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Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

reuters.com

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Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#121

Post by WarmWash »

toomuchtodo wrote: post #69
lenerdenator wrote: post #62

Earlier quoted context omitted.

The question will be whether customers can switch. Can you install a near-SOTA model on a cluster in a data center? Of course. Compliance and operations are the sticking points. I work in healthcare IT, and it's amazing how tight the data compliance requirements are. I can't have someone in Canada look at prod data. If we told hospitals that we were handing off PHI/PII to Chinese models, they'd end our relationship d…

My primary role is cybersecurity in a regulated entity in a regulated industry, I am highly confident it is straightforward to do so based on work accomplished in only a couple of weeks. Stand up a router, stand up a Kubernetes cluster if you don't have one, stand up the necessary VMs and compute for serving inference. Two pizza team, in my experience. Customers can switch (although we can argue the speed and pain of…

Good luck explaining to an exec that the locally hosted Chinese model definitely doesn't have a backdoor or hidden trained-in intentions.

Meanwhile the cost/benefit analysis doesn't move much even if you are paying 2x for tokens, and you don't need anything on prem.

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#122

Post by 01100011 »

gavin_gee wrote: post #108

i dont understand the concern. they are putting up great financials. you have to invest ahead of the outcome. this is just classic quarterly public company earnings BS, where public markets dont reward innovation investment. they just want crank the handle financials. The bigger issue is on the model front, can Google compete; Gemini doesnt seem to be able to compete on the heavy expert end; they are doing well on li…

I've given up on Gemini. It sounds smart but most of what it tells me ends up being wrong or misleading. I might actually hand $20/mo to OpenAI. It's been far more helpful with the random collection of legal and health problems I've thrown at it. My recent comment history is going to make me come across like a shill for them but, holy crap, GPT has been doing amazing things for me at work as well.

I don't get it either... Google has so much talent yet they just can't seem to get it right.

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#123

Post by strongpigeon »

650 wrote: post #40

I've been seeing quite a few companies juicing short term margins and quarter to quarter maxxing even more than before, one such example: https://x.com/MaxAnderson/status/2080229375773941871 https://xcancel.com/MaxAnderson/status/2080229375773941871 --- As someone who has personally spent $500k / mo+ on Google Ads for years, I can tell you with certainty: This revenue growth in Search is artificial & extremely unheal…

> Lastly, and perhaps most egregiously, Google quietly stopped respecting budget caps by a factor of 2x. For example campaigns we’ve been running for years with $1000 daily budget caps suddenly began spending $2000+ per day

When I worked on Google Ads (I left in 2020), I remember this one tripping a lot of people. As I remember it, the limit for a single day is indeed 2x daily budget, but over a month it will average to it. This is supposed to give more flexibility to the auto bidder.

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#124

Post by WarmWash »

throwaway27448 wrote: post #22
mynameisjonny_ wrote: post #6

Earlier 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?

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.

The infamous 2025 MIT study that found almost all AI pilots in companies were failing, also found that virtually every worker was using AI many times a week if not daily.

Turns out people just use their personal AI accounts rather than company ones. Which would make sense if you want to claim the work the AI does as your own.

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#125

Post by drumhead »

gavin_gee wrote: post #108

i dont understand the concern. they are putting up great financials. you have to invest ahead of the outcome. this is just classic quarterly public company earnings BS, where public markets dont reward innovation investment. they just want crank the handle financials. The bigger issue is on the model front, can Google compete; Gemini doesnt seem to be able to compete on the heavy expert end; they are doing well on li…

People bought Google for the torrential free cashflow, that looks like its gone forever with this new capital intensive model. If that the case then it needs to be valued like a heavy industrial rather than a capital light tech company.

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#127

Post by rjdndmndnd »

minraws wrote: post #96
Aurornis wrote: post #52

Earlier quoted context omitted.

The alarms in this case are that the profits and margins won’t be as high as we’ve come to expect from cloud companies. Other than Oracle’s questionable spending spree, these big tech companies are still in very good financial positions. The enormous R&D and infrastructure spends are just feeling unusual to investors who got comparable with the unusually high margins and low costs for SaaS companies. Now they have to…

If the margins aren't as high then there will be a repricing for all the massive cloud companies, which means several trillions worth of valuations to be cut from the companies. AWS/Azure/GCP/Oracle/SpaceX/etc neoclouds... are worth a combined 10+Trillion. That going down by 50-70% is going to be insane.

[dead]

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#128

Post by inigyou »

manarth wrote: post #94
inigyou wrote: post #47

Earlier quoted context omitted.

Why do people choose the cloud with a history of randomly deleting billion-dollar accounts?

UniSuper? (The claim felt so wild I wanted to check, and indeed, the private Google Cloud for the $125bn Australian pension fund was accidentally deleted by a provisioning misconfiguration. Any others?)

Yes, Google randomly deleted UniSuper for basically the same reason they randomly ban individual customers: they don't care. Relying on them for anything is a huge mistake.

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#129

Post by padjo »

650 wrote: post #40

I've been seeing quite a few companies juicing short term margins and quarter to quarter maxxing even more than before, one such example: https://x.com/MaxAnderson/status/2080229375773941871 https://xcancel.com/MaxAnderson/status/2080229375773941871 --- As someone who has personally spent $500k / mo+ on Google Ads for years, I can tell you with certainty: This revenue growth in Search is artificial & extremely unheal…

Curious how you are responding to this? Are there viable alternatives you are moving budget to or are you just hostage to their new tactics?

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#130

Post by yunwal »

erwald wrote: post #24
InsideOutSanta wrote: post #10

Earlier 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...

The guy who sells $20 bills for $10 also generates a lot of revenue
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