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Why Wall Street is ignoring big tech's debt [video]

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Re: Why Wall Street is ignoring big tech's debt [video]

#191

Post by spwa4 »

saghm wrote: post #182
jurgenburgen wrote: post #162

Earlier quoted context omitted.

> eventually the world moves forward and it is trained on too much obsolete data. This is why LLMs are never going to be AGI. Humans don’t become obsolete just because they age.

Humans do die eventually though, which is an even more severe form of obsolescense. I don't think they'll be AGI either, but that argument doesn't seem super compelling.

On the other hand you have the old saying "science advances one funeral at a time", indicating death solves at least as many problems as it causes.

(the point being that old, powerful professors have more than once blocked progress in their fields for decades. And only a funeral, eventually, solves the problem ...)

Re: Why Wall Street is ignoring big tech's debt [video]

#192

Post by fallingbananna »

stackbutterflow wrote: post #113
TrackerFF wrote: post #16

Earlier quoted context omitted.

But the question is how much are people willing to pay for AI. I use AI every day at work, but I only pay $20. That's the most I will ever want to pay. And, so far, it gives me everything I need. If OpenAI or Anthropic suddenly said "Sorry, the game is up. You'll have to pay $100/month now", I would 100% look into cheaper Chinese solutions. I suspect the AI subscription (or API) economy is whale economy. You have a s…

To put it into perspective if we consider that US salaries are 3 to 5 times those of other "rich" countries then it's already a 60 to 100 dollar subscription for the next richest part of the world.

I have a devils advocate argument: AI spend doesn't need to scale with salary.

If a company was OK with paying 10k a month for an employee in the US because they considered their work more valuable. And the same company is only willing to spend 300 per month on someone in a 3rd world country, because they consider the work to be lower quality.

Wouldn't it be reasonable to consider a situation where the same company would be willing to only spend 100 per month more on the 10k employee to make them a bit faster. At the same time be willing to spend 700 per month on the 300 employee, if it levels out their capabilities and makes them nearly as valuable as the 10k employee?

-- This argument is riddled with assumptions, but I do feel like it's one possible direction that some companies might try to take.

Re: Why Wall Street is ignoring big tech's debt [video]

#193

Post by jmathai »

StevePrefontain wrote: post #132
jmathai wrote: post #121

Earlier quoted context omitted.

I avoid subscriptions like the plague and I was getting enough value from Claude that I was paying for the Max plan for a couple months. I don't know how much Anthropic needs to make to be sustainable but I think it's worth north of $50 or $100 per month for many knowledge workers.

I highly doubt anything more than a small single-digit percent of users are willing to pay $50-100 for a Claude subscription themselves. Just like everything else (if your company isn’t paying for a seat) 90% of people will just use the free tier, 7-8% will use the first paid tier, 2-3% use some kind of power user plan. It could end up being a whale-driven business model in the end.

I don’t think end users will purchases subscriptions out of their own pocket for work en masse.

If the value is there, companies will.

Re: Why Wall Street is ignoring big tech's debt [video]

#194

Post by tristanj »

disgruntledphd2 wrote: post #189
tristanj wrote: post #91

Earlier quoted context omitted.

Anthropic has 80%+ margins on inference. Google has 30%+ margins on compute. Both parties have discovered a literal money printer. The payback period is At those unit economics, anyone not borrowing aggressively here to create more money printers is a moron.

> Anthropic has 80%+ margins on inference. If you read the interviews where Dario said this closely, you'll find that he's talking in hypothethicals. We will have to wait for the S-1 to get audited figures, until then, only insiders have any idea (and only the accountants can be sure).

That point is irrelevant because the number comes from SemiAnalysis, not Dario's interview:

> SemiAnalysis estimates that Anthropic's overall gross margin has rebounded from negative 94% in 2024 to the mid-60% range, with the gross margin of its API business exceeding 80%.

https://www.tradingkey.com/analysis/stocks/us-stocks/2620181...

Given Anthropic is charging $50 per million output tokens on Fable, those high margins are very believable.

Re: Why Wall Street is ignoring big tech's debt [video]

#195

Post by disgruntledphd2 »

tristanj wrote: post #194
disgruntledphd2 wrote: post #189

Earlier quoted context omitted.

> Anthropic has 80%+ margins on inference. If you read the interviews where Dario said this closely, you'll find that he's talking in hypothethicals. We will have to wait for the S-1 to get audited figures, until then, only insiders have any idea (and only the accountants can be sure).

