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Over the last two years I have written again and again about the ruinous costs of running generative AI services, and today I’m coming to you with real proof.

Based on discussions with sources with direct knowledge of their AWS billing, I am able to disclose the amounts that AI firms are spending, specifically Anthropic and AI coding company Cursor, its largest customer.

I can exclusively reveal today Anthropic’s spending on Amazon Web Services for the entirety of 2024, and for every month in 2025 up until September, and that that Anthropic’s spend on compute far exceeds that previously reported. 

Furthermore, I can confirm that through September, Anthropic has spent more than 100% of its estimated revenue (based on reporting in the last year) on Amazon Web Services, spending $2.66 billion on compute on an estimated $2.55 billion in revenue.

Additionally, these documents show that Curson’s Amazon Web Services bills more than doubled from $6.2 million in May 2025 to $12.6 million in June 2025, exacerbating a cash crunch that began when Anthropic introduced Priority Service Tiers, an aggressive rent-seeking measure that begun what I call the Subprime AI Crisis, where model providers begin jacking up the prices on their previously subsidized rates.

Although Cursor obtains the majority of its compute from Anthropic — with AWS contributing a relatively small amount, and likely also taking care of other parts of its business — the data seen reveals an overall direction of travel, where the costs of compute only keep on going up. 

Let’s get to it.

Some Initial Important Details

• I do not have all the answers! I am going to do my best to go through the information I’ve obtained and give you a thorough review and analysis. This information provides a revealing — though incomplete — insight into the costs of running Anthropic and Cursor, but does not include other costs, like salaries and compute obtained from other providers. I cannot tell you (and do not have insight into) Anthropic’s actual private moves. Any conclusions or speculation I make in this article will be based on my interpretations of the information I’ve received, as well as other publicly-available information.
• I have used estimates of Anthropic’s revenue based on reporting across the last ten months. Any estimates I make are detailed and they are brief. 
• These costs are inclusive of every product bought on Amazon Web Services, including EC2, storage and database services (as well as literally everything else they pay for).
• Anthropic works with both Amazon Web Services and Google Cloud for compute. I do not have any information about its Google Cloud spend.
  • The reason I bring this up is that Anthropic’s revenue is already being eaten up by its AWS spend. It’s likely billions more in the hole from Google Cloud and other operational expenses.
• I have confirmed with sources that every single number I give around Anthropic and Cursor’s AWS spend is the final cash paid to Amazon after any discounts or credits.
• While I cannot disclose the identity of my source, I am 100% confident in these numbers, and have verified their veracity with other sources.

Anthropic’s Compute Costs Are Likely Much Higher Than Reported — $1.35 Billion in 2024 on AWS Alone

In February of this year, The information reported that Anthropic burned $5.6 billion in 2024, and made somewhere between $400 million and $600 million in revenue:

It’s not publicly known how much revenue Anthropic generated in 2024, although its monthly revenue rose to about $80 million by the end of the year, compared to around $8 million at the start. That suggests full-year revenue in the $400 million to $600 million range.

…Anthropic told investors it expects to burn $3 billion this year, substantially less than last year, when it burned $5.6 billion. Last year’s cash burn was nearly $3 billion more than Anthropic had previously projected. That’s likely due to the fact that more than half of the cash burn came from a one-off payment to access the data centers that power its technology, according to one of the people who viewed the pitch.

While I don’t know about prepayment for services, I can confirm from a source with direct knowledge of billing that Anthropic spent $1.35 billion on Amazon Web Services in 2024, and has already spent $2.66 billion on Amazon Web Services through the end of September.

Assuming that Anthropic made $600 million in revenue, this means that Anthropic spent $6.2 billion in 2024, leaving $4.85 billion in costs unaccounted for. 

The Information’s piece also brings up another point:

The costs to develop AI models accounted for a major portion of Anthropic’s expenses last year. The company spent $1.5 billion on servers for training AI models. OpenAI was on track to spend as much as $3 billion on training costs last year, though that figure includes additional expenses like paying for data.

