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xAI is looking more like a datacentre REIT than a frontier lab

martinalderson.com

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Re: xAI is looking more like a datacentre REIT than a frontier lab

#131

Post by Terr_ »

atleastoptimal wrote: post #121
Terr_ wrote: post #114

Earlier quoted context omitted.

That's like saying "nobody is speculating in Enron stock" simply because there was electrical power that was sold for real revenue and consumed.

Enron collapsed due to legitimate fraud. To imply Enron is an apt comparison requires assertion that AI companies are actually cooking the books. Is that what you are saying?

Please address the primary point first: Selling some product does not disprove speculation.

In the case of Enron, people were obviously speculating in its stock, and that remains true regardless of why it collapsed later, or even whether it collapsed at all.

I say "first" because if you still can't agree that speculation in AI stocks even exists, then it's pointless to discuss what people might be doing to exploit or encourage it.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#132

Post by jmye »

nonethewiser wrote: post #79

Weren't we just talking about how SpaceX is valued based on some profits from starlink + tons of speculation? Yet when we learn of this new $26B in yearly revenue (2.2B/month from Google and Anthropic)the conversation does not return to that discussion. It transforms into: "xAI's tech sucks" "Google/SpaceX is Structurally Bad for the Economy" etc This is called motivated reasoning. We get new information and instead…

> he narrative here is completely polluted by people who dislike Elon/SpaceX.

Hard disagree. It's polluted by Elon in general (pro and con), just like Tesla's idiotic valuation.

But in this case, a pivoted business model fundamentally changes the value proposition, and I'm not clear why "this space company making money on space things is now pretending to be a compute reseller and that's a good thing" is the narrative you think is preferable.

It's also beyond lame to essentially subtweet a "narrative" instead of responding to it directly. Who is "we", aside from a transparently dishonest way to pretend consensus exists?

Re: xAI is looking more like a datacentre REIT than a frontier lab

#133

Post by EA-3167 »

TSiege wrote: post #6

> And Google is a major shareholder in SpaceX, so they certainly have incentive to juice the valuation of the IPO. Google own 5-6% of the shares of SpaceX. SpaceX is seeking a valuation of $1.77T which means Google's shares would be worth $88.5B-$106.2B. I'm not a skeptic of AI/LLMs but this makes me deeply suspicious of these circular deals. What happens when the music stops?

Retail investors are currently being set up to hold that bag, and presumably the companies themselves will get government bailouts, so the taxpayer gets hit coming and going.

It's not even subtle at this point, what with the attempt at S&P rules changes, the insane valuation, the attempt to change the trade-through rule, and more.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#134

Post by redox99 »

TSiege wrote: post #6

> And Google is a major shareholder in SpaceX, so they certainly have incentive to juice the valuation of the IPO. Google own 5-6% of the shares of SpaceX. SpaceX is seeking a valuation of $1.77T which means Google's shares would be worth $88.5B-$106.2B. I'm not a skeptic of AI/LLMs but this makes me deeply suspicious of these circular deals. What happens when the music stops?

You seem to imply that with this deal their shares are worth 88B but without it they're worthless.

It's very hard to know how much the deal actually increases SpaceX market cap, but unless Google exits their SpaceX position soon it doesn't even make much sense as a circular deal.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#135

Post by Ekaros »

SlinkyOnStairs wrote: post #47
colechristensen wrote: post #34

Earlier quoted context omitted.

>What happens when the music stops? Bubble bursts, somewhere between 2008 housing crisis and the dotcom bust. Really dependent on if there are any OTHER structural problems to compound a fast re-valuation of tech stocks. There's plenty of noise about banks holding large amounts of bad private credit debt. There could be a lot or only a little collapse. There's so much uncertainty and the combination of war, high oil…

> There's plenty of noise about banks holding large amounts of bad private credit debt. This is still only big enough to cause funny banking collapses not actual 2008 scale financial disasters. Banks hold a lot of bad debt, but it's isolated from consumer accounts. Might not want to hold equity in SoftBank though. > There's so much uncertainty and the combination of war, high oil prices, and uncertainty about tarriff…

On other hand private corporate credit freezing might take down lot of business that need credit lines to operate regularly. Even the not so bad zombie companies. Tightening up and not being able to revolve credit anymore could lead to bankruptcies.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#136

Post by stymaar »

smallmancontrov wrote: post #97
drivebyhooting wrote: post #90

Earlier quoted context omitted.

I don’t understand how to read those charts.

Any time you see a price denominated in $, divide by that chart.

The idea that inflation and the money supply are linked is one of the most dumb one in folk economics.

