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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

#371

Post by dmix »

nemomarx wrote: post #351
dmix wrote: post #341

Earlier quoted context omitted.

In accounting terms it’s not an investment it’s an operating expense or in your example a personal expense, but if you leased a property and operated a business (ie an AirBnB for an apartment) it could be considered as part of an investment as it’s a means to make a profit.

that would be an investment in your own business, not in your landlord right?

The landlords business is the rent, your business goal would be making a profit more than the lease. This is pretty simple stuff

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

#373

Post by scionaura »

adjejmxbdjdn wrote: post #251
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.

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…

it’s more like if you were to value Hertz as if they were a self-driving car company, only to find they’re a car rental company

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

#374

Post by Tycho »

542458 wrote: post #223
trothamel wrote: post #69

I suspect that this is the start of a play for SpaceX's orbital datacenter project - if they're really planning on launching as many satellites as they've said (and Starship is going to massively lower the cost of launch), they won't be able to fill them with Grok. So perhaps it's best to become the infrastructure provider to the other AI Labs.

Is there anything to read on how the economics of an orbital datacenter make any sense? Because I don't really see how blasting a server into space solves any of the typical issues associated with datacentres beyond easier access to solar.

The idea is that eventually the power demand for AI compute will be too great to satisfy by terrestrial means.

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

#375

Post by protocolture »

georgeburdell wrote: post #307

Not that my feelings or opinion matter, but I'm going to be devastated if this xAI grift takes down SpaceX. I am reminded that the 90s Boy Band groups Backstreet Boys and N*SYNC were the side projects of a Ponzi Scheme.

I hope that Backstreet Boys grift didnt take down the Ponzi scheme.

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

#376

Post by RealityVoid »

nl wrote: post #309
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 also a rapidly depreciating asset. That's the default assumption but in the new GPU+Memory constrained age isn't true. Time on 4 year old H100 servers costs more now than when they were new (!!)

> That's the default assumption but in the new GPU+Memory constrained age isn't true.

Is it an age or a temporary situation?

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

#377

Post by idiotsecant »

brokencode wrote: post #359
idiotsecant wrote: post #327

Earlier quoted context omitted.

The diverse investment is the reason that funds will be forced to buy these worthless stocks. It's a direct transfer of money from the working class to the extreme capital class. If you're good with that, I'll send you my PayPal so you can get me my 5 bucks. It's a tiny fraction of your overall cash flow, whats the big deal?

True, that’s an argument against the typical passive, broad market, market cap weighted fund like VTI or SPY. But there are many funds that have different strategies, both passive and active. Such as by investing based on value, quality, dividends, etc. I get that the average person doesn’t know this, but the 401k doesn’t inherently force somebody into broad market funds.

When you destroy pensions by crushing organized labor, create 401k incentives, and place your new captive audience by default into a certain investment class, a whole lot of people are going to leave it there. Whether the provider forces anyone to do anything is irrelevant, it creates second order impacts that ultimately lead to what is perhaps the greatest attempted fleecing in market history

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

#379

Post by hsgwveeheu »

throwawaypath wrote: post #378

Sounds like a sound strategy to actually profit in during the AI craze, no?

If it is a craze then no. You want to sell shovels, not buy overpriced land during a gold rush.

That said details matter. Can the DCs be reused for other in-demand things?

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

#380

Post by frognumber »

RealityVoid wrote: post #376
nl wrote: post #309

Earlier quoted context omitted.

> Compute is also a rapidly depreciating asset. That's the default assumption but in the new GPU+Memory constrained age isn't true. Time on 4 year old H100 servers costs more now than when they were new (!!)

> That's the default assumption but in the new GPU+Memory constrained age isn't true. Is it an age or a temporary situation?

It's very unclear to me.

The key question is on direction of LLMs. Right now, LLMs are taking over human jobs. If the cost of silicon+power If this applies to SWEs, lawyers, business analysts, many research scientists, .... this situation could persist for a long, long time. While capital costs less than the inputs of labor (nominal food, housing, etc.), there is no need for labor.

The key question is about continued progress in models, and of the tooling around them:

- Plateau: Old silicon obsoletes in due course

- Rise quickly: Old silicon maintains value for a long time

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