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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]

#71

Post by cm2187 »

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…

The video quotes sales of $2.5 trillion a year to payoff those investments. What workforce you divide it by is a bit up in the air, but let's use 500 millions, which is basically 100% of the workforce of US + Europe + some change. That gives you around $500 a month per employee (from hedge fund manager to flipping burgers at McDonald's).

And there will be competition. I see zero moat right now. The user specific part of the state of the model sits outside of the control of the model (it is basically my code base, or my prompts, all of which I can transfer to any competitor).

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

#72

Post by oblio »

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.

In the US. With how much they've invested in AI they need the entire planet to pay, and pay lots.

What's the capex expenditure of Magnificent 7 just this year? Close to $1tn?

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

#73

Post by tim333 »

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…

People may pay less than they are willing to pay as competition drives the price down. I paid $20/mo a while which I was happy with but I found I could get similar for free so pay $0 now.

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

#74

Post by tim333 »

gilleain wrote: post #25
cm2187 wrote: post #17

Is this an AI generated video? The guy didn't blink an eye or moved the head more than one inch in 30 minutes!

Hah instantly knew it was a Patrick Boyle video. He's a well-known expert in rap music that also does finance on the side.

True. He mentions AI vids and rap here https://youtu.be/Ak4on5uTaTg?t=161

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

#75

Post by tobinfekkes »

jrflo wrote: post #60
acivitillo wrote: post #14

Earlier quoted context omitted.

$80 per month in a 5,000 people Enterprise is 400k per month which translates to ~5m per year. That is easily in the 8-16% of their total IT budget. I don’t know you, but companies don’t like to increase recurring cost. Is AI good? Yes. Is it clear how it generates enough ROI to justify a material IT cost increase? No. This is the problem now, not how much white collar workers use AI, but what is the productivity nar…

The thing that's a bit different about AI from a CRM is it translates pretty directly into time savings. You only need each employee to save 1-2 hours of work per month to break even with a $80/seat subscription.

It's true that it can easily save 1-2 hours per month, but it only seems worth it if those hours saved are spent doing something else productive/profitable.

It appears that a lot of the time saved is spent either 1) doing nothing instead, 2) waiting for the AI to finish, or 3) increasing the hours spent elsewhere down/up the chain for reviewing, fixing, auditing.

The obvious benefit of anything offering to save time is that now you have time for "higher order work", but often, we use the time saved to be lazy.

After all, that's the underlying reason we used the time-saving, corner-cutting tool in the first place.

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

#76

Post by spwa4 »

r0b05 wrote: post #52
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…

Won't the Chinese providers have to raise their prices as well due to the economics of serving inference at scale?

Buy an M5 max for $4k and you have a portable Deepseek 0731 for life.

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

#77

Post by porridgeraisin »

rdedev wrote: post #69
porridgeraisin wrote: post #55

Earlier quoted context omitted.

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 mon…

They dont need to scale down anything. AGI is a red herring.

Even Deepseek at its absurd prices is a very healthy business. Regarding their return on capex multiple, their CEO said they make a six-fold profit on their compute capex with 10 month recuperation. Because of this, all of them are spending aggressively on compute. Apart from that, user acquisition and data labelling are the major costs that are preventing net profitability right now. High quality data labelling is said to not have a cost advantage in china etc as well and they pay global market prices for this. I can confirm this is true in india too the model companies I know pay global market rates for high quality data.

> 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?

By limiting the number of tokens you use per month? per week, per hour? And by limiting the inference time compute dedicated to each turn in each session.

> need to recoup

the world economy has shown itself capable of handling decade-scale recouping easily

The main obstacle today in the inference business is the high variability in usefulness/token. This does not need to be solved, but rather only quantified. Innovation is needed to be able to reasonably bound this variance for a reasonable subset of tasks. And we are making progress on this. Naturally though, tasks on the frontier of current capabilities have very high variance. The last couple of years has followed the pattern where tasks no longer on the frontier have reduced variance, but I am not claiming this will continue to be the case generally as the frontier improves.

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

#79

Post by tim333 »

There's a kind of inconsistency in that he ends the video talking about overpriced stocks and how it's hard to short them but the title is about the $1.75tn in debt which seems to mostly be from professional investors, apparently:

>JPMorgan Chase and Morgan Stanley, private equity and credit giants like Blue Owl Capital, BlackRock, and PIMCO, alongside international commercial banks

who probably know what they are doing and read the footnotes.

My guess is that the lending is actually ok because there's a lot of real demand for compute. $1.75 tn is about 1.4% of global GDP which doesn't seem that silly in the AI boom.

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

#80

Post by Aurornis »

borzi wrote: post #63
Aurornis wrote: post #41

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. 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 - whil…

> 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?

I literally lived through this situation. It was not 5 cents on the dollar. The taxis continued to exist then and continue to exist now.

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