models are not a profitable business. While I cannot speak to Amazon Web Services’ actual costs, it’s making $2.66 billion from Anthropic, which is the second largest foundation model company in the world. Is that really worth $105 billion in capital expenditures? Is that really worth building a giant 1200 acre data center in Indiana with 2.2GW of electricity? What’s the plan, exactly? Let Anthropic burn money for the foreseeable future until it dies, and then pick up the pieces? Wait until Wall Street gets mad at you and then pull the plug? Who knows.

Anthropic spent $610 million on AWS in Q1, $829.7 million in Q2, and $1.225 billion in Q3, spending 88.9% of their estimated revenue (based on reported numbers) in September 2025. Amazon will spend $105bn in capex this year, a chunk of which supports Anthropic.
www.wheresyoured.at/costs/

An Estimate of Anthropic’s Potential Cloud Compute Spend Through September THE NUMBERS I AM USING ARE ESTIMATES CALCULATED BASED ON 25%, 50% and 100% OF THE AMOUNTS THAT ANTHROPIC HAS SPENT ON AMAZON WEB SERVICES THROUGH SEPTEMBER. I apologize for all the noise, I just want it to be crystal clear what you see next. As you can see, all it takes is for Anthropic to spend (I am estimating) around 25% of its Amazon Web Services bills (for a total of around $3.33 billion in compute costs through the end of September) to savage any and all revenue ($2.55 billion) it’s making. Assuming Anthropic spends half of its AWS spend on Google Cloud, this number climbs to $3.99 billion, and if you assume - and to be clear, this is an estimate - that it spends around the same on both Google Cloud and AWS, Anthropic has spent $5.3 billion on compute through the end of September. I can’t tell you which it is, just that we know for certain that Anthropic is spending money on Google Cloud, and because Google owns 14% of the company — rivalling estimates saying Amazon owns around 15-19% — it’s fair to assume that there’s a significant spend.

To be clear, Anthropic has also likely got a vast spend on Google Cloud. If they spend as little as 25% as much as they do on AWS, Anthropic is eternally unprofitable. Their costs appear to scale linearly upward with revenue - the more they make the more they lose.
www.wheresyoured.at/costs/

Analysis: Anthropic Spent At Least 126.5% of Its 2024 Revenue On Amazon Web Services In 2024 I’m gonna be nice here and say that Anthropic made $600 million in 2024 — the higher end of The Information’s reporting — meaning that it spent 126.5% of its revenue ($1.359 billion) on Amazon Web Services. Anthropic’s Amazon Web Services Spend In 2025 Through September 2025 - $2.66 Billion - Estimated Revenue Through September $2.55 Billion - 104% Of Revenue Spent on AWS Thanks to my own analysis and reporting from outlets like The Information and Reuters, we have a pretty good idea of Anthropic’s revenues for much of the year. That said, July, August, and September get a little weirder, because we’re relying on “almosts” and “approachings,” as I’ll explain as we go.

Based on a source with direct knowledge of its Amazon Web Services bills, Anthropic spent $2.66 billion on AWS through September 2025. Based on an analysis of their reported revenues, it appears their revenue directly correlates with an increase in costs.
www.wheresyoured.at/costs/

Exclusive: Here's How Much Anthropic Spends on AWS

This newsletter pairs well with the standalone episode of Better Offline I recorded. Both communicate much the same story, but the podcast is a little more entertaining. This is the culmination of months of reporting and investigation.

open.spotify.com/episode/5Tyq...
linktr.ee/betteroffline

This Is How Much Anthropic and Cursor Spend On Amazon Web Services So, I originally planned for this to be on my premium newsletter, but decided it was better to publish on my free one so that you could all enjoy it. If you liked it, please consider subscribing to su...

Exclusive: Anthropic spent $2.66 billion on Amazon Web Services in the first three quarters of 2025, around 100% of their estimated revenue. Its costs appear to increase with their revenue, showing little path to profitability.
www.wheresyoured.at/costs/

Marley!

Lemlist has the claap.

Only just noticed there’s a little pool of his slobber in that picture.

Oh well. He’s a golden retriever.

Marley!

I repeat, I was 16. This was the height of comedy back then.

"Hello, QVC. How may I help you?"

"Yes, I'm calling about the Yankee Candles. I have a question."

"Of course, sir."

"Are they edible?"

"..."

Example: One psychic had a toll-free number for her business. I'd call up and express interest in a reading. She'd ask for sixteen-digit credit card number first.

I'd respond: "But... you're psychic. Shouldn't you know that?"

"It doesn't work like that, sir."

"How come?"

"..."

(On that note: My favorite memory of Skype is being 16 and learning that I could prank call toll-free numbers in the US, UK, and Canada with near impunity, and at no cost.

And oh how I prank called them.)

Should have been clearer here! I meant making international calls to actual phones.

Can you call a normal phone with FB messenger?

I'd rather drag my ballsack over broken glass than use TalkTalk, but that's because I was spoiled from the time I lived in an OpenReach area and could use Andrews & Arnold ISP.

Now, I'm in a Virgin monopoly street and... well...

Remember what I said about my ballsack and broken glass?

I meant for calling an actual phone!

I should have been clearer! I meant for calling a normal phone!

Now that Skype doesn't exist any more, I'm curious what tools people are using to make international calls without being bankrupted?

(In fairness, I've never flown from Luton. But I have flown from Stansted! And Glasgow Prestwick. And Southampton.)

(Aside: I'm not joking about Manchester being the UK's shittest airport. If you know, and if you know Terminal 3, you know. It's a dump. A sweaty, boozy, cramped dump that now smells like KFC.)

I'm furious about the fact that the UK government will literally hand over your name and address to anyone who asks for it, for any reason, without having to provide a smidgen of evidence for why it's justifiable.

This shouldn't be legal.

I'm not pissed off about the fine -- I won't pay it, even if my appeal is rejected, which may be the case because there are two appeal systems, and one rules against drivers 95% of the time.

I'm annoyed about wasting my time, but in the past I've made up for it by being rude and sarcastic.

Anyway, I got a fine for dropping my wife off at the airport a few weeks back.

The maddening thing is that I FUCKING PAID!

So, now I have to go through the process of appealing a parking charge -- which is entirely unjustified -- wasting my time and energy when I'd rather do anything else.

Also, some people aren't tech literate! Some people don't have a computer or a smartphone!

I'm sure there's a demographic of people who are old enough to be on the wrong side of the digital divide, but are still independent and still drive.

Those people would have no choice *but* to get fined.

There's no option to pay in-person. You HAVE to do it online.

This is a shitty way to extract money out of people, in part because it makes it possible for people to forget to pay (which happens if you're busy, or you're dropping someone off at 4AM and you're fucking tired).