Before I go any further, I want to be clear that The Information’s reporting is sound, and I trust that their source (I have no idea who they are or what information was provided) was operating in good faith with good data.

However, Anthropic is telling people it spent $1.5 billion on just training when it has an Amazon Web Services bill of $1.35 billion, which heavily suggests that its actual compute costs are significantly higher than we thought, because, to quote SemiAnalysis, “a large share of Anthropic’s spending is going to Google Cloud.” 

I am guessing, because I do not know, but with $4.85 billion of other expenses to account for, it’s reasonable to believe Anthropic spent an amount similar to its AWS spend on Google Cloud. I do not have any information to confirm this, but given the discrepancies mentioned above, this is an explanation that makes sense.

I also will add that there is some sort of undisclosed cut that Amazon gets of Anthropic’s revenue, though it’s unclear how much. According to The Information, “Anthropic previously told some investors it paid a substantially higher percentage to Amazon [than OpenAI’s 20% revenue share with Microsoft] when companies purchase Anthropic models through Amazon.”

I cannot confirm whether a similar revenue share agreement exists between Anthropic and Google.

This also makes me wonder exactly where Anthropic’s money is going.

Where Is Anthropic’s Money Going?

Anthropic has, based on what I can find, raised $32 billion in the last two years, starting out 

2023 with a $4 billion investment from Amazon from September 2023 (bringing the total to $37.5 billion), where Amazon was named its “primary cloud provider” nearly eight months after Anthropic announced Google was Anthropic’s “cloud provider.,” which Google responded to a month later by investing another $2 billion on October 27 2023, “involving a $500 million upfront investment and an additional $1.5 billion to be invested over time,” bringing its total funding from 2023 to $6 billion.

In 2024, it would raise several more rounds — one in January for $750 million, another in March for $884.1 million, another in May for $452.3 million, and another $4 billion from Amazon in November 2024, which also saw it name AWS as Anthropic’s “primary cloud and training partner,” bringing its 2024 funding total to $6 billion.

In 2025 so far, it’s raised a $1 billion round from Google, a $3.5 billion venture round in March, opened a $2.5 billion credit facility in May, and completed a $13 billion venture round in September, valuing the company at $183 billion. This brings its total 2025 funding to $20 billion. 

While I do not have Anthropic’s 2023 numbers, its spend on AWS in 2024 — around $1.35 billion — leaves (as I’ve mentioned) $4.85 billion in costs that are unaccounted for. The Information reports that costs for Anthropic’s 521 research and development staff reached $160 million in 2024, leaving 394 other employees unaccounted for (for 915 employees total), and also adding that Anthropic expects its headcount to increase to 1900 people by the end of 2025.

The Information also adds that Anthropic “expects to stop burning cash in 2027.”

This leaves two unanswered questions:

• Where is the rest of Anthropic’s money going?
• How will it “stop burning cash” when its operational costs explode as its revenue increases?

An optimist might argue that Anthropic is just growing its pile of cash so it’s got a warchest to burn through in the future, but I have my doubts. In a memo revealed by WIRED, Anthropic CEO Dario Amodei stated that “if [Anthropic wanted] to stay on the frontier, [it would] gain a very large benefit from having access to this capital,” with “this capital” referring to money from the Middle East. 

Anthropic and Amodei’s sudden willingness to take large swaths of capital from the Gulf States does not suggest that it’s not at least a little desperate for capital, especially given Anthropic has, according to Bloomberg, “recently held early funding talks with Abu Dhabi-based investment firm MGX” a month after raising $13 billion.

In my opinion — and this is just my gut instinct — I believe that it is either significantly more expensive to run Anthropic than we know, or Anthropic’s leaked (and stated) revenue numbers are worse than we believe. I do not know one way or another, and will only report what I know.

How Much Did Anthropic and Cursor Spend On Amazon Web Services In 2025?

So, I’m going to do this a little differently than you’d expect, in that I’m going to lay out how much these companies spent, and draw throughlines from that spend to its reported revenue numbers and product announcements or events that may have caused its compute costs to increase.

I’ve only got Cursor’s numbers from January through September 2025, but I have Anthropic’s AWS spend for both the entirety of 2024 and through September 2025.

