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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]

#61

Post by jrflo »

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…

But AI use translates directly to time savings (if it works). You only need 1-2 hours of time savings per employee per week to break even on a $100/seat/month subscription.

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

#62

Post by galangalalgol »

sneak wrote: post #47
w29UiIm2Xz wrote: post #44

Earlier quoted context omitted.

If you need fewer workers due to the increased productivity, then the number of white collar workers (the TAM) won't be as large as anticipated.

That’s never really how efficiency gains tend to work except in places where entire industries ceased to exist (printers, weavers, clothes washers, etc).

How sure are we that isn't the case here?

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

#63

Post by borzi »

Aurornis wrote: post #41
borzi wrote: post #21

Earlier quoted context omitted.

The reason uber didn't loose that much business is because it replaced the established businesses and left most consumers with little alternative. That's not the case with AI - unless the frontier labs achieve AGI or some sort of super intelligence that lets them create infinite economic value (at which point, any further discussion is pointless for obvious reasons), the average worker can do most of their tasks with…

> The reason uber didn't loose that much business is because it replaced the established businesses and left most consumers with little alternative. The established businesses were awful. There was not a thriving and beloved taxi service in every city pre-Uber. Taxis were bad and very expensive. Also did you forget that Lyft exists and normal taxis are still available? Taxi services had to improve their business when…

Imagine suddenly a new taxi business was able to come into your city and provided taxi rides for 5 cents on the dollar. What would happen?

Edit: now add on top of that that even if uber tried to undercut them again by running losses as they did in the past, that new taxi business would not loose any money if the number of their rides went down because their operating costs simply scale with the number of rides - while uber was loosing money on every ride.

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

#64

Post by porridgeraisin »

cm2187 wrote: post #29
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…

The real question is not whether there will be a market for AI, it is obvious that there will be one (as it was obvious the Internet was a gigantic thing in the dotcom boom). It is rather whether the value will be in the models (and if so in which?) or the infrastructure or somewhere else. Interesting thoughts from Dwarkesh Patel on the future of models [1]. In summary, no moat if a client can switch to a competitor…

The moat is in sales, the model and its quality is largely irrelevant. Gross margins will be high enough for moats to not matter that much.

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

#65

Post by intended »

zippyman55 wrote: post #58
intended wrote: post #37

Earlier quoted context omitted.

Examples like this come up as sub comments very often, but they don’t address the point. Most people will not go beyond $20, forget a 18k.

I use AI daily and pay zero dollars. I get my work done and I stay sharp. A huge mass will always choose the cheapest option.

Absolutely! The opposite end of the preference scale from someone willing to spend 18k a month.

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

#66

Post by cm2187 »

porridgeraisin wrote: post #64
cm2187 wrote: post #29

Earlier quoted context omitted.

The real question is not whether there will be a market for AI, it is obvious that there will be one (as it was obvious the Internet was a gigantic thing in the dotcom boom). It is rather whether the value will be in the models (and if so in which?) or the infrastructure or somewhere else. Interesting thoughts from Dwarkesh Patel on the future of models [1]. In summary, no moat if a client can switch to a competitor…

The moat is in sales, the model and its quality is largely irrelevant. Gross margins will be high enough for moats to not matter that much.

I work for a large company and for any LLM I use professionally, whether programmatically or via a UI, I get to pick from a dropdown from Gemini, Claude, OpenAI and the open weight ones. We ain't locked in.

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

#67

Post by gedy »

jrflo wrote: post #61
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…

But AI use translates directly to time savings (if it works). You only need 1-2 hours of time savings per employee per week to break even on a $100/seat/month subscription.

That's not how people mentally price things though, i.e. "streaming is so much cheaper than the movie theaters!", etc

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

#69

Post by rdedev »

porridgeraisin wrote: post #55
rdedev wrote: post #43

Earlier quoted context omitted.

Remember that 20$ is a subsidized rate openai is currently willing to provide. Once that goes down you think these guys would be willing to pay token based billing charges ?

It is not going to go away. Rather they have doubled down and opened 399 INR/mo (4$/mo) plans that as of late have GPT 5.6 Luna. The reason this works is that you get lesser inference time compute used for queries on these cheaper plans which makes it sustainable and this is enough for the tasks these guys do. And some local telcos are bundling this subscription as well, so most people just get it for "free". For exa…

These companies have spent billions of investor dollars and they will need to recoup that cost soon. And then show year over year growth on top of that.

Unless they can massively scale down training and inference cost or implement AGI I don't know what their plan is. Just provide a subsidized plan for the next 10 or 20 years? Their costs are directly proportional to the amount of tokens the LLM produces. How is a monthly subscription plan supposed to account for such costs?

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

#70

Post by porridgeraisin »

cm2187 wrote: post #66
porridgeraisin wrote: post #64

Earlier quoted context omitted.

The moat is in sales, the model and its quality is largely irrelevant. Gross margins will be high enough for moats to not matter that much.

I work for a large company and for any LLM I use professionally, whether programmatically or via a UI, I get to pick from a dropdown from Gemini, Claude, OpenAI and the open weight ones. We ain't locked in.

Yeah, and that is completely fine business-wise for all the businesses in that dropdown. Averaged over the whole TAM, they will all make a lot of money. The reason is that the total market becomes _bigger_ with every new model (upto a reasonable point of course, but for 5 models it is obviously true), they don't end up competing for the same slices of the pie.

The core business for each of the 5 will not be companies like yours, but rather few hundred to few thousand companies each who exclusively use their model not for technical reasons, but because they were wined and dined or due to bundling with another service. The other hundreds of thousands of customers are all bonus. This is true for most categories of SaaS not just LLM inference.

If the vendor of a core piece of software that you are already locked into tells you they are raising prices and adding AI inference features, you are going to cancel whatever AI plan you have and use theirs. Or pay the amount anyways (which is even better business-wise for them).

Eventually, semi-random differences that arise in their distribution may end up informing model capabilities as well, and _that_ is when true model-level differentiation may happen. But this is not necessary and if it comes true would just be a bonus.

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