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AI revenues are growing fast, but not fast enough

economist.com

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Re: AI revenues are growing fast, but not fast enough

#51

Post by frankbreetz »

woeirua wrote: post #44
pu_pe wrote: post #35

> Exponential View, a consultancy, counts $175bn of generative-AI revenue, on an annualised basis, in June. In a recent paper Anton Korinek of Anthropic and Patrick McKelvey of the Bank of Canada estimate total “AI services” revenue. Adapting their methodology, we reckon this was $220bn (again annualised) in the first quarter of this year. Ramp’s data imply that 2-3% of business spending now goes on AI, pointing to $…

This is also at the end of the tokenmaxxing era, so I'm not sure I would draw a straight line out from here. A LOT of companies are clamping down on token costs right now.

Even more companies are just starting AI/ML initiatives. The tokenmaxxing thing only happened at a handful of tech companies, most companies don't have unlimited money to do this kind of thing.

Once the Pathfinders find out where the real value is there is much more room for growth from companies who have be mindful of budget.

Re: AI revenues are growing fast, but not fast enough

#52

Post by fidotron »

woeirua wrote: post #48
iammjm wrote: post #3

“ According to Mr Yotzov’s study, nine in ten executives report no impact of ai on their firm’s productivity over the past three years.” Brutal stuff.

A lot of people are slowly realizing that code generation was not the bottleneck in their internal development process, and waving a magic wand to make that go faster doesn't actually lead to more revenue.

Next you'll be telling me that using number of PRs deployed in a week as a KPI is a bad idea.

Re: AI revenues are growing fast, but not fast enough

#53

Post by jcranmer »

trollbridge wrote: post #11
an0malous wrote: post #6

> A back-of-the-envelope calculation finds that covering aicapex through identifiable ai income requires revenue on the order of $2.5trn per year, more than tech’s entire combined revenue today. … > All these complex calculations roughly tally with a much simpler one: adding up the ai revenue of the firms selling most of the ai. Anthropic pulls in perhaps $75bn, annualised; Openai makes tens of billions; Google, via…

$2.5tn is about 8% of U.S. GDP. So a handful of AI firms really expect that they will become larger than the entire U.S. sectors of manufacturing, government, or healthcare?

I suspect that they believe they can integrate with a substantial portion of not just the US economy, but also most of the European and formal Latin America economies. And I also suspect that the number is quite high because there are so many AI companies planning to snag like 80% market share for AI.

Re: AI revenues are growing fast, but not fast enough

#54

Post by jonfw »

thisisthenewme wrote: post #12

I kind of think the AI boom is the worst for (non-inference-providing) companies. If all companies are using the same "frontier" LLMs, and if they are competitive, what gives one an edge over the other? I think, just the people. Which was the same as before, but now with the additional AI spend that they can't cut, or they become less competitive.

> If all companies are using the same "frontier" LLMs, and if they are competitive

The answer is that all companies will not be using the same frontier LLMs competitively

This will be yet another technology that will benefit from economies of scale. Big businesses and those in PE portfolios will lead the charge, adopt AI, increase efficiency, and gain market share at the expense of mom and pop shops.

This will be good for our 401ks because we're all primarily invested in big business

Re: AI revenues are growing fast, but not fast enough

#55

Post by lunar_mycroft »

WarmWash wrote: post #37
iammjm wrote: post #3

“ According to Mr Yotzov’s study, nine in ten executives report no impact of ai on their firm’s productivity over the past three years.” Brutal stuff.

Most people will pocket AI gains for themselves. So from the top it doesn't look like much has changed, whereas workers are trying to offload as much work as they can onto their claude subscription. People in desperation to min/max work per unit dollar, will leverage AI to free themselves from as much work as possible, while still claiming credit for the work. So as the labs start ratcheting up the price, people will…

Wouldn't that explanation predict that lower ranking employees would be more impressed with AI than higher ranking ones? Because what we actually observe [0] tends to be the opposite. Executives are the most bullish on AI, followed by Managers, with employees having the least adoption.