What Does “Annualized” Mean?

So, this term is one of the most abused terms in the world of software, but in this case, I am sticking to the idea that it means “month times 12.” So, if a company made $10m in January, you would say that its annualized revenue is $120m. Obviously, there’s a lot of (when you think about it, really obvious) problems with this kind of reporting — and thus, you only ever see it when it comes to pre-IPO firms — but that’s besides the point.

I give you this explanation because, when contrasting Anthropic’s AWS spend with its revenues, I’ve had to work back from whatever annualized revenues were reported for that month. 

Anthropic’s Amazon Web Services Spend In 2024 - $1.359 Billion - Estimated Revenue $400 Million to $600 Million

Anthropic’s 2024 revenues are a little bit of a mystery, but, as mentioned above, The Information says it might be between $400 million and $600 million.

Here’s its monthly AWS spend. 

• January 2024 - $52.9 million
• February 2024 - $60.9 million
• March 2024 - $74.3 million
• April 2024 - $101.1 million
• May 2024 - $100.1 million
• June 2024 - $101.8 million
• July 2024 - $118.9 million
• August 2024 - $128.8 million
• September 2024 - $127.8 million
• October 2024 - $169.6 million
• November 2024 - $146.5 million
• December 2024 - $176.1 million

Analysis: Anthropic Spent At Least 126.5% of Its 2024 Revenue On Amazon Web Services In 2024

I’m gonna be nice here and say that Anthropic made $600 million in 2024 — the higher end of The Information’s reporting — meaning that it spent 126.5% of its revenue ($1.359 billion) on Amazon Web Services.

Anthropic’s Amazon Web Services Spend In 2025 Through September 2025 - $2.66 Billion - Estimated Revenue Through September $2.55 Billion - 104% Of Revenue Spent on AWS

Thanks to my own analysis and reporting from outlets like The Information and Reuters, we have a pretty good idea of Anthropic’s revenues for much of the year. That said, July, August, and September get a little weirder, because we’re relying on “almosts” and “approachings,” as I’ll explain as we go.

I’m also gonna do an analysis on a month-by-month basis, because it’s necessary to evaluate these numbers in context. 

January 2025 - $188.5 million In AWS Spend, $72.91 or $83 Million In Revenue - 227% Of Revenue Spent on AWS

In this month, Anthropic’s reported revenue was somewhere from $875 million to $1 billion annualized, meaning either $72.91 million or $83 million for the month of January.

February 2025 - $181.2 million in AWS Spend, $116 Million In Revenue - 156% Of Revenue Spent On AWS - 181% Of Revenue Spent On AWS

In February, as reported by The Information, Anthropic hit $1.4 billion annualized revenue, or around $116 million each month.

March 2025 - $240.3 million in AWS Spend - $166 Million In Revenue - 144% Of Revenue Spent On AWS - Launch of Claude Sonnet 3.7 & Claude Code Research Preview (February 24)

In March, as reported by Reuters, Anthropic hit $2 billion in annualized revenue, or $166 million in revenue.

Because February is a short month, and the launch took place on February 24 2025, I’m considering the launches of Claude 3.7 Sonnet and Claude Code’s research preview to be a cost burden in the month of March.

And man, what a burden! Costs increased by $59.1 million, primarily across compute categories, but with a large ($2 million since January) increase in monthly costs for S3 storage.

April 2025 - $221.6 million in AWS Spend - $204 Million In Revenue - 108% Of Revenue Spent On AWS

I estimate, based on a 22.4% compound growth rate, that Anthropic hit around $2.44 billion in annualized revenue in April, or $204 million in revenue.

Interestingly, this was the month where Anthropic launched its $100 and $200 dollar a month “Max” plans, and it doesn’t seem to have dramatically increased its costs. Then again, Max is also the gateway to things like Claude Code, which I’ll get to shortly.

May 2025 - $286.7 million in AWS Spend - $250 Million In Revenue - 114% Of Revenue Spent On AWS - Sonnet 4, Opus 4, General Availability Of Claude Code (May 22) Service Tiers (May 30)

In May, as reported by CNBC, Anthropic hit $3 billion in annualized revenue, or $250 million in monthly average revenue.

