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How the AI Bubble Bursts

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Re: How the AI Bubble Bursts

#181

Post by red_admiral »

piker wrote: post #31

> They lose a big customer for their cloud services. Even worse considering that now, using the AI they helped fund, everyone can compete with their sub-par products. GitHub is a good candidate for disruption, and that’d be just the start. Look, I'm a Microsoft hater like the rest of us, but calling Microsoft's products sub-par discredits the author a good bit. I invite anyone who thinks this to try and compete with…

Microsoft's AI, on the other hand, is underwhelming at the moment and might well go the way of Windows Phone. Plus enough people hate the copilot icons everywhere that Microsoft is hinting at dialing down a bit.

MS Office should last a while if they stop calling it "Copilot 365 Office" or whatever it was.

Re: How the AI Bubble Bursts

#182

Post by infecto »

iterateoften wrote: post #93
infecto wrote: post #30

It’s incredible how polarizing the AI rush is. I keep the perspective that the technology is an absolute step change but I have no idea where the cards will fall. I take a lot of issue with these style of articles. I get a sense that the authors are being overly defensive. The cost to serve tokens is absolutely profitable today and that’s been true for at least a year. What’s unclear is how R&D and capex fit into the…

According to open router token demand is growing at something like 10% a week It’s insane

I wish this was higher up. I have been tracking the same since Thanksgiving ‘25 and the growth is unreal. Again I don’t know where the cards fall maybe the industry overspent on capex but it’s at least easier to see why they are spending based on demand. The risk of being left out is greater than overbuilding.

Re: How the AI Bubble Bursts

#183

Post by butlike »

14113 wrote: post #156
Aurornis wrote: post #60

This article tries to build upon a lot of half-truths or incorrect facts, like this: > OpenAI is struggling to monetize. They turned to showing ads in ChatGPT, The ads aren’t going into your paid plans (except maybe a highly discounted tier, depending on the market). The ads are a play to offer a free version. Having an ad-supported free tier isn’t new. The discussion about being unprofitable also repeats the reducti…

> companies are supposed to lose money while they grow At what point do we declare that a company has "grown" and now must make money? OpenAI is a multi-billion dollar company right now, surely that's a point at which they should be profitable, instead of propped up by further investment and borrowing. > We have very strong indicators that inference is not a money loser for these companies All of the economic analysi…

They clearly have some vested interest/skin in the game. Not sure it's worth retorting that one.

Re: How the AI Bubble Bursts

#184

Post by nexos »

I think ultimately the AI bubble is bound to burst solely based on the fact that no AI company has turned a profit. A business model consisting of pure speculation on profitability when profit has not come in for 4 years now indicates that the tech industry is over-betting on AI. That plus consumer backlash at the way AI is jacking up consumer prices on RAM and etc means that the bubble is bound to burst. To paraphrase Linus Torvalds, AI is a helpful tool but I look forward to the day it’s a regular part of life and the hype cycle ends

Re: How the AI Bubble Bursts

#185

Post by keybored »

SirensOfTitan wrote: post #56
infecto wrote: post #30

It’s incredible how polarizing the AI rush is. I keep the perspective that the technology is an absolute step change but I have no idea where the cards will fall. I take a lot of issue with these style of articles. I get a sense that the authors are being overly defensive. The cost to serve tokens is absolutely profitable today and that’s been true for at least a year. What’s unclear is how R&D and capex fit into the…

This is a classic HN mistaking the map for the territory. R&D and capex absolutely figure into de-facto profitability and sustainability for AI labs, despite their separate treatment in accounting. > well most of us here on HN have benefited from decades of overinflated engineering salaries being paid by often companies that were not profitable and not only unprofitable This is a really concerning perspective: people…

> This is a really concerning perspective: people were paid what they were worth.

Even interpreting what-they-were-worth in the usual sense, I’m not so sure about this. We have seen wage collusion reported by the usual US West Coast-based companies. And some news on here[1] have reported that some engineer with a salary of $100K[2] might be producing $1M of value. And even factoring in the usual “but benefits and overhead” comes out to a solid factor of profit per programmer/engineer.

Despite that the sense I get (only from this site since that is my only reference) is that the so-called overpaid engineers are incredibly content to just have this happen to them. As long as they are paid well compared to other workers, it’s fine. No matter the profit factor. In fact, the discourse is very much focused on how “privileged” they were if the tide ever changes. Instead of realizing how much value they provided, collectively.

