Why smarter AI models could drive up compute prices 10x
Summary
Dwarkesh Patel analyzes the divergence between AI labs' 10x revenue growth and only 3x compute scaling. He argues that rising compute prices and increasing inference margins are bridging this gap, favoring efficient models via the Alkin-Allen effect. This dynamic may price out low-value applications and concentrate power among top labs, as compute supply remains constrained by hardware bottlenecks.
Listen ad-free on Castria