Tokens Eat Software.
Five internet CEOs flagged AI inference costs on Q1 calls. Same quarter. Unprompted.
$META: $33.4B in expenses, third-party cloud spend
$SHOP: scale efficiencies "partially offset by increased LLM costs"
$SPOT: "spending more compute per employee"
$PINS: cost of revenue +20%, GPU capacity guided as 2026 margin headwind
$ROKU: "watching it carefully"
In The Token Dollar I argued every AI-native software company is a token reseller. They buy compute at wholesale, add workflow, and sell tokens at retail. Their gross margin is the spread.
That spread just got smaller in five places at once.
Tokens are no longer an R&D line item. They are a cost-of-revenue line item.
Vertical SaaS with proprietary data passes the cost through. Horizontal SaaS with commodity workflows eats it. Watch the divergence over the next two cycles.
http://bepresearch.substack.com/p/the-token-dollar
Five internet CEOs flagged AI inference costs on Q1 calls. Same quarter. Unprompted.
$META: $33.4B in expenses, third-party cloud spend
$SHOP: scale efficiencies "partially offset by increased LLM costs"
$SPOT: "spending more compute per employee"
$PINS: cost of revenue +20%, GPU capacity guided as 2026 margin headwind
$ROKU: "watching it carefully"
In The Token Dollar I argued every AI-native software company is a token reseller. They buy compute at wholesale, add workflow, and sell tokens at retail. Their gross margin is the spread.
That spread just got smaller in five places at once.
Tokens are no longer an R&D line item. They are a cost-of-revenue line item.
Vertical SaaS with proprietary data passes the cost through. Horizontal SaaS with commodity workflows eats it. Watch the divergence over the next two cycles.
http://bepresearch.substack.com/p/the-token-dollar
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