FreeAMZN6 min read
Inference cost curves are collapsing
AMZN
Delayed
The thesis
Serving costs are down roughly an order of magnitude in eighteen months. The margin drag everyone underwrote is turning into a tailwind sooner than expected.
What I'm watching
- Cost per million tokens across providers
- Custom silicon attach rate
- Whether cloud margin guides move up
Positioning
Long, 2-3 quarters. Conviction: Medium. Cheap inference also compresses what anyone can charge for it.
Opinion, not investment advice. The author may or may not hold positions discussed.
Opinion. The author may or may not hold positions discussed. Not advice. Not a financial promotion approved under FSMA s.21. Quote data is delayed. Past performance is not a reliable indicator of future results.
Comments
11 commentsBeen waiting for someone to write this up properly. Thanks.
The second point is the one most people are going to skip over.
Good point — hadn't looked at it that way.
That's the part I keep going back and forth on.
This is the right question. The answer changes the whole setup.
This lines up with what I'm seeing in the AMZN tape.
Good timing — was just reworking my AMZN sizing this morning.
This is the right question. The answer changes the whole setup.
Exactly — that's the invalidation I'd use too.
Reasonable thesis but I think AMZN is priced for most of this already.
For anyone tracking this, the data drops Thursday pre-market.