This article seems to be struggling with telling apart the difference between R&D and operating expenses? The fact that AI companies are extremely unprofitable doesn’t mean they are subsidizing token costs, they still can have very decent gross margins on them
AI's Affordability Crisis
141–150 of 436 posts
Re: AI's Affordability Crisis
#142Earlier quoted context omitted.
tbh, not sure i ever understood it
A superintelligence is one that exceeds human intelligence in all areas. Which roughly translates to learning, adapting, and performing more quickly and efficiently than even the best humans. This is closely related to "the singularity", which is when technological growth becomes uncontrollable by humanity.
That sounds like a definition designed for goal shifting. This AI is better than human at 99.9% of things, but humans are better at pooping. Therefore we don't yet have a superintelligence.
Re: AI's Affordability Crisis
#143Lol I feel like no one has any attention span here. Tech shit is expensive in the beginning when it's new. It gets cheaper with time. This is a tech forum, don't we know this? Of course people overreact in both directions on both sides of the issue. It's a very fast technology, wait for things to settle before making grand declarations.
Re: AI's Affordability Crisis
#144Earlier quoted context omitted.
They may not be able to! It's pretty widely acknowledged, for example, that if there's some surprising plateau hiding around the corner they're both going to fail. But that could mean that they're over charging for AI usage to get research money and sustainable rates are lower rather than higher.
The whole hidden plateau hypothesis is kinda bunk, because we're already pretty far in a plateau for general knowledge/question answering, but there are many subdomains where we can push model capabilities, and as we saturate one subdomain we can just shift to another economically valuable one. There isn't one AI intelligence S curve, there are thousands of them, and they're mostly invisible in the major benchmarks,…
I'm skeptical of a hidden plateau, but I really think it's overconfident to assume there's not one. Remember that it doesn't even have to be a technical plateau; the effective plateau of e.g. car speeds is determined by regulations and road conditions, and far below what "frontier cars" are capable of on a controlled racetrack.
Re: AI's Affordability Crisis
#145Shouldn't we know a better answer to these questions once Anthropic's IPO materials surface publicly? I understand, and maybe even expect, SpaceX's materials to be all over the place and skate on by any discussion of unit economics, but the nerds over at Anthropic might just be forthright enough to just tell us what their margin is on tokens as part of their IPO.
To be honest, making sense of finances of fully public companies is often hard, because in practice, accounting is hard. How you account for depreciacion, cost, investment, fixed vs marginal costs is in practice fluid, companies have an incentive to make it look attractive, while also optimising for tax and shifting revenue around to narrowly beat analyst recommendations. Here's a concrete example. Does some random A…
I saw some commentary that their free cash flow is misleading because it doesn't subtract the stock compensation they are paying to attract / keep top AI talent. Their point was also that deciphering financial statements is hard
Re: AI's Affordability Crisis
#146The math doesn’t add up and the wheels are starting to come off the bus. The conversation in a lot of wealth management offices has shifted dramatically in the last few month from “how do I get in on this AI thing?” to “how do I protect my assets when this AI stuff blows up.” There’s little question now if this will all implode, just when and who’s going to lose their shirt and be left without chairs when the music s…
With these confident comments I would appreciate some kind of origin of the information. Not even necessarily a source accessible to me, just: are you in any wealth management offices? Or are you reporting other people's opinions? Or does it just sound right given the spirit of our time?
Re: AI's Affordability Crisis
#147Earlier quoted context omitted.
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.
Is this really for comparable models though? Will folks at scale continue to choose Anthropic frontier AI model if OpenAI releases a similar generation at a 90% discount with comparable capabilities? It feels like the fungibility assumes delineation by capability _and_ cost. No one is choosing sonnet over opus at similar price points.
Re: AI's Affordability Crisis
#148Earlier 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.
That could happen, but the shareholders still get wiped out.
Re: AI's Affordability Crisis
#149Earlier quoted context omitted.
>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.
Yes, and private credit investors are rushing for the exits but can’t get out because of withdraw limits. It’s starting to get ugly. Folks owning something they think is going to tank and they can’t sell.
Re: AI's Affordability Crisis
#150I 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…
GM is running 0% interest, no payments until n deals right now.
That’s usually a sign that sales are not “just fine”.