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AI Companies Are Trying to Hide a Staggering Amount of Debt

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Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#31

Post by kaoD »

Xalutiono wrote: post #25

And? Its not my debt. If they continue investing in compute, memory, memory bandwidth, network infrastructure, etc. it makes a relevant contribution of progress in all of these fields which I will leverage. A small form factor PC with 100gb fast memory and being able to run something like sonnet or opus level LLM would be massive. I have so many things i want to do and still sitting it out due to cost.

Is this in practice what's going to happen, or are (1) the prices going to hike (and never go down) for the consumer and (2) the memory companies will just continue doing what they already do because they're still selling their old shovels to the gold diggers?

I don't see how this will benefit the consumer, but I might be missing some second order effect?

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#32

Post by Xalutiono »

chasd00 wrote: post #23

Are they really "trying to hide" this debt? I think it's pretty common knowledge that a lot of these companies are using debt/bonds for funding. The debt not showing up where the author wants is a reporting formality not an attempt to hide it.

Yeah I think it went through the press on mass eh?

And even if you look at the debt, even companies like meta make 200 billion revenue in 2025 alone.

Isn't it good that these companies with these massive massive deep pockets invest?

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#33

Post by eagerpace »

Xalutiono wrote: post #25

And? Its not my debt. If they continue investing in compute, memory, memory bandwidth, network infrastructure, etc. it makes a relevant contribution of progress in all of these fields which I will leverage. A small form factor PC with 100gb fast memory and being able to run something like sonnet or opus level LLM would be massive. I have so many things i want to do and still sitting it out due to cost.

Exactly, this is how capitalism works. Let them shoot for the moon and let them fail. Worst case their over-valued assets are liquidated and continued on with at a more reasonable valuation. Just make sure they play by the rules and don't make new rules in the name of national security, ie boxing out open source.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#35

Post by brainwad »

Insanity wrote: post #5
brainwad wrote: post #3

Earlier quoted context omitted.

Or: increasing resource efficiency may encourage even more usage, as happened with coal, oil and photovoltaics.

Given how heavily subsidized it is at the moment, the efficiency isn’t as important. Typically efficiency would give you more at lower cost, but with token prices so removed from actual cost that plays less of a role here.

If the inference gets an order of magnitude cheaper, labs can afford to subsidise an order of magnitude more usage for the same marketing cost. So that part of usage will, if not accelerate with efficiency, at least still grow linearly with it. And there is a substantial amount of usage at or above true costs - everyone using a 3P harness, everyone on enterprise contracts, and everyone self-hosting an open weights model in a 3P cloud.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#36

Post by nolok »

daveguy wrote: post #20
nolok wrote: post #11

Earlier quoted context omitted.

I disagree in a way, part of the reason they can't really succeed at the moment is because it's way too expensive to really deploy at scale for most companies, but even for those AI companies themselves. If they can make business access subsidized/cheap the same way pro/plus/max/whatever plan are for regular users while still being profitable, this can work out. The other solution is if they do reach that "it's so su…

You do realize "subsidizing" means charging less for something than it costs to provide, right? So they'll lose a dollar on every sale, but they'll make up for it in volume? E2E is usually where the profit comes from. If they're subsidizing getting regular users on board (pro/plus/max), and they're subsidizing to get businesses on board (massive deploys), where can the profit possibly come from without a pricing rug…

I do, my point was answering to the "if it comes so cheap that" they would stop losing money of that, they would still need to subsidize for acquisition or some big clients or for rush times. It's the all-you-can-eat-buffet strategy.

I'm not saying I see them going that way or that I would, but at least THAT would possibly work.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#37

Post by dofm »

Xalutiono wrote: post #25

And? Its not my debt. If they continue investing in compute, memory, memory bandwidth, network infrastructure, etc. it makes a relevant contribution of progress in all of these fields which I will leverage. A small form factor PC with 100gb fast memory and being able to run something like sonnet or opus level LLM would be massive. I have so many things i want to do and still sitting it out due to cost.

> And? Its not my debt.

For the moment.

There are several ways that ordinary investors and even simple pension holders could end up stuck with the downside of this.

The debt risk hidden in CDOs wasn't your debt either but if you had a pension plan, the crisis absolutely cost you money you would have earned, and in many cases pension fund values dropped by five to ten per cent within a year.

The SPV/CDO comparison being made is by no means exact, but hidden debt at this scale surprising analysts tends to cause problems. If more institutions are severely exposed than anyone thought, it is bad.

Especially since any success strategy is predicated on literally unbelievably rosy predictions.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#38

Post by Xalutiono »

markus_zhang wrote: post #29
Xalutiono wrote: post #25

And? Its not my debt. If they continue investing in compute, memory, memory bandwidth, network infrastructure, etc. it makes a relevant contribution of progress in all of these fields which I will leverage. A small form factor PC with 100gb fast memory and being able to run something like sonnet or opus level LLM would be massive. I have so many things i want to do and still sitting it out due to cost.

The thing is they actually pushed the price tags of memory and disks high so we wouldn’t be able to afford it. Unless ofc you rent from them.

Yes that is unfortunate for sure don't get me wrong this affects me but the overall benefit will still be bigger i assume.

10 years ago i watched a talk about the problem of compute vs. memory. Compute increased significantly while memory speed did not.

This gigantic investment will solve this problem.

So either this blows and we will have way too much capacity which will lead to cheap and mass amount of memory for everyone + cheap GPUs again OR AGI. So win - win.

Re: AI Companies Are Trying to Hide a Staggering Amount of Debt

#39

Post by GolfPopper »

eagerpace wrote: post #33
Xalutiono wrote: post #25

And? Its not my debt. If they continue investing in compute, memory, memory bandwidth, network infrastructure, etc. it makes a relevant contribution of progress in all of these fields which I will leverage. A small form factor PC with 100gb fast memory and being able to run something like sonnet or opus level LLM would be massive. I have so many things i want to do and still sitting it out due to cost.

Exactly, this is how capitalism works. Let them shoot for the moon and let them fail. Worst case their over-valued assets are liquidated and continued on with at a more reasonable valuation. Just make sure they play by the rules and don't make new rules in the name of national security, ie boxing out open source.

Here in the US "let them fail" only happens to businesses without political pull, which I'm pretty sure these companies have.
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