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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

#171

Post by oblio »

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.

Alphabet/Google profits:

Q1 2025: $34.54 billion

Q2 2025: $28.20 billion

Q3 2025: $34.98 billion

Q4 2025: $34.46 billion

>

Amazon profits:

Q1 2025: $17.1 billion

Q2 2025: $18.16 billion

Q3 2025: $21.2 billion

Q4 2025: $21.19 billion

>

Both Alphabet/Google and Amazon have invested recently into Anthropic and are doing all sorts of financial chicanery.

https://www.youtube.com/watch?v=-bjNrGFiAI4

Nah, man, it's all fine, they're just going to take down the entire global financial system doing this crap, and by global, I mean > pensions are going to take a hit, even "fully funded" pension systems.

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

#172

Post by doctorwho42 »

treis wrote: post #41
raducu wrote: post #23

Earlier quoted context omitted.

> 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…

>What happens in a few years when DeepSeek runs on the chinese chips like the Huawei Ascend at a fraction of the cost ? Nvidia goes back to being a 100 billion dollar business and everyone else reaps the benefits of cheap tokens.

So Nvidia will lose 94.5% of their market cap, and you think that will not effect anything beyond AI?

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

#173

Post by martinky24 »

zoogeny wrote: post #72

If xAI is a datacenter REIT, it is a special kind that has a promise that no other datacenter provider could dream of: LEO datacenters. As far-fetched as that may sound, the biggest profit center for SpaceX in my understanding was Starlink. xAI already has extremely high-bandwidth connections from Earth to LEO available. Connecting that to solar powered orbital datacenters seems doable in realistic timeframes, especi…

You're hand waving the whole "data center" part away. Comms is one thing. That's probably 1% of the challenge.

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

#174

Post by JumpCrisscross »

oblio wrote: post #171
bko wrote: post #128

Earlier quoted context omitted.

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. Alphabet/Google profits: Q1 2025: $34.54 billion Q2 2025: $28.20 billion Q3 2025: $34.98 billion Q4 2025: $34.46 billion > Amazon profits: Q1 2025: $17.1 billion Q2 2025: $18.16 billion Q3 2025: $21.2 billion Q4 2025: $21.19 billion > Both Alphabet/Google and Amazon have invested recently in…

> Both Alphabet/Google and Amazon have invested recently into Anthropic and are doing all sorts of financial chicanery

bko didn’t say there isn’t circular financing going on. They’re just saying this isn’t an example of it. They’re right.

It’s a potential conflict of interest. And if the agreement is fake—if Google cancels without paying the cash—it could be market manipulation. But the influencer space likes to latch onto jargon, and the one it’s overapplying right now is circular financing.

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

#175

Post by chris_money202 »

bpodgursky wrote: post #112
chris_money202 wrote: post #87

Earlier quoted context omitted.

Think two things can be true at once. They should be using their capital to achieve their speculative price. Instead, they are using their capital to achieve a modest ROI, thus invalidating the speculation AND proving they have tech issues in what the speculation is around.

They are making $24B/yr on datacenters they built in < 2 years for $2-3B. To call that a "modest ROI" is... quite a statement.

Operating these datacenters is a pretty big cost that isn't factored here

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

#176

Post by [deleted] »

mikeryan wrote: post #164
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?

Google also just announced a new equity raise of $80B. I have no idea if doing this via equity vs debt is trying to suck some of the wind out of the IPO Market for Anthropic and OpenAI but it’s going to be interesting to see how the markets deal with all the new equity being floated. Someone isn’t going to hit their raise targets and the later IPOs may be the ones holding the bag.

[deleted]

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

#177

Post by stymaar »

smallmancontrov wrote: post #165
stymaar wrote: post #136

Earlier quoted context omitted.

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 …

Lagged processes are one of the most fundamental concepts in economics. If merely recognizing the possibility that one could be at play here is throwing you for a loop, you need the simplified monetary model more than most.

Where's the hell is the lag on these graphs though!? The money supply grows both before, and after the inflationary spike. (And the fact that it stops increasing when inflation is high is not surprising at all, by the way, high inflation make the central bank raise interest rates, which reduce credit, which is where money comes from).

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

#178

Post by qaq »

bpodgursky wrote: post #112
chris_money202 wrote: post #87

Earlier quoted context omitted.

Think two things can be true at once. They should be using their capital to achieve their speculative price. Instead, they are using their capital to achieve a modest ROI, thus invalidating the speculation AND proving they have tech issues in what the speculation is around.

They are making $24B/yr on datacenters they built in < 2 years for $2-3B. To call that a "modest ROI" is... quite a statement.

Where did you get 2-3B from? Colosus 2 GPU's alone were 18B Total cost including construction, power and water treatment facility might be close to 25-30B.

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

#179

Post by JumpCrisscross »

idiotsecant wrote: post #144
brokencode wrote: post #109

Earlier quoted context omitted.

With most 401k plans, you can choose what you invest in to an extent. You can put it in bonds or other investments if you want.

This doesnt fix the systemic issue. Most people put their money in a target fund and leave it alone. Those target funds are at risk of being forced to buy these over-inflated assets. The incentive to do this is there because those target funds and naive investors exist.

> Those target funds are at risk of being forced to buy these over-inflated assets

Target funds are diversely managed. This isn’t a real concern.

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