Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

martinalderson.com

Post reply on HN
Print view View original

281–290 of 580 posts

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

#281

Post by shdh »

noosphr wrote: post #279
shdh wrote: post #272

Earlier quoted context omitted.

It is depreciating, but demand has been very high. There's a reason old 3090's went from $600 in 2022 o to over $1K in 2026.

My local inference rig now costs three times what I bought it for. If I'd gotten the max ram I could at the time I would have made $10k after selling the excess to my current spec. How someone can look at an asset class thats appreciated an order of magnitude in the last two years and say it will depreciate in value when the tailwinds are even stronger now is beyond me.

Fundamentals dictate hardware is a depreciating asset, they're not wrong. They're just ignoring the reality of the current market.

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

#282

Post by noosphr »

shdh wrote: post #281
noosphr wrote: post #279

Earlier quoted context omitted.

My local inference rig now costs three times what I bought it for. If I'd gotten the max ram I could at the time I would have made $10k after selling the excess to my current spec. How someone can look at an asset class thats appreciated an order of magnitude in the last two years and say it will depreciate in value when the tailwinds are even stronger now is beyond me.

Fundamentals dictate hardware is a depreciating asset, they're not wrong. They're just ignoring the reality of the current market.

This was true when Moores law wasn't dead. Per watts performance has been flat since Ampere. There is a reason why undervolted 3090s are still used.

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

#283

Post by fc417fc802 »

atleastoptimal wrote: post #261
fc417fc802 wrote: post #241

Earlier quoted context omitted.

It's an interesting point that the token revenue will presumably survive a crash in stock prices. But (IIUC) much of the new infrastructure is funded using stock is it not? So it seems like token revenue theoretically surviving doesn't address the risk to the rest of the economy here. And if the economy takes a large enough hit then presumably so will token spend because someone has to pay for that after all. Sure th…

That is true, if all the new data centers don’t produce revenue then there will be a crash. However you’d have to bet that the models won’t stop getting better, or if they still keep getting better, that somehow better models does not translate to increased productivity. Would it be wise to look at how AI has progressed over the last 5 years and make that bet?

It's possible to question the accuracy of the projections without disputing that the numbers are expected to go up. It's not that the new data centers wouldn't produce any revenue but rather that those numbers are where unfounded speculation could be happening. If and when those numbers fail to materialize (or when investors revise their projections) would presumably be the point at which the music stops.

Recall that the exchange earlier called into question the similarity or difference to enron. Sure, the current revenue numbers don't appear to be cooked but if the future revenue numbers are unrealistic and everyone is using those future numbers to make their decisions then isn't the end result roughly analogous? Blatant fraud not withstanding of course.

Note that I'm not claiming the above to be the case. Merely illustrating the commonality and acknowledging the possibility.

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

#284

Post by downrightmike »

disgruntledphd2 wrote: post #142
gruez wrote: post #123

Earlier quoted context omitted.

>See "M2SL" or "TOTBKCR" on tradingview if you want to see inflation live. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/TOTBKCR And you would have been massively wrong. People have been complaining about quantitative easing since post GFC, and if you took the figures at face value, those would imply inflation was nearly 100% between the end of GFC and before the pandemic. Whatever you th…

I mean, it sortof did in assets, just not in the changes tracked by CPI.

That's because they take and modify what is tracked in the CPI at will

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

#285

Post by enos_feedler »

BoorishBears wrote: post #268
adjejmxbdjdn wrote: post #251

Earlier quoted context omitted.

Compute is also a rapidly depreciating asset. I want to make a comparison with a car rental business and say that it would be like valuing Hertz entirely on the basis of the number of cars they own, as opposed to how many they rent out, but cars have a much longer depreciation period, if there are no customers they’re not costing you more money, unlike your computer which you are using for training and sucking up mas…

Compute is about to come an appreciating asset in the near-term, and it some ways it already is. The frontier labs are shifting from pricing grounded in the price of compute, to pricing grounded in the intelligence provided, or more specifically the economic value of that intelligence downstream. The margins on that allow them to pay a hefty premium on compute and still come out ahead. As they buy more compute at hig…

There is zero evidence of this shift in pricing occurring. It’s still a dream which seems unlikely

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

#286

Post by snypher »

noosphr wrote: post #279
shdh wrote: post #272

Earlier quoted context omitted.

