The greatest unsolved mystery: how do companies that sell AI models actually make money?

I read an insightful article from @michael_lwy that found the answer from the Hong Kong MTR.
MTR (MTR Corporation) is one of the very few subway systems in the world that doesn’t rely on government subsidies and can sustain itself. It’s even a publicly listed company, distributing dividends every year. However, when it comes to making money, it’s not from ticket prices.
Public data shows that at its best time, the railway operating profit was HK$2 billion, but in the same period the three years of capital expenditures were HK$87.9B. That means ticket revenue only covers 8% of construction costs.
So relying on selling tickets is never enough to build the next railway line—this was never designed as MTR’s profit model. Then where does the money come from? The answer is from the buildings above the stations. You might not know that MTR owns 13 shopping malls and 47 station-overlaid property projects. The railway makes surrounding land appreciate in value, and MTR develops those assets itself; the property profits then feed back into railway construction.
Now replace “railway” with “AI model,” and the structure is actually exactly the same. API pricing drops by 10x each year, open-source models chase down closed-source ones, and any AI lab with pricing above marginal cost will have its customers poached.
Each model may generate slim profits at the operational level, but profits can never support the next round of training.
This is the same logic as subway ticket fares: it can cover operating costs, but it can’t cover construction costs.
So asking “when can an AI company make money from APIs,” is the same question as “when can a subway recoup construction costs from ticket prices.” The answer is the same too: you can’t, and you shouldn’t; you have to build your own buildings.
For example, Google puts Gemini into Gmail, Docs, and Search, giving the model away for free—what it earns is probably the money from you being even more dependent on Google’s whole suite of products.
Conversely, companies that only sell bare model APIs and don’t have their own “buildings” are just like subways that only sell tickets—they’ll have to survive on subsidies sooner or later.