Kant: AI foundation model gross margins will settle near 40%
Eiso Kant · Intelligence Isn’t Enough: Why Energy & Compute Decide the AGI Race – Eiso Kant · Nov 6, 2025 · at 10:26
Eiso Kant, Co-CEO of AI lab Poolside, discusses AI unit economics and foundation model cost structures with host Matt Turck.
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“I'm not yet convinced that gross margins in our industry will look like a SaaS company, like 80% plus. I think when we're talking about a commodity as intelligence, that we build value added services on top. Right. It's a foundation model company. On one hand, you sell your tokens, right? Your barrels of oil, your raw material. And on the other hand, you're building up value added services, your products that you bring to end users and customers that, you know, unlock value for their businesses or for consumers in the case of others. And in that world, I think it looks a lot more like a cloud company. So I think when we're going to look at the scale of this it's going to look like cloud companies with a zero behind them, but from a margin perspective, probably pretty similar. Because if you think about what is an AWS or GCP or an Azure, it's effectively virtualization of hardware with services on top. I don't think foundation models are that different. So I think from a margin profile will probably sit far closer towards that, like, 40% mark that you see in, in cloud companies than you do, like, the 80% on the software side.”
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