It is depreciating, but demand has been very high. There's a reason old 3090's went from $600 in 2022 o to over $1K in 2026.

My local inference rig now costs three times what I bought it for. If I'd gotten the max ram I could at the time I would have made $10k after selling the excess to my current spec. How someone can look at an asset class thats appreciated an order of magnitude in the last two years and say it will depreciate in value when the tailwinds are even stronger now is beyond me.

Yes, toilet paper and N95s were expensive and hard to buy once, which is why I stockpiled a lifetime supply of them. Suckers!

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

#287

Post by hn_acc1 »

JumpCrisscross wrote: post #240
fc417fc802 wrote: post #232

Earlier quoted context omitted.

> and power-supply agreements Don't you mean gas turbine purchases and questionably legal operation? But yeah I feel exactly the same way. The AI part of xAI looks like a mess but it seems that they still managed to score a massive win.

> Don't you mean gas turbine purchases and questionably legal operation? The point is it’s running. They built fast before the backlash got organized. Now everyone has to deal with delays and thoughtful permitting processes.

Sure, they brought in artillery and a small freelance militia to shoot at the unionized workers, but the point is, the survivors are back working the mines...

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

#288

Post by fc417fc802 »

XorNot wrote: post #271
JumpCrisscross wrote: post #240

Earlier quoted context omitted.

> Don't you mean gas turbine purchases and questionably legal operation? The point is it’s running. They built fast before the backlash got organized. Now everyone has to deal with delays and thoughtful permitting processes.

The point is they're in a business no one would claim is particularly profitable but claiming a valuation like they're in a totally different business - one where they're not even top 3. Its not that there isn't value in that business, but it's not the AI business either. Its the one where Oracle is laying off staff to try and avoid a revenue crash on future commitments. Both Google and Anthropic would be trying to c…

It isn't normally particularly profitable but given their lucky timing they appear to temporarily be doing quite well. When their tenants eventually vacate either they make a move to reenter the race for the cutting edge and get lucky or else they revert to a "boring" cloud rental business with near cutting edge hardware. That seems like an extremely favorable mode of failure to me.

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

#289

Post by seltzered_ »

Spooky23 wrote: post #263
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.

xAI lets companies like Google move fast and hurt people at arms length. Google itself has a good reputation as a facilities operator. SpaceXAI is operating gas turbines emitting exhaust at ground level.

Google has also tried to hide things like water consumption data, see:

- https://cloud.sustainability.watch/explore-issues/example-go...

- https://www.sfgate.com/national-parks/article/mount-hood-wat...

They also seemingly dropped their net-zero climate goal:

https://www.tomshardware.com/tech-industry/google-quietly-re...

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

#290

Post by snypher »

Dig1t wrote: post #265
jhallenworld wrote: post #243

Earlier quoted context omitted.

>There are no dark GPUs This might not be true. Someone was comparing Nvidia's production rate with known data center capacity, and they do not match. Their conclusion was that people (possibly even Nvidia) were hoarding GPUs- in the very short term this might be a good strategy, but GPUs go EOL fast. There are other stories about paused datacenter builds that match with this. TSMC is definitely fully allocated, base…

All that means is that there's a bottleneck at the data center layer. When he says "dark GPUs" he's saying that there are no dark DEPLOYED GPUs. This is a reference to the 1990's dot com bubble where internet infrastructure companies overbuilt network capacity, leading to the term "dark fiber". That was an indicator of a bubble because it showed that capacity was larger than demand. OP is saying that this is specific…

Don't you think that under excess demand, production will ramp, competition will become available etc? These posts read like we're all out of fresh silicon or something.
Post reply on HN