Even if inference was subsidized (afaik it isn't when paying through API calls, subscription plans indeed might have losses for heavy users, but that's how any subscription model typically work, it can still be profitable overall).
Models are still improving/getting cheaper, so that seems unlikely.
I could imagine that when the music stops, advancement of new frontier models slows or stops, but that doesn't remove any curent capabilities.
(And to be fair the way we duplicate efforts on building new frontier models looks indeed wasteful. Tho maybe we reach a point later where progress is no longer started from scratch)
There is no evidence for this. The claims that API is "profitable on inference" are all hearsay. Despite the fact that any AI executive could immediately dismiss the misconception by merely making a public statement beholden to SEC regulation, they don't.
> Models are still improving/getting cheaper
The diminishing returns have set in for quality, and for a while now that increased quality has come at the cost of massive increases in token burn, it's not getting cheaper.
Worse yet, we're in an energy crisis. Iran has threatened to strike critical oil infrastructure, and repairs would take years.
AI is going to get significantly more expensive, soon.
I do think coding with local agents will keep improving to a good level but if deep thinking cloud tokens become too expensive you'll reach the limits of what your local, limited agent can do much more quickly (i.e. be even less able to do more complex work as other replies mention).