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How the AI Bubble Bursts

martinvol.pe

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Re: How the AI Bubble Bursts

#211

Post by keybored »

guzfip wrote: post #191
keybored wrote: post #185

Earlier quoted context omitted.

> 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 ove…

> As long as they are paid well compared to other workers, it’s fine. Well I’m sure they’ll be thrilled to know they can collect $100 a week more in unemployment benefits than their neighbor.

I wasn’t alluding to them resigning or whatever this comment is referring to.

Re: How the AI Bubble Bursts

#212

Post by drakythe »

ajross wrote: post #201
cma wrote: post #167

Earlier quoted context omitted.

> RAM prices spiked speculatively Didn't OpenAI buy up 40% of the capacity all at once?

No, they signed a bunch of contracts for future deliveries. That's not a supply constraint. The factories making RAM continued operating and serving their existing deliveries, and in fact they still are. Freshman economics would say that supply is fine and that prices shouldn't move. But they did anyway. And the reason is speculation.

The economy is vibe coded at this point.

Have we gotten anymore word on the potential Helium constraints that SK Hynix was making noise about after the strike on the helium plant in the Middle East that suppplied 60% of S. Korea's Helium? Because that could definitely put a kink in things, since SKH is one of the 3 remaining big DRAM producers.

Re: How the AI Bubble Bursts

#213

Post by [deleted] »

ajross wrote: post #89
joshstrange wrote: post #53

> RAM prices are crashing because new models won’t need as much Reality begs to differ [0] and following the link for that text goes to an article [1] where they talk about Google's TurboQuant which supposedly will lower the RAM requirements. Now if that means RAM prices come down (as speculated, not reported on, in the link) or the AI companies just do more things with their extra ram is yet to be determined. The fa…

> Reality begs to differ Honestly you're both wrong. RAM prices spiked speculatively, and they're going down for the same reason. Market people always want to argue in fundamentals, when in practice *ALL* the high frequency components of the signal are down to a bunch of traders trying to guess where it's going in the short term. At best those guesses are informed by ground truth ("AI needs a lot of RAM!" "Sam corner…

[deleted]

Re: How the AI Bubble Bursts

#214

Post by raincole »

mattmanser wrote: post #186
raincole wrote: post #159

Earlier quoted context omitted.

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.

When AI companies spend a lot: a sign of bubble bursting.

When AI companies look to cut cost: a sign of bubble bursting.

When RAM price goes up: a sign of bubble bursting.

When RAM price goes down: a sign of bubble bursting.

Re: How the AI Bubble Bursts

#215

Post by martinvol »

KaiserPro wrote: post #197

The problem with these kind of posts is that "How" is almost useless, I can tell you how the bubble pops: The value of these AI companies crash and take out a lots of other stuff with it. The interesting questions are: "What triggers it" and "what also goes tits up"? The issue with high/international finance is that a good percentage of it (if not more) is fraudulent or semi fraudulent bollocks. "Here is a startup th…

> The problem with these kind of posts is that "How" is almost useless, I can tell you how the bubble pops: The value of these AI companies crash and take out a lots of other stuff with it.

That's like saying "I know exactly how you're going to die, your heart will stop"

Re: How the AI Bubble Bursts

#216

Post by drakythe »

Throaway1975123 wrote: post #142
hirako2000 wrote: post #117

Earlier quoted context omitted.

Tulips sales also skyrocketed. Seriously, what value are tokens providing other than justifying layoffs. Concretely. Today. Not in the speculating scenario that cardiologist could be replaced with models. We see this new trend of agentic coding, again a promise software will be written that way going forward, despite the number of fiasco already experienced when trusting a model turned bad. The use case may provide v…

Tulips had literally no economic value. LLM's do.

I say this as someone who has used them to boilerplate/scaffold a bit of code by this point: Economic Value of LLMs is debatable, if only because they're being too broadly applied.

Re: How the AI Bubble Bursts

#217

Post by infecto »

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…

Thank you for saying it better than I could have. It’s probably an unnecessary jab but I know how well I benefited financially in an industry where not much was expected in terms of output, lavish perks and huge base salary and stock compensation. Absolutely some companies are extremely profitable per headcount but I look at the sea of failures and how well engineers have generally done. It sets the tone for this massive negativity I see around AI when so many of us have benefited from VC money that failed.

Re: How the AI Bubble Bursts

#218

Post by Throaway1975123 »

drakythe wrote: post #216
Throaway1975123 wrote: post #142

Earlier quoted context omitted.

Tulips had literally no economic value. LLM's do.

I say this as someone who has used them to boilerplate/scaffold a bit of code by this point: Economic Value of LLMs is debatable, if only because they're being too broadly applied.

Debatable sure. Not 0. Tulips are 0. They add nothing to anyone's output. LLM's are not. LLM's are not tulips.

Re: How the AI Bubble Bursts

#219

Post by surajrmal »

jeromegv wrote: post #102
malfist wrote: post #52

Earlier quoted context omitted.

> The cost to serve tokens is absolutely profitable today How can you possibly say that? Everyone knows that's not the case, these companies are losing money every day selling tokens. Revenue is not the same thing as profit.

Yep, especially if we look at what happened just last week, both Google and Anthropic have dropped how much you get out of your existing plans.

That's not a necessarily profitability thing as much as a demand thing. The only way to improve the supply for those willing to pay more is to take it away from those paying less. Once supply catches up to demand things will change

Re: How the AI Bubble Bursts

#220

Post by lotsofpulp »

9rx wrote: post #154
SirensOfTitan wrote: post #56

Earlier quoted context omitted.

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. The parent comment doesn't discount that, only pointing out that "what they were worth" was inflated due to a speculative environment. Wherein lies your concern?

That prices change from one point in time to another is a trivial fact.

“Inflated due to a speculative environment” is not an accurate way to frame labor prices that held for many years. At that point, the prices were simply high due to high demand relative to supply (compared to other types of labor).

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