THE LONG-TERM REALITY OF HYPERSCALERS: THE GOOD, THE BAD, AND THE UGLY SCENARIOS

Summary from the TLDR Dev newsletter

The long-term sustainability of high gross margins for private AI labs is questionable. This concern is supported by reports showing OpenAI's adjusted gross margin for inference dropped to 33% in 2025, below its own expectations. Well-funded, vertically integrated competitors like Alphabet can apply pricing pressure and have better cost structures, forcing independent labs to lower API prices and increase massive, uncontrollable training expenditures.