Economist Brad DeLong argues that Artificial Intelligence, particularly Large Language Models (LLMs), faces an "Airline Scenario" where immense user value is generated but little profit for the companies providing the service. He points to high operating costs like compute and electricity, and the lack of economies of scale in model development and deployment, as reasons for this profitless prosperity. DeLong suggests that reported profits, often presented as "adjusted operating income," are a signal that true profitability is elusive in the current LLM business model. AI
IMPACT Suggests current LLM business models may struggle with profitability despite high utility, potentially impacting future investment and development.
RANK_REASON Opinion piece by a named credible voice discussing AI economics.
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