[0] https://businesschief.com/news/why-are-executives-using-ai-m...

Re: AI revenues are growing fast, but not fast enough

#56

Post by fidotron »

iammjm wrote: post #3

“ According to Mr Yotzov’s study, nine in ten executives report no impact of ai on their firm’s productivity over the past three years.” Brutal stuff.

I think what's happened, so far at least, is productivity has been moved around.

Anyone doing consulting has seen it, where now the "I vibe coded this last week" competition is way more intense. Basically the people with the problems now have a chance to spin up something that looks like the solution they want, they then get in trouble and need someone to sort it out.

LLMs _are_ great tools for software development but if you haven't noticed their near complete inability to reason about why what they're doing might work you haven't been trying hard enough.

Re: AI revenues are growing fast, but not fast enough

#57

Post by jordanb »

woeirua wrote: post #48
iammjm wrote: post #3

“ According to Mr Yotzov’s study, nine in ten executives report no impact of ai on their firm’s productivity over the past three years.” Brutal stuff.

A lot of people are slowly realizing that code generation was not the bottleneck in their internal development process, and waving a magic wand to make that go faster doesn't actually lead to more revenue.

One of the weirdest things about the whole AI boom is the mass formation psychosis where everyone started acting like lines of code written was an important metric for software development productivity.

We've known for decades that more lines of code isn't good. Bill Gates was joking about it in the OS/2 days!

We've known for decades that the actual creation of the code is the smallest part of an actual software developer's job.

We've known for decades that "every line of code is a business decision" that has to be written with an understanding of the underlying goal, and the hardest part of training up software engineers is making them understand that.

We threw all that out because "the chatbox writes code really fast, software is a solved problem!"

Re: AI revenues are growing fast, but not fast enough

#58

Post by QuantumNoodle »

The thing is, AI is a productivity boost but staff drive all the productivity. The catch 22 is AI is expensive so in order to provide it to everyone they need to reduce staffing. The result is remaining folks are able to produce more but the organization as a whole is not exceeding pre-layoff output. And now things are being dropped on the floor and falling in between the cracks -- which impedes efficiency and velocity. Happening at my company now.

AI inference needs to get cheaper or there will always be this "terminal velocity." I suspect AI labs' incentives to reduce costs is only where there is overlap to free up hardware/utilization (to then provide inference to more paying customers.) I highly doubt they will want to make things cheaper for users -- they have debts to pay.

Open weight models are the way and forward, it is the only way an organization can truly control costs by self hosting or buying cheaper inference. Relying on closed weight models is a business risk. Kimi models are only marginally worse than opus but significantly better than the bleeding edge of yesterday's sonnet.

Re: AI revenues are growing fast, but not fast enough

#59

Post by lunar_mycroft »

andy99 wrote: post #17
bad_haircut72 wrote: post #4

Earlier quoted context omitted.

AI will probably end up reducing lots of firms productivity because costs to defend against cyber attack is gonna skyrocket. Even for tech firms writing more code (the only thing AI is really good at so far) doesn't scale linearly with profits

Why would it obviously give attackers the upper hand? If we accept the premise that AI helps find vulns more efficiently, shouldn’t this be at least equally helpful in securing against attacks and make that increasingly efficient?

It won't do that for free, companies (and open source maintainers) will have to pay for the tokens used finding vulnerabilities in their own software. That increases the cost of releasing the same product/feature/amount of code vs what it was before.

Re: AI revenues are growing fast, but not fast enough

#60

Post by Gagarin1917 »

an0malous wrote: post #6

> A back-of-the-envelope calculation finds that covering aicapex through identifiable ai income requires revenue on the order of $2.5trn per year, more than tech’s entire combined revenue today. … > All these complex calculations roughly tally with a much simpler one: adding up the ai revenue of the firms selling most of the ai. Anthropic pulls in perhaps $75bn, annualised; Openai makes tens of billions; Google, via…

I thought SpaceXAI was making like $25 billion a year renting out hardware now?
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