AI's Affordability Crisis • Hacker News Board

Re: AI's Affordability Crisis

#131

Post by bryanlarsen » Tue, Jun 23, 2026, 4:47 PM UTC

devin wrote: post #125

cmiles8 wrote: post #122

Earlier quoted context omitted.

If that happens the AI companies will first try to negotiate with their creditors and after that likely declare bankruptcy with the creditors taking over what’s left of the assets. Shareholders will be wiped out and employees will be left with nothing. Various franken-companies will emerge from the bankruptcy ashes and the world will move on with AI sans the present irrational exuberance.

And then the US government will say that these company's futures are in the national interest, and they will be bailed out with taxpayer dollars.

Usually (but not always) such bailouts wipe out the shareholders.

Re: AI's Affordability Crisis

#132

Post by thewebguyd » Tue, Jun 23, 2026, 4:47 PM UTC

NickC25 wrote: post #108

jcgrillo wrote: post #84

Earlier quoted context omitted.

Assuming the analysis is right, and most (or all) of these AI companies will default on their debts, what consequences might that have?

>what consequences might that have? All depends on who is holding the bag, and how big the bag is.

Hence the IPO. Push the risk on to retail and index funds, away from private credit. Plus Microsoft, Google, and Amazon will also be holding the bag and have huge balance sheet write downs, the compute commitments have not yet been paid for it's all just promises.

The banks aren't has exposed this time, as in 2008, most of it is tied up in private credit, its more akin to the fiber buildout in the 90s.

Re: AI's Affordability Crisis

#133

Post by simianwords » Tue, Jun 23, 2026, 4:47 PM UTC

josefritzishere wrote: post #56

simianwords wrote: post #12

Earlier quoted context omitted.

https://simianwords.bearblog.dev/conclusive-proofs-that-llm-...

That article seems a bit bogus. Cost per capability is a soft, non-predictive model unlike cost per token which has been trending up.

This is just hand waving on the obvious consensus that cost per capability is going down. There’s no doubt about it. Hell you can run a Gemma 4 model on your laptop that mogs GPT 4. But yeah you can use fuzziness as an excuse and ignore the trend.

Re: AI's Affordability Crisis

#134

Post by dranudin » Tue, Jun 23, 2026, 4:48 PM UTC

verdverm wrote: post #126

dranudin wrote: post #113

Earlier quoted context omitted.

I can second this. Our company and department was all-in on AI. And since the token-based pricing came in, we got an email from IT that tried to explain that most developers don't know how to choose models and that the cheap models should be good enough for most of our work ..

Have they built an internal ai enablement team?

Yes :D

Re: AI's Affordability Crisis

#135

Post by oreally » Tue, Jun 23, 2026, 4:48 PM UTC

deweywsu wrote: post #124

I know a lot of level-headed engineers here may not side with me, but I say let the companies who abandoned their people at the drop of a hat, with CEOs who waved their flag around on social media, proudly declaring how they'd now run their companies with 75% fewer employees wither and die. If I had been let go, there's no way I'd go back to a company like that, and there should be a black list of CEOs who acted this…

Someone should keep track of a public database of CEOs who cut workforce while making huge profits. Name, context, situation and all.

Re: AI's Affordability Crisis

#136

Post by SwellJoe » Tue, Jun 23, 2026, 4:48 PM UTC

NickC25 wrote: post #108

jcgrillo wrote: post #84

Earlier quoted context omitted.

Assuming the analysis is right, and most (or all) of these AI companies will default on their debts, what consequences might that have?

>what consequences might that have? All depends on who is holding the bag, and how big the bag is.

Yep, if they make it to IPO, as SpaceX has, and if they manage to get into several indexes (as SpaceX is already doing, I assume it's already in the Russell indexes, and will soon be in the Nasdaq 100 index), it'll be a bunch of working class people's retirement accounts holding the bag. And, those same companies might be deemed Too Big To Fail, and they'll get even more working class folks money in the form of tax-funded bailouts.

A wealth transfer from the working class to a handful of billionaires bigger than any the world has ever seen (and the world has seen a lot of wealth transfer from the working class to billionaires).

Re: AI's Affordability Crisis

#137

Post by SamuelAdams » Tue, Jun 23, 2026, 4:48 PM UTC

deweywsu wrote: post #124

I know a lot of level-headed engineers here may not side with me, but I say let the companies who abandoned their people at the drop of a hat, with CEOs who waved their flag around on social media, proudly declaring how they'd now run their companies with 75% fewer employees wither and die. If I had been let go, there's no way I'd go back to a company like that, and there should be a black list of CEOs who acted this…

GM just did this in the last 30 days [1], and their sales are likely going to be just fine. In fact the auto industry has repeatedly automated jobs over the last 100 years, and they still make decent sales numbers.

If you decided to boycott every company that replaced staff with automation, you would be forced to exit the economy. Every company does this to some degree and the customers who vote with their wallet do not seem to care about a reduction in force.

[1]: https://arstechnica.com/ai/2026/06/gm-installs-robots-at-fla...

Re: AI's Affordability Crisis

#138

Post by manapause » Tue, Jun 23, 2026, 4:49 PM UTC

sleepybrett wrote: post #50

It's funny when you watch the doomscroll all these anthropic guys talking about how you should be writing self-improving loops and that's all they do. Of course that's all they do, they don't have to pay for their tokens.

Can confirm, my experience in “loop engineering” was “this is neat” for 45 minutes until a daily ration of tokens was evaporated. The quadratic cost trap is prohibitive to experimentation.

As a localLLM evangelist, I am hopeful this will bring more attention to the joys of rolling your own sovereign AI.

Re: AI's Affordability Crisis

#139

Post by simianwords » Tue, Jun 23, 2026, 4:49 PM UTC

mikgp wrote: post #117

skeledrew wrote: post #83

Earlier quoted context omitted.

AI prices going down means the models are improving, particularly from the efficiency angle (which is inevitable, given the nature of tech). That means all they have to do is maintain a large enough customer base at a rate high enough to ensure loss decreases continuously over time, until eventually the pass the point where they're just gaining. Healthy competition ensures that improvement savings are actually passed…

But now you’re describing a commodity, and the competition will erode profits, and their valuations are bananas, unless someone can find a business model that truly differentiate and creates a moat.

Models are not commodities and are famously non fungible. Each model has its quirks and strengths, weaknesses and idiosyncrasies.

I know because I see how people went over the 4o model. I can see opus behaving clearly differently enough that I pick it for certain tasks.

Re: AI's Affordability Crisis

#140

Post by gizzlon » Tue, Jun 23, 2026, 4:49 PM UTC

> Sales and Marketing: $5.73 billion .. That is, OpenAI spent 44% of their revenue on sales and marketing!

Anyone know what they are spending this on? Can't remember seeing one OpenAI ad.. Is it just pr and influencers? Ads in the US?