This was a big month for Anthropic, with two huge launches on May 22 2025 — its new, “more powerful” models Claude Sonnet and Opus 4, as well as the general availability of its AI coding environment Claude Code.

Eight days later, on May 30 2025, a page on Anthropic's API documentation appeared for the first time: "Service Tiers":

Different tiers of service allow you to balance availability, performance, and predictable costs based on your application’s needs.

We offer three service tiers:

- Priority Tier: Best for workflows deployed in production where time, availability, and predictable pricing are important

Standard: Best for bursty traffic, or for when you’re trying a new idea

Batch: Best for asynchronous workflows which can wait or benefit from being outside your normal capacity

Accessing the priority tier requires you to make an up-front commitment to Anthropic, and said commitment is based on a number of months (1, 3, 6 or 12) and the number of input and output tokens you estimate you will use each minute. 

What’s a Priority Tier? Why Is It Significant?

As I’ll get into in my June analysis, Anthropic’s Service Tiers exist specifically for it to “guarantee” your company won’t face rate limits or any other service interruptions, requiring a minimum spend, minimum token throughput, and for you to pay higher rates when writing to the cache — which is, as I’ll explain, a big part of running an AI coding product like Cursor.

Now, the jump in costs — $65.1 million or so between April and May — likely comes as a result of the final training for Sonnet and Opus 4, as well as, I imagine, some sort of testing to make sure Claude Code was ready to go.

June 2025 - $321.4 million in AWS Spend - $333 Million In Revenue - 96.5% Of Revenue Spent On AWS - Anthropic Cashes In On Service Tier Tolls That Add An Increased Charge For Prompt Caching, Directly Targeting Companies Like Cursor

In June, as reported by The Information, Anthropic hit $4 billion in annualized revenue, or $333 million.

Anthropic’s revenue spiked by $83 million this month, and so did its costs by $34.7 million. 

Anthropic Started The Subprime AI Crisis In June 2025, Increasing Costs On Its Largest Customer, Doubling Its AWS Spend In A Month

I have, for a while, talked about the Subprime AI Crisis, where big tech and companies like Anthropic, after offering subsidized pricing to entice in customers, raise the rates on their customers to start covering more of their costs, leading to a cascade where businesses are forced to raise their prices to handle their new, exploding costs.

And I was god damn right. Or, at least, it sure looks like I am. I’m hedging, forgive me. I cannot say for certain, but I see a pattern. 

It’s likely the June 2025 spike in revenue came from the introduction of service tiers, which specifically target prompt caching, increasing the amount of tokens you’re charged for as an enterprise customer based on the term of the contract, and your forecast usage.

Per my reporting in July: 

You see, Anthropic specifically notes on its "service tiers" page that requests at the priority tier are "prioritized over all other requests to Anthropic," a rent-seeking measure that effectively means a company must either:

- Commit to at least a month, though likely 3-12 months of specific levels of input and output tokens a minute, based on what they believe they will use in the future, regardless of whether they do.

- Accept that access to Anthropic models will be slower at some point, in some way that Anthropic can't guarantee.Furthermore, the way that Anthropic is charging almost feels intentionally built to fuck over any coding startup that would use its service. Per the service tier page, Anthropic charges 1.25 for every time you write a token to the cache with a 5 minute TTL — or 2 tokens if you have a 1 hour TTL — and a longer cache is effectively essential for any background task where an agent will be working for more than 5 minutes, such as restructuring a particularly complex series of code, you know, the exact things that Cursor is well-known and marketed to do.

Furthermore, the longer something is in the cache, the better autocomplete suggestions for your code will be. It's also important to remember you're, at some point, caching the prompts themselves — so the instructions of what you want Cursor to do, meaning that the more complex the operation, the more expensive it'll now be for Cursor to provide the service with reasonable uptime.

