Prominent tech investor Gavin Baker says most of the money in AI at the model layer is surprisingly going into a few places, defying initial expectations that models will eventually be commoditized.
The News
In a new interview with Patrick O’Shaughnessy, the chief investment officer at Atreides Management says frontier-model creators like OpenAI and Anthropic are capturing the vast majority of economic returns at the AI model layer.
“I do think it’s fascinating, the returns to the frontier, all the economic returns to AI at the model layer, not all of them, but an overwhelming amount of them have been at the frontier, which is surprising to me. And I think it’s been surprising to a lot of people.”
Baker says the data is surprising because people initially thought that AI models would become commodities, where companies would build similar models, leading to lower prices and distribution of profits.
But Baker notes that economic returns have been concentrated in a few AI giants, and that investors should now carefully consider whether the trend will continue.
“I think this is one of the most important questions to be answered. And you need to have a hypothesis on it as an investor. Are frontier tokens going to continue capturing the overwhelming majority of economic value created at the model layer? I’m much more open-minded to that.”
What It Means for Investors
A closer look at the funding, usage and enterprise adoption of AI models strongly supports Baker’s stance.
For instance, OpenAI has raised $122 billion at an $852 billion post-money valuation, while generating $2 billion in monthly revenue and serving 900 million weekly active users. The figures show frontier-model economics at a massive scale.
While OpenAI is more consumer-focused, Anthropic is dominating the enterprise side. The Claude creator recently reported that its run-rate revenue has shattered $30 billion, with more than 1,000 enterprise customers spending over $1 million each on an annual basis.
Data from the payments platform Ramp also supports Baker’s finding. Anthropic has captured 34.4% of businesses using AI, while 32.3% rely on OpenAI. Google is at 4.5%, xAI at 1.9% and DeepSeek at 0.1%.
As for usage, Alphabet CEO Sundar Pichai said that Google is now processing 3.2 quadrillion AI tokens monthly, up from 480 trillion in just 12 months.
The signals suggest that AI models are not becoming commodities or being open-sourced for free or at lower prices. The biggest AI labs are winning, and there are no clear signs the trend is about to reverse anytime soon, especially as both OpenAI and Anthropic are reportedly gearing up for mega IPOs this year.
In trading, people are taught to trade what the market shows them, not what they want to see. The same philosophy also applies to investing, and Baker appears to be recognizing the data that AI giants will continue to capture most of the economic gains when he said, “I’m much more open-minded to that.”
In the AI trade, the picks-and-shovels investment thesis is gathering steam and for good reason. But Baker and the data suggest that investors shouldn’t count out frontier-model developers just yet.
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