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Ask HN: What Makes AI a Bubble?

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Re: Ask HN: What Makes AI a Bubble?

#21

Post by AriasLcr »

avaer wrote: post #6

It is widely agreed users are not paying enough to cover the costs of inference. This is what "subscription" plans are. So, many users are losing the companies money. This is not discussed publicly and is covered up for by raises, because there is growth and the hope that at some point the economics could work out. Which remains to be seen. It's a variant on a Ponzi scheme. Investor hope is that at some point someone…

If companies start to raise the token prices, at some point it won't be affordable to people. I think that no matter what they do they will just keep losing money. If they raise prices, less people will be buying the paid plans and if they don't, they are still losing money like now

Re: Ask HN: What Makes AI a Bubble?

#22

Post by razorbeamz »

Because too many new companies are popping up with the business model of "We're going to use AI" and they don't actually have any explanation for how or why they're going to use AI.

This is just like the Dot Com Bubble, where a lot of companies popped up saying they were going to "use the internet" without actually having a plan.

Re: Ask HN: What Makes AI a Bubble?

#24

Post by Lanbasara »

I’ve been thinking about this: Has current AI truly led to a significant improvement in productivity? For many jobs, AI seems to be getting more and more powerful, but has it fallen into the problem of a mismatch between show cases and real-world cases? If there is a bubble in AI, I think it will burst because, in the current environment of a sluggish global economy, people’s excessive expectations of AI have not been realized.

Re: Ask HN: What Makes AI a Bubble?

#25

Post by atleastoptimal »

AriasLcr wrote: post #20

It's not about the companies having high revenue, but rather investors being really interested in AI because it's the new flashy object everyone must have nowadays. Yes, I think it will still be a thing a few years from now and later, even. But, at the moment, the AI trend is staying afloat due to how much people are investing on it. Except that companies are just losing ridiculous amounts of money due to compute cos…

I think cancelling SORA doesn’t mean their endeavors in AI are ultimately futile. It seems that with how scarce a resource a compute is, and how much of a legal minefield video models are, the GPUs would serve better working on something else.

Re: Ask HN: What Makes AI a Bubble?

#26

Post by atleastoptimal »

razorbeamz wrote: post #22

Because too many new companies are popping up with the business model of "We're going to use AI" and they don't actually have any explanation for how or why they're going to use AI. This is just like the Dot Com Bubble, where a lot of companies popped up saying they were going to "use the internet" without actually having a plan.

P/E ratios are much lower among top AI and AI adjacent firms now compared to the dotcom bubble. There is hype, certainly, but it isn’t an entirely speculation driven market like the dotcom bubble. Even so, the internet only became more pervasive than ever after the early 2000s

Re: Ask HN: What Makes AI a Bubble?

#27

Post by atleastoptimal »

Rury wrote: post #10
atleastoptimal wrote: post #3

Earlier quoted context omitted.

I think their annualized revenue is 25 billion with 3.4x yearly growth, with 1 billion weekly active users

Now do costs. You're also ignoring the fact that these companies have been shifting things around to make their books look better than they actually are. Here's a good example explaining how META has been keeping debt and lease obligations off its books to fuel growth (and who's at risk if META doesn't pay up): https://www.reddit.com/r/economy/comments/1soent7/if_the_ai_...

Many tech companies operate at a loss initially, that is the point of venture markets in firms that invest heavily in R&D, the initial investment will pay off once the technology matures.

As for Meta’s shady accounting, I also inside most tech companies leverage whatever they can to remain competitive in a high growth market. They certainly have the money to get away with it though for now.

Re: Ask HN: What Makes AI a Bubble?

#30

Post by Ekaros »

Revenues start looking lot less impressive if the margins are very low at same time... Software was special place where producing more units costed only tiny bit more. But AI seems to be something where producing more will well cost almost the same.
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