Cursor, as Anthropic’s largest client (the second largest being Github Copilot), represents a material part of its revenue, and its surging popularity meant it was sending more and more revenue Anthropic’s way.  Anysphere, the company that develops Cursor, hit $500 million annualized revenue ($41.6 million) by the end of May, which Anthropic chose to celebrate by increasing its costs.

On June 16 2025, Cursor launched a $200-a-month “Ultra” plan, as well as dramatic changes to its $20-a-month Pro pricing that, instead of offering 500 “fast” responses using models from Anthropic and OpenAI, now effectively provided you with “at least” whatever you paid a month (so $20-a-month got at least $20 of credit), massively increasing the costs for users, with one calling the changes a “rug pull” after spending $71 in a single day.

As I’ll get to later in the piece, Cursor’s costs exploded from $6.19 million in May 2025 to $12.67 million in June 2025, and I believe this is a direct result of Anthropic’s sudden and aggressive cost increases. 

Similarly, Replit, another AI coding startup, moved to “Effort-Based Pricing” on June 18 2025. I have not got any information around its AWS spend.

I’ll get into this a bit later, but I find this whole situation disgusting.

July 2025 $323.2 million in AWS Spend - $416 Million In Revenue - 77.7% Of Revenue Spent On AWS

In July, as reported by Bloomberg, Anthropic hit $5 billion in annualized revenue, or $416 million.

While July wasn’t a huge month for announcements, it was allegedly the month that Claude Code was generating “nearly $400 million in annualized revenue,” or $33.3 million (according to The Information, who says Anthropic was “approaching” $5 billion in annualized revenue - which likely means LESS than that - but I’m going to go with the full $5 billion annualized for sake of fairness. 

There’s roughly an $83 million bump in Anthropic’s revenue between June and July 2025, and I think Claude Code and its new rates are a big part of it. What’s fascinating is that cloud costs didn’t increase too much — by only $1.8 million, to be specific.

August 2025 - $383.7 million in AWS Spend - $416 Million In Revenue - 92% Of Revenue Spent On AWS

In August, according to Anthropic, its run-rate “reached over $5 billion,” or in or around $416 million. I am not giving it anything more than $5 billion, especially considering in July Bloomberg’s reporting said “about $5 billion.”

Costs grew by $60.5 this month, potentially due to the launch of Claude Opus 4.1, Anthropic’s more aggressively expensive model, though revenues do not appear to have grown much along the way.

Yet what’s very interesting is that Anthropic — starting August 28 — launched weekly rate limits on its Claude Pro and Max plans. I wonder why?

September 2025 - $518.9 million in AWS Spend - $583 Million In Revenue - 88.9% Of Revenue Spent On AWS

Oh fuck! Look at that massive cost explosion!

Anyway, according to Reuters, Anthropic’s run rate is “approaching $7 billion” in October, and for the sake of fairness, I am going to just say it has $7 billion annualized, though I believe this number to be lower. “Approaching” can mean a lot of different things — $6.1 billion, $6.5 billion — and because I already anticipate a lot of accusations of “FUD,” I’m going to err on the side of generosity.

If we assume a $6.5 billion annualized rate, that would make this month’s revenue $541.6 million, or 95.8% of its AWS spend.  

Nevertheless, Anthropic’s costs exploded in the space of a month by $135.2 million (35%) - likely due to the fact that users, as I reported in mid-July, were costing it thousands or tens of thousands of dollars in compute, a problem it still faces to this day, with VibeRank showing a user currently spending $51,291 in a calendar month on a $200-a-month subscription.

If there were other costs, they likely had something to do with the training runs for the launches of Sonnet 4.5 on September 29 2025 and Haiku 4.5 in October 2025.

Anthropic’s Monthly AWS Costs Have Increased By 174% Since January - And With Its Potential Google Cloud Spend and Massive Staff, Anthropic Is Burning Billions In 2025

While these costs only speak to one part of its cloud stack — Anthropic has an unknowable amount of cloud spend on Google Cloud, and the data I have only covers AWS — it is simply remarkable how much this company spends on AWS, and how rapidly its costs seem to escalate as it grows.

