Character.ai leaves LLM building behind due to expense: report

Character.ai revealed it plans to abandon the race to build bigger and better large language models and instead focus on improving its consumer products, according to a report today in the Financial Times.

Character.ai CEO Dominic Perella said the start-up can’t keep pace with tech titans such as Microsoft-backed (NASDAQ:MSFT) OpenAI, Amazon (AMZN) and Google (NASDAQ:GOOG)(NASDAQ:GOOGL) to build new LLMs, according to the report.

“It got insanely expensive to train frontier models . . . which is extremely difficult to finance on even a very large start-up budget,” Perrella told the Financial Times.

Indeed, the costs to build LLMs requires massive investments in the latest GPUs from companies such as Nvidia (NASDAQ:NVDA) or AMD (NASDAQ:AMD). For example, OpenAI’s GPT-5 is expected to require 100,000 of Nvidia’s H100s, which would cost approximately $3B.

What’s more, in August, Google paid Character.ai $2.7B to acquire its models and hired 20% of its staff, the report said.

Character.ai creates neutral language models allowing users to engage in dialogue with a host of fictional, historical and celebrity figures. For example, you can have a conversation about battle strategies with Napoleon or debate Elon Musk on the value of humankind traveling to Mars. You can relax on a couch while talking to a therapist or even create your chatbot.

It has about 20M active users, and earns money from subscriptions. The startup plans to focus on this platform moving forward.