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The AI bubble is popping; we just don't know it yet

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Re: The AI bubble is popping; we just don't know it yet

#81

Post by prodigycorp »

cmiles8 wrote: post #70
prodigycorp wrote: post #65

Earlier quoted context omitted.

Which players, specifically, are you talking about? Everything you said is opinion passed off as fact.

SpaceX has put a ton of excess capacity on the market. Meta tanked chip stocks by saying it was considering the same. Worries about compute overcapacity, via folks saying they want to offload capacity, is literally the thing that nuked the “situational awareness” fund last week. It’s long term demand that matters, not just “price.” High prices without true demand is the literal definition of a bubble.

SpaceX has put a ton of excess capacity on the market that was subsequently absorbed by Anthropic. There's a reason why Grok is no longer free.

Meta said it was considering doing the same because they saw how valuable excess capacity was.

You're misinterpreting what actually happened.

Re: The AI bubble is popping; we just don't know it yet

#82

Post by rickydroll »

ozgung wrote: post #34

Note that the “AI Bubble” term used here is only defined in the context of market speculation. If you are not an investor of AI companies then there is nothing to worry about for you. If you are an investor, then you should know that people can’t really predict when bubbles burst. Every prediction in the markets is a speculation and some investors can simply bets against the popular expectations to make good money. M…

I'm not an intentional investor in AI companies. I have index funds, which still expose me to the risk of AI froth.

Although yes, AI as a technology is still in its early stages, and I believe it's a sound technology for us to work with.

I also think we're solving the wrong problem (removing office work) versus solving problems in the sciences, like running and monitoring biotech labs.

Re: The AI bubble is popping; we just don't know it yet

#83

Post by kibwen »

FrustratedMonky wrote: post #73
hajile wrote: post #67

Earlier quoted context omitted.

On a $100B AI datacenter, some 60-70% of the center needs to be replaced every 2-6 years. These companies claim the hardware lasts 6 years while simultaneously claiming they are relying on new hardware to lower inference costs (implying much more frequent updates). Over 40 years, that's 7-20 hardware changes, that turns into between $420B and $1.4T of ongoing investment (not accounting for inflation). The $30B that i…

I've been through several network upgrades. You are saying the fiber in the ground lasts a long time, but all the equipment on either end gets replaced every ~5 years. I agree this build out seems pretty crazy, but people were saying the same thing with the internet. Arguing if the equipment has a replacement rate of 2-6 years or 30-40 years, I think isn't the part that makes this a bubble.

For fiber, the main costs were not the fiber itself, but acquiring the rights to lay the fiber and the labor to do so. The equipment at either end has a lifespan of somewhat less that 50 years, but that's a minor cost.

Conversely, for the data centers we're talking about, the cost of the things that need replacing every five years is one of the primary costs.

Re: The AI bubble is popping; we just don't know it yet

#84

Post by Ekaros »

delecti wrote: post #57
thepasch wrote: post #24

Earlier quoted context omitted.

Nvidia has hordes of raucous gamers on the prowl waiting to tear their chips out of their hands the moment hyperscaler demand falters; plus, China has made sure there will always be plenty of open models to run for hobbyists and neoclouds, even if training compute were to drop off a cliff. They'll be just fine.

The market for video game hardware is absolutely puny in comparison to the datacenter GPU boom. I saw it put quite well in a comment on reddit: > In 2020, the gaming segment was 47% of revenue at around 8 billion. Today it's doubled to 16 billion, or 7% of revenue. That's right, data center went from 6 billion 2020 to around 198 billion today. Even if gaming revenue doubles again when the AI bubble pops, their total…

I think Nvidia surviving is pretty certain. They are not particularly leveraged to my understanding and their commitments are for their own products. Debt is at 12,34 billion so not that much even at their gaming revenue comparison.

Now their market cap is most likely destroyed for forever... Still I little doubts about them continuing to exist.

Re: The AI bubble is popping; we just don't know it yet

#85

Post by patwolf »

thepasch wrote: post #24
tremon wrote: post #17

Earlier quoted context omitted.

