
AI Compute Deals Pressure Margins, Shift Valuation Metrics
AI compute costs are rising as companies spend more on both training and using AI models. While training big models like GPT-4 may cost over $100 million, most of the long-term spending now comes from using these models (inference), which might make margins shrink if revenue growth does not keep up. Large deals to lock in chip supply can help manage risks but also create high fixed costs and reduce flexibility if demand drops or new hardware appears. Some reports suggest that missing usage targets by even a small amount may erase profits. Overall, how well these companies match their compute supply with actual usage may decide if they stay profitable.