Outlets for capturing more of the value they create is entrepreneurship (Hello HN). Never any collective organizing. And entrepenurship is easily bought via aqcuisition.

Collective bargaining would have been relevant in case they ever get automated... by the very software they co-created.

One could imagine that this “privileged” collection of programmers could have served as a vanguard for the collective good of programming professionals as well as collective ownership of software goods, using their privilege to that end. The former never happened, and the latter is partly realized in people’s free time (see the OSS maintainer in Nebraska meme).[3]

[1] All from recollection since this is just news from the Frontier to me

[2] Of course the pay might be much higher now; this might have been a while ago

[3] when it isn’t simply exploited by corporations just using OSS without giving any back; a logical turn of events when no license or law forces them to contribute back

Re: How the AI Bubble Bursts

#186

Post by mattmanser »

raincole wrote: post #159
ajay-b wrote: post #123

I would be very sad to lose services like ChatGPT. It has significantly improved my workflow by digesting and analyzing huge documents, and helping me to synthesize and respond better. May be I am part of a minority.

Don't worry lol. It's not going anywhere. The article is just ragebaitng. Verbatim: > Anthropic is already in a push to reduce costs and increase revenue Yeah, it's totally a bad sign when a company tries to... reduce costs and increase revenue.

Their point is it is a bad sign at this stage in the game, there's a lot of competition still.

Usually in a land grab like this you spend, spend, spend.

Uber was still paying to subsidize customer's rides until fairly recently to kill off the competition.

Re: How the AI Bubble Bursts

#187

Post by lstodd »

hnthrow0287345 wrote: post #121

I don't see this bubble really popping as-in sinking the economy. Some circular investing and enough write offs will happen to avoid the largest recession indicators from informing the general population that there's actually a recession. You also have a government willing to do shady shit for their own benefit at the expense of responsible governing and ethics, and we have already seen the business leaders of the bi…

DC infra will be scooped up by cloud guys, that's a given. As for GPUs.. well low-precision tflops have other uses besides inference. You can run Doom for example.

Re: How the AI Bubble Bursts

#188

Post by jerojero »

wongarsu wrote: post #166
boriskourt wrote: post #48

Earlier quoted context omitted.

> The cost to serve tokens is absolutely profitable today and that’s been true for at least a year. > For the data center build outs, demand for tokens is still exceeding supply. Can you provide any numbers for this?

I can get Kimi K2.5 inference on openrouter for about $0.5/MTok input + $2.5/MTok output, from six providers that have no moat besides efficiently selling GPU time. We can assume they are doing so at a profit (they have no incentive to do this at a loss), giving us those numbers as the cost to serve a 1T-a32b model at scale. Now we don't know the true size of any of the proprietary models, but my educated guess is th…

Companies doing foundational models need to cover the cost of training which is much more expensive than training something like kimi.

Re: How the AI Bubble Bursts

#189

Post by rileymichael »

fcarraldo wrote: post #162
chrisweekly wrote: post #100

Earlier quoted context omitted.

> "decades of overinflated engineering salaries" 'Overinflated' relative to what? You make some good points but I don't accept this as a premise.

Well, not GP, but I do. Let’s look at the numbers: Median senior SWE salaries in SF: https://www.levels.fyi/t/software-engineer/levels/senior/loc... Median income in metro areas: https://www.cnbc.com/2024/07/11/the-median-salary-for-the-25... Engineering salaries are significantly higher than nearly every other industry on average and on median. Much of this is driven by VC funding rather than sound, profitable, boot…

> Engineering salaries are significantly higher than nearly every other industry on average and on median

now compare the profit per employee at tech (software engineering) companies and those industries..

Re: How the AI Bubble Bursts

#190

Post by joefourier »

qoez wrote: post #13

History doesn't have to repeat. There's barely anything else going on in terms of innovation, and AI is a real step function technology. We might be overspending but there's no way we're getting another AI winter like last time (remember last time investment in 90s AI had to compete for resources with the internet boom).

The dotcom bubble burst and 26 years later we’re all hopelessly addicted to the internet and the top companies on the stock market are almost all what would have been called “dotcoms” then.

The railroad bubble burst in 1846 not because trains were a dead end - passenger number would increase more than 10x in the UK in the following 50 years.

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