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IBM CEO says there is 'no way' spending on AI data centers will pay off

businessinsider.com

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Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#221

Post by dghlsakjg »

skeeter2020 wrote: post #33

The interesting macro view on what's happening is to compare a mature data center operation (specifically a commoditized one) with the utility business. The margins here, and in similar industries with big infra build-out costs (ex: rail) are quite small. Historically the businesses have not done well; I can't really imagine what happens when tech companies who've only ever known huge, juicy margins experience low si…

Does AWS count as commoditized data center? Because that is extremely profitable.

Or are you talking abour things like Hetzner and OVH?

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#222

Post by htk »

martinald wrote: post #192
badmonster wrote: post #54

[flagged]

I disagree on that and covered a lot of it in this blog (sorry for the plug!) https://martinalderson.com/posts/are-we-really-repeating-the...

Great article, thank you for writing and sharing it!

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#223

Post by rzwitserloot »

kerabatsos wrote: post #209
1vuio0pswjnm7 wrote: post #176

One thing we saw with the dot-com bust is how certain individuals were able to cash in on the failures, e.g., low cost hardware, domain names, etc. (NB. prices may exceed $2) Perhaps people are already thinking about they can cash in on the floor space and HVAC systems that will be left in the wake of failed "AI" hype

Why do you believe it will fail? Because some companies will not be profitable?

It wasn't an 'it' it was a 'some'. Some of these companies that are investing massively in data centers will fail.

Right now essentially none have 'failed' in the sense of 'bankrupt with no recovery' (Chapter 7). They haven't run out of runway yet, and the equity markets are still so eager, even a bad proposition that includes the word 'AI!' is likely to be able to cut some sort of deal for more funds.

But that won't last. Some companies will fail. Probably sufficient failures that the companies that are successful won't be able to meaningfully counteract the bursts of sudden supply of AI related gear.

That's all the comment you are replying to is implying.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#224

Post by levocardia »

bluGill wrote: post #10

I question depreciation. those gpu's will be obsolete in 5 years, but will the newer be enough better as to be worth replacing them is an open question. cpu's stopped getting exponetially faster 20 years ago, (they are faster but not the jumps the 1990s got)

It's not that hard to see the old GPUs being used e.g. for inference on cheaper models, or sub-agents, or mid-scale research runs. I bet Karpathy's $100 / $1000 nanochat models will be <$10 / <$100 to train by 2031

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#225

Post by stanleykm »

mywittyname wrote: post #167
senordevnyc wrote: post #38

Earlier quoted context omitted.

I must be dense, why does this imply AI can't be profitable?

Tokens are, roughly speaking, how you pay for AI. So you can approximate revenue by multiplying tokens per year by the revenue for a token. (6.29 10^16 tokens a year) * ($10 per 10^6 tokens) = $6.29 10^11 = $629,000,000,000 per year in revenue Per the article > "It's my view that there's no way you're going to get a return on that, because $8 trillion of capex means you need roughly $800 billion of profit just to pay…

im a little confused about why you are using revenue for a single datacenter against interest payments for 100 datacenters

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#226

Post by hkt »

kerabatsos wrote: post #209
1vuio0pswjnm7 wrote: post #176

One thing we saw with the dot-com bust is how certain individuals were able to cash in on the failures, e.g., low cost hardware, domain names, etc. (NB. prices may exceed $2) Perhaps people are already thinking about they can cash in on the floor space and HVAC systems that will be left in the wake of failed "AI" hype

Why do you believe it will fail? Because some companies will not be profitable?

Given the amounts being raised and spent, one imagines that the ROI will be appalling unless the pesky humans learn to live on cents a day, or the world economy grows by double digits every year for a few decades.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#227

Post by spacecadet »

jsheard wrote: post #215
blibble wrote: post #181

Earlier quoted context omitted.

I'm looking forward to buying my own slightly used 5 million square ft data centre in Texas for $1

Tired: homelabbers bringing decommissioned datacenter gear home. Wired: homelabbers moving into decommissioned datacenters.

Colo!

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#228

Post by dghlsakjg »

zozbot234 wrote: post #211
carlCarlCarlCar wrote: post #32

Earlier quoted context omitted.

MTBF for data center hardware is short; DCs breeze through GPUs compared to even the hardest of hardcore gamers. And there is the whole FOMO effect to business purchases; decision makers will worry their models won't be as fast. Obsolete doesn't mean the reductive notion you have in mind, where theoretically it can still push pixels. Physics will burn them up, and "line go up" will drive demand to replace them.

Source? Anecdotally, GPUs sourced from cryptomining were absolutely fine MTBF-wise. Zero apparent issues of wear-and-tear or any shortened lifecycle.

My bellybutton fluff, uninformed opinion is that heat cycling and effective cooling are probably a much more limiting factor.

If you are running a gpu at 60C for months at a time, but never idling it (crypto use case), I would actually hazard a guess that it is better than cycling it with intermittent workloads due to thermal expansion.

That of course presupposes effective, consistent cooling.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#229

Post by 1vuio0pswjnm7 »

1vuio0pswjnm7 wrote: post #176

One thing we saw with the dot-com bust is how certain individuals were able to cash in on the failures, e.g., low cost hardware, domain names, etc. (NB. prices may exceed $2) Perhaps people are already thinking about they can cash in on the floor space and HVAC systems that will be left in the wake of failed "AI" hype

From the article:

""It's my view that there's no way you're going to get a return on that, because $8 trillion of capex means you need roughly $800 billion of profit just to pay for the interest," he said."

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#230

Post by matt-p »

1vuio0pswjnm7 wrote: post #176

One thing we saw with the dot-com bust is how certain individuals were able to cash in on the failures, e.g., low cost hardware, domain names, etc. (NB. prices may exceed $2) Perhaps people are already thinking about they can cash in on the floor space and HVAC systems that will be left in the wake of failed "AI" hype

To be honest ai datacentres would be a rip and replace to get back to normal datacentre density, at least on the cooling and power systems.

Maybe useful for some kind of manufacturing or industrial process.

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