111–120 of 178 posts
Earlier quoted context omitted.
Yes, they have assets: GPUs sitting in datacenters, and data. Question is: is that worth enough to cover the debt after the market crashed?
Don’t they all have mostly the same data, with a small / negligible delta between each other?
Earlier quoted context omitted.
And then everyone would stop using their inference as soon as a better model for a reasonable price came out. The R&D expenditure is a critical requirement for the inference profits, to the point where we should probably lump their financials together, at which point is definitely not profitable. What will it look like when R&D plateaus (and yes it definitely will, but it could take a while), investment falls, and a…
And then everyone would stop using their inference as soon as a better model for a reasonable price came out. Exactly. It's competition now that is driving high training costs - not a business model problem. There will be winners and losers. The losers won't be able to keep up with the training costs forever. See my post here: https://news.ycombinator.com/item?id=49119265
We have seen plenty of examples in other industries where you can never really stop investing a ton on R&D with diminishing returns (like in semiconductors or pharma), because the moment you stop newcomers overtake you.
Or the whole thing becomes a commodity with lots of competitors, where technological advantage is overtaken by marketing as the dominant force.
Or you really are left as the only player alive, but you realise that the market cannot absorb higher prices for your product by then, they prefer just not to buy it. Perhaps you are the only player alive because the business has become so low-margin that everyone else has abandoned it intentionally.
That Silicon Valley pitch you are echoing rarely works out as advertised, even for the winners.
Earlier quoted context omitted.
I think these large numbers are casually thrown about, but the real meaning is mind boggling. 1 trillion dollars is the entire US defense budget - aircraft carriers, nuclear submarines, health care, salaries, stealth fighters ect. The hidden AI debt alone is more than that https://asia.nikkei.com/business/technology/five-us-tech-gia... just for five tech giants (not to mention all the other smaller players like neocl…
Most people mean this to say that 1 trillion is a lot of money, but it still comes back to what you believe AI is- in hindsight, does 1 trillion dollars to build the internet sound like a lot or a little? (That is, spending 1 year of USA's defense budget to get the entire internet) It comes back to your perception of what AI is because to people who say AI is glorified auto-complete won't believe that the money is wo…
Earlier quoted context omitted.
I would imagine Anthropic et al. are largely leasing land/buildings, so as the other commenter said… must be the server racks that are acting as collateral (if anything). Generally enterprise hardware depreciates very harshly. I’m used to paying $10 for Intel Xeons that once retailed for over $5,000. I expect to pick up some NVIDIA Blackwell 6000s for $100 each someday.
We are in odd times however - I for one am sitting on paper profits on the consumer gpu I bought 2 years ago. If anyone goes down before the supply side is fixed - the first to fall will probably be able to liquidate their gpus at a profit.
Meta and xAI announcing they are leasing out capacity is a version of this already happening.
A while ago I was thinking, “Gee, AI is so complicated, how can I keep up with the landscape?” After reading these articles go by so often, it feels like what I actually can’t keep up with is the bond market. To paraphrase Trotsky, you may not be interested in the bond market, but the bond market is interested in you. I want to be able to read the signals at the bottom of this article, and divine some kind of predict…
> Gee, AI is so complicated, how can I keep up with the landscape? The interesting thing is: you do not need to keep up. It’s actually way easier and cheaper to wait a bit for the chaos to stabilize, then learn to use the tools. You don’t need to have been someone who experienced the whole evolution, non stop at the edge. It’s ok to let the enthusiasts discover how things work and eventually learn from them. Just lik…
you won't get debt if you don't have assets that can be repossessed, so having debt means these AI companies have assets: that's a strong thing, not a weak thing. interest rates are what they are, and they go up and down for reasons exogenous to your industry; debt regardless of interest is always "cheaper" than equity, and the shareholders expect to make their money from equity, paying interest on debt as a type of…
That's the ideal scenario, but you can also have immense debt because someone once thought you had assets.
Earlier quoted context omitted.
How can people in Hacker News still doubt AI's benefit when they are seeing in front of their eyes every technical profession getting disrupted to oblivion in the last year. Just ask basically any software engineer how much their profession has changed over the last 12 months Obviously there is risk, but can't we really extrapolate the AI gains forward and just see how big it's ahead to become?
> every technical profession getting disrupted to oblivion Where is this disruption? The longer we go, the more people report that the supposed net-gain of easily 100s of percents is not visible. I do strongly believe "It's just a tool" - A powerful one, but not one like the invention of the steam machine.
Earlier quoted context omitted.
And then everyone would stop using their inference as soon as a better model for a reasonable price came out. Exactly. It's competition now that is driving high training costs - not a business model problem. There will be winners and losers. The losers won't be able to keep up with the training costs forever. See my post here: https://news.ycombinator.com/item?id=49119265
It's never that simple, that's not the only possible endgame. We have seen plenty of examples in other industries where you can never really stop investing a ton on R&D with diminishing returns (like in semiconductors or pharma), because the moment you stop newcomers overtake you. Or the whole thing becomes a commodity with lots of competitors, where technological advantage is overtaken by marketing as the dominant f…
We have seen plenty of examples in other industries where you can never really stop investing a ton on R&D with diminishing returns (like in semiconductors or pharma), because the moment you stop newcomers overtake you.
I think you're proving my point. Eventually, R&D heavy industries almost always become a monopoly or duopoly. Small/losing players can't keep up and drop out or acquired.
A while ago I was thinking, “Gee, AI is so complicated, how can I keep up with the landscape?” After reading these articles go by so often, it feels like what I actually can’t keep up with is the bond market. To paraphrase Trotsky, you may not be interested in the bond market, but the bond market is interested in you. I want to be able to read the signals at the bottom of this article, and divine some kind of predict…
As a retail investor, you should buy an index fund and then forget about it. By the time you have read this article, the professionals and their computers will have digested that material a thousand times over and have priced it in. To be more precise: buy the lowest cost most diversified index fund you can buy and then hold it. If you want to spend some smarts to get a better return: look at how to minimise taxes an…
Not sure how it's all going to play out, but this ginormous increase in passive investing over the past decade or so, mainly in S&P 500, seems like a vulnerability. Small cap might be a better (non-sexy) target long term.