The author argues that despite improvements in open-weight models, most AI inference will remain in datacenters because local models can't match frontier performance and are actually more expensive to run. Batching hundreds of users' requests together and specialized datacenter GPUs make cloud inference roughly 30x more efficient than running models at home, and users will always prefer the strongest available model in their budget.

• Datacenter inference beats local by ~30x on efficiency due to request batching and specialized GPUs (e.g., B200 vs RTX 4090)
• A home GPU rig's upfront cost plus $50-300/month in power outweighs just paying for years of API access
• Users always gravitate to the strongest model they can afford, so smaller local models keep losing ground even as they improve
• Local models will persist only in niches like low-latency voice interfaces, privacy-focused use, or unreliable internet—not as the dominant paradigm