That point is irrelevant because the number comes from SemiAnalysis, not Dario's interview: > SemiAnalysis estimates that Anthropic's overall gross margin has rebounded from negative 94% in 2024 to the mid-60% range, with the gross margin of its API business exceeding 80%. https://www.tradingkey.com/analysis/stocks/us-stocks/2620181... Given Anthropic is charging $50 per million output tokens on Fable, those high mar…

Look, that's an estimate (by a presumably biased observer). I don't really have a horse in this race, new large tech companies are fine by me, even if only to reduce the power of the current ones.

However, I find these numbers incredibly hard to believe, and most likely deceptive, given that they recently (like March) started making enterprises pay API rates, so even if they were profitable (and if they paid from Fable training from this post cost money) I would be sceptical that this will continue, given all the competition in this space.

tl;dr let's all wait for the S1 (it will presumably be soon, unless SpaceX declines get them to postpone).

Re: Why Wall Street is ignoring big tech's debt [video]

#196

Post by amluto »

WhrRTheBaboons wrote: post #173
tristanj wrote: post #153

Earlier quoted context omitted.

Agreed, ChatGPT has more than 900 million weekly active users. They're not losing the top spot anytime soon.

how many paying ones?

If OpenAI wants to generate revenue by charging its users for services, this is a big deal. If, on the other hand, OpenAI wants to become like Meta or TikTok, then they don’t actually need to charge these users.

But latter model will not be easy. TikTok does very well, but their revenues are not enough to justify OpenAI’s expenses. Meta is very, very good at capturing value from users’ attention, but they are not going to give this market up without a fight. In general, I’m somewhat suspicious that the total addressable market for attention is not infinitely scalable. At the end of the day, the money comes from marketing budgets, and those marketing budgets scale with the amount of stuff being sold and, much less strongly, with the efficacy of the marketing.

There’s a theory that there is money to be made having at AI-like system that will actually buy things for the end user. Amazon tried very hard to make this work (in the Alexa division) and basically gave up. I’m not finding my breath for OpenAI, or for anyone else, to pull this off any time soon.

Re: Why Wall Street is ignoring big tech's debt [video]

#197

Post by red-iron-pine »

TrackerFF wrote: post #16
WarmWash wrote: post #9

I don't know a single white collar worker who isn't using AI for their job. Not like forced, but like "Oh damn, this bot thing can do a lot of tedious leg work for me". To think that people won't pay $60-$80/mo to continue using it is wild to me. In a white collar environment it pays for itself in a few hours of use. If you focus on how much value AI brings to people (mostly in time saved), the bubble hardly looks bu…

But the question is how much are people willing to pay for AI. I use AI every day at work, but I only pay $20. That's the most I will ever want to pay. And, so far, it gives me everything I need. If OpenAI or Anthropic suddenly said "Sorry, the game is up. You'll have to pay $100/month now", I would 100% look into cheaper Chinese solutions. I suspect the AI subscription (or API) economy is whale economy. You have a s…

bingo. it helped me sort through 2 CSVs earlier today.

grunt work, really, and nothing some python skills or excel-fu couldn't solve just as quickly.

it also got something wrong, and I had to put it into a different AI to understand why. not really to bad though, a 2 minute, sanity check.

I'd pay no more than, say $3 for the use, maybe 5. If they want to start clocking us $200 a day, or $4000 a license or whatever -- nah.

Re: Why Wall Street is ignoring big tech's debt [video]

#198

Post by nitwit005 »

arisAlexis wrote: post #105
TacticalCoder wrote: post #57

Earlier quoted context omitted.

And capitalism also works with crashes taking unprofitable companies down. And frauds, eventually, gets companies valuation like Enron and FTX to zero. And people go to jail. Now I'm not saying OpenAI or Anthropic are frauds. What I'm saying is that, eventually, things revert to what is just. The late 90s SV tech-bros behind pets.com or webvan for example faked it for 18 months to 36 months or so. At some point when…

Yes and since there is no fraud there is no reason for this panic they know what they are doing

A number of famous business leaders have admitted they had no idea what they were doing in their memoirs. A few have even suggested that was an advantage.

Everyone running these AI firms is being forced to make educated guesses about the future of the technology and the industry. It's unlikely they're all making accurate predictions.

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