There are so many news about this topics nowadays, that I think they are going to blow the horn of the final attack shortly after.
Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
221–230 of 306 posts
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#222Earlier quoted context omitted.
> Once the tide drops enough for hardware lead times to shorten to weeks Which will not be any time soon according to SK Hynix CEO: > We still forecast that customer demand will remain higher than our supply capacity even beyond 2030 https://www.reuters.com/world/asia-pacific/sk-hynix-ceo-sees...
For what its worth, SK Hynix CEO has every incentive to show that RAM prices will remain high for as long as possible because that is the only thing which is floating their evaluation to such astronomical amounts. Independent estimates sort of show around 2027-28 from what I remember. I remember reading some article which said that RAM prices are already going down from its peak slowly (IIRC I can be wrong, I usually…
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Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#223i 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 agree Gemini's value is not at the frontier, but they are making very useful smaller models. 3.5 flash lite is super fast, cheap and token efficient and accepts any kind of input. For large, price-sensitive processing, in consolidated workflows that don't need the latest improvement, it is the best. Perhaps they should focus on improving their dominance on this business, I don't see gemini reaching claude/gpt in coding. But they could be the ones that make it possible, and economically viable, to roll out llms in large scale automation.
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#224The current commitment by hyperscalers is around 1.7T USD, reported liabilities 1.3T and this year global debt related to AI is 570B. So that’s around 3T total. For this to make sense AI must generate 2T in new revenue per year by the end of the decade. And that would be only a 10% ROIC. For context ROIC for big tech is around 35% so at 10% they will be barely breaking even. The SP500 gives 10-12%. With 10% ROIC from…
I just don’t understand this view. This is the most significant technology ever developed. The uncertainty currently is whether it 1) has massive impact, completely altering society and the making world significantly significantly better or 2) if we go into a fast takeoff/rsi loop. Personally I’ve always been highly skeptical of the later, but that seems like a genuine possibility now. It’s not ‘are we going to be ab…
> It’s not ‘are we going to be able to generate 10% roic on compute’ the answer to that is yes.
Based on what? No AI company has ever made a cent in profit (exept for Nvidia lmao).
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#225The current commitment by hyperscalers is around 1.7T USD, reported liabilities 1.3T and this year global debt related to AI is 570B. So that’s around 3T total. For this to make sense AI must generate 2T in new revenue per year by the end of the decade. And that would be only a 10% ROIC. For context ROIC for big tech is around 35% so at 10% they will be barely breaking even. The SP500 gives 10-12%. With 10% ROIC from…
Everyone that has invested even a dollar to AI believes the revenue will easily surpass the most optimistic predictions. Ask them.
Wonder if you can pay margin calls with belief.
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#226The current commitment by hyperscalers is around 1.7T USD, reported liabilities 1.3T and this year global debt related to AI is 570B. So that’s around 3T total. For this to make sense AI must generate 2T in new revenue per year by the end of the decade. And that would be only a 10% ROIC. For context ROIC for big tech is around 35% so at 10% they will be barely breaking even. The SP500 gives 10-12%. With 10% ROIC from…
I just don’t understand this view. This is the most significant technology ever developed. The uncertainty currently is whether it 1) has massive impact, completely altering society and the making world significantly significantly better or 2) if we go into a fast takeoff/rsi loop. Personally I’ve always been highly skeptical of the later, but that seems like a genuine possibility now. It’s not ‘are we going to be ab…
It will obviously be a large part of the economy like online shopping is today. The companies that built up a lot of debt to be brand names in online shopping primarily went bankrupt because new companies had no debt (and perhaps no negative sentiment from early customer experiences.)
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#227Earlier quoted context omitted.
> I'm not sure I've seen what I would call dramatic improvement since maybe GPT4? LLM conversations online are so weird. Whenever I read things like this it’s like I’m living in a different world than the other person. GPT4 was almost useless compared to what we have available today.
I mostly use anthropic models, but there was a big step function when claude code came out, and it’s been incremental or a plateau since then. Opus 4.6 and 4.8 are basically indistinguishable from Fable and Sonnet 5. 4.7 was a hot mess. The guardrails on 4.8 and 5.0 make them worse than 4.6 for many tasks. So, even if Fable is theoretically better, refusals/downgrades make it a worse product in practice. Who cares if…
> I’d bet most people could be downgraded to a 12 month old frontier model, and not notice for a week or so.
This is another unbelievable claim. I actually used frontier models from 12 months ago and they were completely different.
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#228I'm thinking Apple has been really smart in their AI strategy here. It seems a mistake to make unprecedentedly large capital expenditures, in a very very crowded space, without much evidence of a moat. Presumably people thought the moat would be singularity-like self-improvement of AI, but the singularity is merely a religious concept, and nobody should take religious myth as fact, it's merely narrative for orientati…
Google and Meta's moat will be their ability to set untold billions on fire. OpenAI and Anthropic can do it for now but once the bubble pops they'll be fucked.
Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#229Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs
#230Earlier quoted context omitted.
> GPUs become obsolete in 5 years. Not only that, but they're typically amortized over 5 years, where the actual lifespan usually falls far shorter (1-3 years), adding to the artificial subsidy conditions we see today. So they're gaming the lenders into deferring interest payments as much as possible today so that new competitors don't have the same cheap financing advantage.[0] 0: https://blog.citp.princeton.edu/202…
If they're deliberately inflating the likely useful economic life of their assets to get a lower interest rate, it's hard to see how that wouldn't be classed as fraud. It's the sort of behaviour that really does end up with people going to prison.
You’re all getting some concepts mixed up here. That five year amortization rate is the IRS’ usual amortization rate for computers. GPUs are classed as computers for asset depreciation purposes. But GPUs are part of 168(k) so they’re eligible for a 100% bonus depreciation the year of purchase.
There’s nothing fraudulent at all here just people using terms they really aren’t comfortable with.