Keeping in mind that Alphabet is the only one of the Mag 7 stocks that has managed to outperform the S&P 500 in 2026.
Short term stock price is a popularity machine, not an indicator of value.
Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
21–30 of 306 posts
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#22These alarms have been going off for a long time now. Everyone is already in too deep to admit that there’s a problem.
> Everyone is in too deep to now admit that there’s a problem I'm not sure how to square this with the dramatic improvement in LLM capabilities in the last 8-9 months. If anything, it makes the earlier investments look prescient?
Presumably at some point you need a measurable productivity return yea? Maybe organizations are not built around skill and aptitude so much as liability, which LLMs cannot provide barring (very welcome and also very unlikely) legislation in the US.
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#23Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#24Earlier quoted context omitted.
> Everyone is in too deep to now admit that there’s a problem I'm not sure how to square this with the dramatic improvement in LLM capabilities in the last 8-9 months. If anything, it makes the earlier investments look prescient?
The problem is that the dramatic improvement in capabilities is not translating to a dramatic increase in revenue.
"Anthropic and OpenAI generate a lot of revenue with relatively few employees – an estimated $9M and $5.5M in revenue per employee (RPE), respectively. If either company were to go public, it would have a higher RPE than any public tech company on Forbes’ Global 2000 list." https://epoch.ai/data-insights/revenue-per-employee-ai-compa...
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#25These alarms have been going off for a long time now. Everyone is already in too deep to admit that there’s a problem.
> Everyone is in too deep to now admit that there’s a problem I'm not sure how to square this with the dramatic improvement in LLM capabilities in the last 8-9 months. If anything, it makes the earlier investments look prescient?
I'm not sure I've seen what I would call dramatic improvement since maybe GPT4?
Sure, things got better. But I'd call it iterative more than revolutionary. I still wouldn't trust any of the models to do anything meaningful unattended. They all still do dumb shit all the time.
Plus, even if they were genuinely dramatically better, the businesses sure as hell aren't. They're burning money left and right, they have no moat, Chinese open models are basically equivalent these days. What's the path to profitability, or hell, break-even? How do you envision this being anything but a giant money pit?
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#26Earlier quoted context omitted.
> Everyone is in too deep to now admit that there’s a problem I'm not sure how to square this with the dramatic improvement in LLM capabilities in the last 8-9 months. If anything, it makes the earlier investments look prescient?
The problem is that the dramatic improvement in capabilities is not translating to a dramatic increase in revenue.
The technology is too hard to capitalize on. It’s far more democratic than, say, an iPhone, or a search engine. Anyone can download a model to their computer and start toying with it, how do you profit off of that? Even if everyone was constantly tokenmaxxing (which we cannot, since the process gets fucked up if you let it run entirely on its own), it probably still wouldn’t be marginally profitable.
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#27Earlier quoted context omitted.
The problem is that the dramatic improvement in capabilities is not translating to a dramatic increase in revenue.
"Anthropic and OpenAI generate a lot of revenue with relatively few employees – an estimated $9M and $5.5M in revenue per employee (RPE), respectively. If either company were to go public, it would have a higher RPE than any public tech company on Forbes’ Global 2000 list." https://epoch.ai/data-insights/revenue-per-employee-ai-compa...
This assumes they do not have to increase prices to be profitable, and that they will continue to have customers when customers can switch to open models at similar performance.
As an analogy, Uber could crank up rates after the VC growth play was over to stoke revenue and profits because they have a duopoly with Lyft. LLM consumers can switch to Kimi models fairly trivially today, and whatever the frontier open model landscape looks like later. Model training and development is expensive, self hosted inference on open models not so much.
https://www.wheresyoured.at/the-openai-bubble/ has the math.
(a component of my work is currently building scaffolding so our organization can swap out commercial inference providers for on prem inference infra to derisk against the eventual rug pull when the math gets icky for LLM providers, while consuming as much subsidized tokens as we can until then, when it makes sense to use tokens for work)
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#28Earlier quoted context omitted.
> Everyone is in too deep to now admit that there’s a problem I'm not sure how to square this with the dramatic improvement in LLM capabilities in the last 8-9 months. If anything, it makes the earlier investments look prescient?
The problem is that the dramatic improvement in capabilities is not translating to a dramatic increase in revenue.
>not translating to a dramatic increase in revenue.
Completely false.
AI and AI related revenues are growing exponentially.
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#29Earlier quoted context omitted.
The problem is that the dramatic improvement in capabilities is not translating to a dramatic increase in revenue.
"Anthropic and OpenAI generate a lot of revenue with relatively few employees – an estimated $9M and $5.5M in revenue per employee (RPE), respectively. If either company were to go public, it would have a higher RPE than any public tech company on Forbes’ Global 2000 list." https://epoch.ai/data-insights/revenue-per-employee-ai-compa...
Ah well we just need to convert our entire economy into an MLM and then I'm sure we'll be set
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#30These alarms have been going off for a long time now. Everyone is already in too deep to admit that there’s a problem.
Too big to fail now, so everything is fine.
They've literally rated the debt as too big to fail in order to get foreign sovereign wealth funds (mostly gulf states) to agree to put up the money for loans. This has been happening this entire time.