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Meta building cloud business to sell excess AI capacity

reuters.com

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Re: Meta building cloud business to sell excess AI capacity

#31

Post by eiejee »

cmiles8 wrote: post #23
johndhi wrote: post #21

Earlier quoted context omitted.

I don't really think this necessarily means demand is limited. It just means demand is consolidating to winners. There's no denying openai and anthropic and maybe Google have a ton of demand. The fact that xai and meta do not does not mean no demand exists.

Everyone slamming the brakes on tokenmaxing and companies putting strict AI budgets in place is surely having at least some impact on demand. And the point is not that “no” demand exists but the likes of AWS are building to the moon citing massive future need but that simply doesn’t jive with all this unused capacity from others coming to the market. And building out massive capacity to sell a product that’s likely t…

Yeah today’s demand at existing and higher prices won’t persist.

Firms are currently experimenting and figuring out the correct way to use these tools in the production function.

Re: Meta building cloud business to sell excess AI capacity

#32

Post by pavlov »

SilverSlash wrote: post #14

So have they just given up on llama then? What happened to the 25 year old Zuck paid $250M for?

If you mean Alexandr Wang, the number is off by an order of magnitude. Forbes estimates he made over $3 billion from selling his startup to Meta and getting hired as chief AI officer.

Re: Meta building cloud business to sell excess AI capacity

#33

Post by cmiles8 »

_heimdall wrote: post #2

For one thing, I still don't understand Meta as a business. It seems like Zuck refused to accept owning a boring ad business and keeps trying to act like a tech business. For another, this seems like a move that happens when the bubble pops. The dotcom bubble went from having tons of business raising fortunes on the promise of business models the internet unlocks to having few internet businesses left at that scale a…

It’s a pretty consistent story in tech. Meta built a successful ads platform. That success went to their head and the company starts acting like it’s just great at tech and innovation and tried to do a bunch of other stuff. Turns out it’s pretty crap at most other things and can’t figure out how to make money from anything other than selling ads. Company is very headstrong and refuses to admit it’s just not good at other stuff. It has enough cash from ads to not go bankrupt and so just carries on with this nonsense on cycle after cycle of crazy side projects that go nowhere.

Re: Meta building cloud business to sell excess AI capacity

#34

Post by gloryjulio »

kombookcha wrote: post #29
gloryjulio wrote: post #7

Earlier quoted context omitted.

> For one thing, I still don't understand Meta as a business Zuck got spooked by apple ads change a few years ago, which crashed the meta's stock to double digit. So Zuck is trying to own a platform. They want to be a version of openai selling ads

This is an interesting angle. I had not considered how fundamentally exposed Meta is, should Apple and Google decide to break omerta.

Btw I am just quoting someone else. It's in the news in for a long time. Besides ads monetization, Zuck's moves in recent years are mostly about creating their own platform so the Apple incident never happen again

Re: Meta building cloud business to sell excess AI capacity

#35

Post by XorNot »

khurs wrote: post #26

Good news. The more providers, the more competition and lower prices. Meta are laying their own sub-sea cables globally at present: https://www.bbc.co.uk/news/articles/ckgrgz8271go

In the grim darkness of the AI boom everyone is watching high profitability industries move into areas characterized by having few providers due to incredibly poor margins and high expenses and declare it business genius.

Re: Meta building cloud business to sell excess AI capacity

#37

Post by Traster »

I think we're going to look back on this as one of the things that really exacerbates this bubble. It's one thing for these companies to have high expectations of their future compute needs and therefore overbuild. But what the SpaceX/Anthropic deal showed was even if you fall short, you can profit by selling off your overcapacity. This means there is essentially no incentive to limit how much capacity you're building, anything you don't use you'll still profit from.

The problem is that only works if aggregate demand is higher than supply. At some point, all these new data centres are going to come on line, and the frothy "throw AI at everything with no regard to costs" is going to drawn down across the industry. And this supply will be much larger - because everyone thought the down side was limited.

At that point you're going to have all of these companies trying to dump their excess capacity on the market and it suddenly won't be true that you can just sell capacity to your competitors.

Obviously this won't bankrupt Meta - it'll just eat into their profits from their ads business. But it likely will drive a bunch of neo-clouds out of business very quickly, and the technology providers like Nvidia etc will suddenly come back to reasonable P/Es.

Re: Meta building cloud business to sell excess AI capacity

#38

Post by mrweasel »

_heimdall wrote: post #2

For one thing, I still don't understand Meta as a business. It seems like Zuck refused to accept owning a boring ad business and keeps trying to act like a tech business. For another, this seems like a move that happens when the bubble pops. The dotcom bubble went from having tons of business raising fortunes on the promise of business models the internet unlocks to having few internet businesses left at that scale a…

He might be scared that his ad business won't be as profitable in a few years. He'll still be rich, but perhaps that's not enough for him. He has all the correct number and knows exactly how many of their users are bots and how much of the ad revenue comes from scams. Maybe he sees a potential risk that we can't.

Could also be a self-image thing. Facebook isn't exactly young and fashionable anymore, it's more akin to a weird mid-90s idea of a close walled Internet in some sense. Instagram users I'd guess is mostly younger women. None of these really align with Zuckerbergs macho persona.

Re: Meta building cloud business to sell excess AI capacity

#39

Post by Jordanpomeroy »

cmiles8 wrote: post #19

So like likes of AWS are spending crazy sums building capacity citing amazing demand they can’t meet. Meanwhile those with capacity are saying hey maybe we don’t need so much and are building cloud businesses to compete with AWS and flood the market with excess capacity. Oh yeah, this is gonna end well.

Most of the demand for data center GPUs comes from the big tech companies themselves, to develop products/services.

Facebook and Twitter are both now signaling that the resources they funded with vast amounts of capital would be worth more to shareholders if they were leased to the highest bidder.

This is either a realization that their internally developed product/service roadmap is not panning out, or that the lease demand is so high that they’d be fools not to take advantage.

Re: Meta building cloud business to sell excess AI capacity

#40

Post by khurs »

Sol- wrote: post #11

xAI has shown this to be quite lucrative. And it seems to even make some sense - if the contract can be ended on relatively short notice, you basically have the capacity on stand-by if you ever need it yourself (accumulating GPUs is not trivial), but can monetize it if you don't need it. Though it's probably a bad sign generally that you can't capitalize on all the GPUs you've acquired.

>xAI has shown this to be quite lucrative.

The demand is likely short term till the renter can ramp up their own centres/find better deals.

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