Though things improved slightly over time — in that Anthropic is no longer burning over 200% of its revenue on AWS alone — these costs have still dramatically escalated, and done so in an aggressive and arbitrary manner. 

Anthropic’s AWS Costs Increase Linearly With Revenue, Consuming The Majority Of Each Dollar Anthropic Makes - As A Reminder, It Also Spends Hundreds Of Millions Or Billions On Google Cloud Too

So, I wanted to visualize this part of the story, because I think it’s important to see the various different scenarios.

An Estimate of Anthropic’s Potential Cloud Compute Spend Through September

THE NUMBERS I AM USING ARE ESTIMATES CALCULATED BASED ON 25%, 50% and 100% OF THE AMOUNTS THAT ANTHROPIC HAS SPENT ON AMAZON WEB SERVICES THROUGH SEPTEMBER. 

I apologize for all the noise, I just want it to be crystal clear what you see next.  

As you can see, all it takes is for Anthropic to spend (I am estimating) around 25% of its Amazon Web Services bills (for a total of around $3.33 billion in compute costs through the end of September) to savage any and all revenue ($2.55 billion) it’s making. 

Assuming Anthropic spends half of its  AWS spend on Google Cloud, this number climbs to $3.99 billion, and if you assume - and to be clear, this is an estimate - that it spends around the same on both Google Cloud and AWS, Anthropic has spent $5.3 billion on compute through the end of September.

I can’t tell you which it is, just that we know for certain that Anthropic is spending money on Google Cloud, and because Google owns 14% of the company — rivalling estimates saying Amazon owns around 15-19% — it’s fair to assume that there’s a significant spend.

Anthropic’s Costs Are Out Of Control, Consistently And Aggressively Outpacing Revenue - And Amazon’s Revenue from Anthropic Of $2.66 Billion Is 2.5% Of Its 2025 Capex

I have sat with these numbers for a great deal of time, and I can’t find any evidence that Anthropic has any path to profitability outside of aggressively increasing the prices on their customers to the point that its services will become untenable for consumers and enterprise customers alike.

As you can see from these estimated and reported revenues, Anthropic’s AWS costs appear to increase in a near-linear fashion with its revenues, meaning that the current pricing — including rent-seeking measures like Priority Service Tiers — isn’t working to meet the burden of its costs.

We do not know its Google Cloud spend, but I’d be shocked if it was anything less than 50% of its AWS bill. If that’s the case, Anthropic is in real trouble - the cost of the services underlying its business increase the more money they make.

It’s becoming increasingly apparent that Large Language Models are not a profitable business. While I cannot speak to Amazon Web Services’ actual costs, it’s making $2.66 billion from Anthropic, which is the second largest foundation model company in the world. 

Is that really worth $105 billion in capital expenditures? Is that really worth building a giant 1200 acre data center in Indiana with 2.2GW of electricity?

What’s the plan, exactly? Let Anthropic burn money for the foreseeable future until it dies, and then pick up the pieces? Wait until Wall Street gets mad at you and then pull the plug?

Who knows. 

But let’s change gears and talk about Cursor — Anthropic’s largest client and, at this point, a victim of circumstance.

Cursor’s Amazon Web Services Spend In 2025 Through September 2025 - $69.99 Million

An Important Note About Cursor’s Compute Spend

Amazon sells Anthropic’s models through Amazon Bedrock, and I believe that AI startups are compelled to spend some of their AI model compute costs through Amazon Web Services. Cursor also sends money directly to Anthropic and OpenAI, meaning that these costs are only one piece of its overall compute costs. In any case, it’s very clear that Cursor buys some degree of its Anthropic model spend through Amazon.

I’ll also add that Tom Dotan of Newcomer reported a few months ago that an investor told him that “Cursor is spending 100% of its revenue on Anthropic.”

Unlike Anthropic, we lack thorough reporting of the month-by-month breakdown of Cursor’s revenues. I will, however, mention them in the month I have them.

For the sake of readability — and because we really don’t have much information on Cursor’s revenues beyond a few months — I’m going to stick to a bullet point list. 

