Agree that the foundation LLM business model is challenging, but I’m not very convinced by these particular arguments.

Yes, Nvidia GPUs are currently expensive. But they will soon be under tremendous competitive pressure from AMD, and more importantly Moore’s law is relentless (both in terms of model size capacity and performance per dollar). The price evolution of miniaturized transistors is basically the opposite of the airplane example.

Second, barriers to entry will keep increasing. Frontier models require stacking many new research and engineering insights. Of course the extent of secrets is currently limited because they only stopped publishing breakthroughs a couple years ago. Obviously that’s going to look very different 5 years from now.

On the other hand, competition between the leading frontier model companies is increasingly fierce (Google and Facebook have been slow to ramp up but theoretically should pose a big threat, and I am suddenly seeing Gemini topping leaderboards in the last few weeks), the moat is indeed questionable and the price of talent is very high. So it’s by no means an easy place to build a profitable business. But it’s at least possible for one or multiple of these firms to achieve process complexity that is extremely hard to replicate, and in the asymptote I really don’t think GPU costs will be a material threat to the business model.