Just look at these charts: they were declining when inflation was raging on in 2022-23 …

Re: xAI is looking more like a datacentre REIT than a frontier lab

#137

Post by jklinger410 »

bko wrote: post #128
TSiege wrote: post #6

> And Google is a major shareholder in SpaceX, so they certainly have incentive to juice the valuation of the IPO. Google own 5-6% of the shares of SpaceX. SpaceX is seeking a valuation of $1.77T which means Google's shares would be worth $88.5B-$106.2B. I'm not a skeptic of AI/LLMs but this makes me deeply suspicious of these circular deals. What happens when the music stops?

Or, hear me out, maybe there's a compute shortage and xAI has compute and manages that well. There are no dark GPUs. Compute translates directly to money for these frontier labs. I think everyone is reading way too much into this. Sure there is some circular transactions that are sus, but this ain't it.

> I think everyone is reading way too much into this. Sure there is some circular transactions that are sus, but this ain't it.

Let us pin this comment and see how it ages

Re: xAI is looking more like a datacentre REIT than a frontier lab

#138

Post by pell »

deaton wrote: post #48
leetharris wrote: post #15

Earlier quoted context omitted.

I have the pro account for ChatGPT, Claude, Gemini, and Grok. They all have various strengths and weaknesses. My favorite is still ChatGPT, then Gemini/Claude, then Grok. Grok often feels 1-2 generations behind the competition in general use, but it has three things that I love: 1. It seems to be the best at understanding current events. Maybe due to X integration, or some other tool call optimization in the backend?…

All 4 of these still regularly insist that I am a genius and everything I say is brilliant. Grok definitely pushes back more than the others, but I don't like how sycophantic they all still are.

I don’t want to open up that whole can of worms but Grok on any vaguely philosophical or political topic is a scaredy cat and has a very hard time staying factual if it could make Musk or the conservative movement appear negatively.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#139

Post by minraws »

atleastoptimal wrote: post #121
Terr_ wrote: post #114

Earlier quoted context omitted.

That's like saying "nobody is speculating in Enron stock" simply because there was electrical power that was sold for real revenue and consumed.

Enron collapsed due to legitimate fraud. To imply Enron is an apt comparison requires assertion that AI companies are actually cooking the books. Is that what you are saying?

The ARR were fine but showing skewed quarterly profitability numbers by slowing down research due to hitting compute capacity suggests otherwise.

I am certain Anthropic spent less on building the next model this quarter if they make it to profitability due to the shear fact that they don't have enough compute.

Which solves the profitability problem with relative ease momentarily.

Also just to confirm, AI subscriptions are definitely being sold at a loss how big I don't know but these models are much harder to run.

API is definitely being sold at a decent profit.

So if you rate limit users and do usage billing + lower research costs which is a money pit temporarily.

(Proof is the fact that we don't have a new pre training run since 4.5 yet, they used to do one every 2 releases)

4.9 will probably be the same.

Next model Mythos doesn't seem to have a successor yet and was trained previous quarter most likely, they don't seem to have pre trained another one just improved Mythos if at all.

As much as I am into AI these attempts to show that there can be a profitable quarter seem like cooking the books, even if we assume no shady dealings otherwise.

Unless one of the Labs can say for certain training is going to stop they can't be profitable and I don't think training can stop because marginal gains is all they have.

8-12 months behind narrative for Chinese labs literally is going to kill the company that stops training first.

If we assume only a 3-6 month gap once China has more compute, then well then even if they keep training the lack of ability to arbitarily scale data centers in US, will kill them first.

DeepSeek V5 might actually just end the AI race for good.

Also given Mythos is atleast a 10x model compared to Opus, then it's pricing is likely going to be 10x as well so well token prices are likely never coming down, especially if these companies want to IPO.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#140

Post by johnsmith1840 »

raducu wrote: post #23
bpodgursky wrote: post #9

Earlier quoted context omitted.

A lot of people are emotionally unprepared for a world where the music doesn't stop.

> A lot of people are emotionally unprepared for a world where the music doesn't stop. I've been wrong before. However, when was the last time this business model made sense -- that facebook, SpaceX and others, all just pivot from their market niche to general purpose AI datacenter providers. How on Earth does this make sense? What happens in a few years when DeepSeek runs on the chinese chips like the Huawei Ascend…

Energy and datacenter scale.

US is a near monopoly of this pairing. A crash will result in the removal of the fluff and ocerpricing of it all but the stance is beyond strong.

Unless China outcompetes Nvidea AND TSMC AND magically gets 4x cheaper energy they are in a much weaker stance for the long haul.

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