Another Note About Cursor’s AWS Spend - It Likely Funnels Some Model Spend Through AWS, But The Majority Goes Directly To Providers Like Anthropic

As discussed above, Cursor announced (along with their price change and $200-a-month plan) several multi-year partnerships with xAI, Anthropic, OpenAI and Google, suggesting that it has direct agreements with Anthropic itself versus one with AWS to guarantee “this volume of compute at a predictable price.” 

Based on its spend with AWS, I do not see a strong “minimum” spend that would suggest that they have a similar deal with Amazon — likely because Amazon handles more than its infrastructure than just compute, but incentivizes it to spend on Anthropic’s models through AWS by offering discounts, something I’ve confirmed with a source. 

In any case, here’s what Cursor spent on AWS.

• January 2025 - $1.459 million
  • This, apparently, is the month that Cursor hit $100 million annualized revenue — or $8.3 million, meaning it spent 17.5% of its revenue on AWS.
• February 2025 - $2.47 million
• March 2025 - $4.39 million
• April 2025 - $4.74 million
  • Cursor hit $200 million annualized ($16.6 million) at the end of March 2025, according to The Information, working out to spending 28% of its revenue on AWS.  
• May 2025 - $6.19 million
• June 2025 - $12.67 million
  • So, Bloomberg reported that Cursor hit $500 million on June 5 2025, along with raising a $900 million funding round. Great news! Turns out it’d need to start handing a lot of that to Anthropic.
  • This was, as I’ve discussed above, the month when Anthropic forced it to adopt “Service Tiers”. I go into detail about the situation here, but the long and short of it is that Anthropic increased the amount of tokens you burned by writing stuff to the cache (think of it like RAM in a computer), and AI coding startups are very cache heavy, meaning that Cursor immediately took on what I believed would be massive new costs. As I discuss in what I just linked, this led Cursor to aggressively change its product, thereby vastly increasing its customers’ costs if they wanted to use the same service.
  • That same month, Cursor’s AWS costs — which I believe are the minority of its cloud compute costs — exploded by 104% (or by $6.48 million), and never returned to their previous levels.
  • It’s conceivable that this surge is due to the compute-heavy nature of the latest Claude 4 models released that month — or, perhaps, Cursor sending more of its users to other models that it runs on Bedrock. 
• July 2025 - $15.5 million
  • As you can see, Cursor’s costs continue to balloon in July, and I am guessing it’s because of the Service Tiers situation — which, I believe, indirectly resulted in Cursor pushing more users to models that it runs on Amazon’s infrastructure.
• August 2025 - $9.67 million
  • So, I can only guess as to why there was a drop here. User churn? It could be the launch of GPT-5 on Cursor, which gave users a week of free access to OpenAI’s new models.
  • What’s also interesting is that this was the month when Cursor announced that its previously free “auto” model (where Cursor would select the best available premium model or its own model) would now bill at “competitive token rates,” by which I mean it went from charging nothing to $1.25 per million input and $6 per million output tokens. This change would take effect on September 15 2025.
  • On August 10 2025, Tom Dotan of Newcomer reported that Cursor was “well above” $500 million in annualized revenue based on commentary from two sources.
• September 2025 - $12.91 million
  • Per the above, this is the month when Cursor started charging for its “auto” model.

What Anthropic May Have Done To Cursor Is Disgusting - And Is A Preview Of What’s To Come For AI Startups

When I wrote that Anthropic and OpenAI had begun the Subprime AI Crisis back in July, I assumed that the increase in costs was burdensome, but having the information from its AWS bills, it seems that Anthropic’s actions directly caused Cursor’s costs to explode by over 100%. 

While I can’t definitively say “this is exactly what did it,” the timelines match up exactly, the costs have never come down, Amazon offers provisioned throughput, and, more than likely, Cursor needs to keep a standard of uptime similar to that of Anthropic’s own direct API access.

If this is what happened, it’s deeply shameful. 

Cursor, Anthropic’s largest customer, in the very same month it hit $500 million in annualized revenue, immediately had its AWS and Anthropic-related costs explode to the point that it had to dramatically reduce the value of its product just as it hit the apex of its revenue growth. 

Anthropic Timed Its Rent-Seeking Service Tier Price Increases on Cursor With The Launch Of A Competitive Product - Which Is What’s Coming To Any AI Startup That Builds On Top Of Its Products

It’s very difficult to see Service Tiers as anything other than an aggressive rent-seeking maneuver.

Yet another undiscussed part of the story is that the launch of Claude 4 Opus and Sonnet — and the subsequent launch of Service Tiers — coincided with the launch of Claude Code, a product that directly competes with Cursor, without the burden of having to pay itself for the cost of models or, indeed, having to deal with its own “Service Tiers.”

Anthropic may have increased the prices on its largest client at the time it was launching a competitor, and I believe that this is what awaits any product built on top of OpenAI or Anthropic’s models. 

The Subprime AI Crisis Is Real, And It Can Hurt You

I realize this has been a long, number-stuffed article, but the long-and-short of it is simple: Anthropic is burning all of its revenue on compute, and Anthropic will willingly increase the prices on its customers if it’ll help it burn less money, even though that doesn’t seem to be working.

What I believe happened to Cursor will likely happen to every AI-native company, because in a very real sense, Anthropic’s products are a wrapper for its own models, except it only has to pay the (unprofitable) costs of running them on Amazon Web Services and Google Cloud.

As a result, both OpenAI and Anthropic can (and may very well!) devour the market of any company that builds on top of their models. 

OpenAI may have given Cursor free access to its GPT-5 models in August, but a month later on September 15 2025 it debuted massive upgrades to its competitive “Codex” platform. 

Any product built on top of an AI model that shows any kind of success can be cloned immediately by OpenAI and Anthropic, and I believe that we’re going to see multiple price increases on AI-native companies in the next few months. After all, OpenAI already has its own priority processing product, which it launched shortly after Anthropic’s in June.

The ultimate problem is that there really are no winners in this situation. If Anthropic kills Cursor through aggressive rent-seeking, that directly eats into its own revenues. If Anthropic lets Cursor succeed, that’s revenue, but it’s also clearly unprofitable revenue. Everybody loses, but nobody loses more than Cursor’s (and other AI companies’) customers. 

Anthropic Is In Real Trouble - And The Current Cost Of Doing Business Is Unsustainable, Meaning Prices Must Increase

I’ve come away from this piece with a feeling of dread.

Anthropic’s costs are out of control, and as things get more desperate, it appears to be lashing out at its customers, both companies like Cursor and Claude Code customers facing weekly rate limits on their more-powerful models who are chided for using a product they pay for. Again, I cannot say for certain, but the spike in costs is clear, and it feels like more than a coincidence to me. 

There is no period of time that I can see in the just under two years of data I’ve been party to that suggests that Anthropic has any means of — or any success doing — cost-cutting, and the only thing this company seems capable of doing is increasing the amount of money it burns on a monthly basis. 

Based on what I have been party to, the more successful Anthropic becomes, the more its services cost. The cost of inference is clearly increasing for customers, but based on its escalating monthly costs, the cost of inference appears to be high for Anthropic too, though it’s impossible to tell how much of its compute is based on training versus running inference.

In any case, these costs seem to increase with the amount of money Anthropic makes, meaning that the current pricing of both subscriptions and API access seems unprofitable, and must increase dramatically — from my calculations, a 100% price increase might work, but good luck retaining every single customer and their customers too! — for this company to ever become sustainable. 

I don’t think that people would pay those prices. If anything, I think what we’re seeing in these numbers is a company bleeding out from costs that escalate the more that its user base grows. This is just my opinion, of course. 

I’m tired of watching these companies burn billions of dollars to destroy our environment and steal from everybody. I’m tired that so many people have tried to pretend there’s a justification for burning billions of dollars every year, clinging to empty tropes about how this is just like Uber or Amazon Web Services, when Anthropic has built something far more mediocre. 

Mr. Amodei, I am sure you will read this piece, and I can make time to chat in person on my show Better Offline. Perhaps this Friday? I even have some studio time on the books.