I expect Nvidia to survive the crash on its own, and everyone else except Softbank to be bailed out with US taxpayer money.

Nvidia has hordes of raucous gamers on the prowl waiting to tear their chips out of their hands the moment hyperscaler demand falters; plus, China has made sure there will always be plenty of open models to run for hobbyists and neoclouds, even if training compute were to drop off a cliff. They'll be just fine.

True, but Nvidia has 10x'd their market cap since the AI boom. They'll be fine, but their current financials can't be sustained by gamers alone.

Re: The AI bubble is popping; we just don't know it yet

#86

Post by DanTheManPR »

inigyou wrote: post #27
cmiles8 wrote: post #12

Outside a relatively small world of circular investment and FOMO feeding FOMO the general consensus seems to be “let it burn.” It appears very unlikely we will ever see an IPO of OpenAI. Anthropic appears less doomed, but still iffy at best. Tons of other large, but little discussed, AI startups are just dead-companies-walking at this point. The likes of AWS are showing good headline numbers but are taking out massiv…

It's holding up the entire US stock market and therefore the entire US economy and the dollar value. You probably don't want this particular Atlas to shrug.

I would rather be market-corrected out of a job for a few weeks or months than have this inflate into an economy-wrecking bubble that derails my career and life for years. I'm worried that we're at that state already...

Re: The AI bubble is popping; we just don't know it yet

#87

Post by antibarbarus »

Just before coming to read this article and thread, I read how Hyatt got rid of something like 30% of their call centre staff, and how the industry is gearing for replacing human work with AI.

There is sadly ample fiscal headroom in mundane drone-like work that was being outsourced (still cheaply, I might add) that AI can replace and even do a marginally better job of. I suspect AI prices can even increase and it will still be profitable for enterprises.

Companies like this will certainly keep expanding their AI use, and once they commit to that, there's little stopping them from moving to open models or local inference if need be.

My concern is less over the bubble and more over the social cost of AI. Call centres and the like provide a tremendous number of jobs. As AI moves into enterprises more and more, where are all these people supposed to work? Become baristas? They certainly won't be "learning to code"... What sorts of social and other unrests will this cause?

These forces I think will muddy the waters and make predictions difficult. Say what you want about the AI bubble, but if it pops, it will be different than previous ones. The bubble doesn't even need to burst because of the insane economic model, if enough people are economically devastated by it, it will cause ripple effects of its own.

Re: The AI bubble is popping; we just don't know it yet

#88

Post by pu_pe »

> And the fundamentals here are OpenAI and Anthropic, which are massively valued companies. They have humongous commitments and are generating real revenue on the order of twenty billion a year.

I think the size of their commitments is predicated on demand. Anthropic's annualized revenue run rate is now close to $50 billion, a fivefold increase from a year before [1]. They are making big investments, like $200 billion on Google's TPUs over the next five years [2], but those numbers seem justified by their expected revenue this year alone. If Anthropic cannot capture that revenue, someone else will.

Stock market valuations are a different beast, I personally think we have been due for a correction for ages now. But criticism of AI investment and particularly betting that it will all come crashing soon appears misguided to me. I can see a future where AI expenditures shifts around, not a future where everyone simply stops spending in AI all of a sudden.

[1] https://www.marketscale.com/industries/software-and-technolo...

[2] https://www.resultsense.com/news/2026-05-06-anthropic-200bn-...

Re: The AI bubble is popping; we just don't know it yet

#89

Post by ozlikethewizard »

bonoboTP wrote: post #68
habinero wrote: post #61

Earlier quoted context omitted.

We don't have sci-fi AI, and in any case "this thing is now possible, therefore [much more difficult thing] will be possible soon" is not a rational thought.

> We don't have sci-fi AI Current frontier models are absolutely sci-fi AI by any measure that existed up until the late 2010s. If you showed a current frontier agentic AI, with bidirectional speech, tool use etc. to a person from 2010, they'd say it can't be real, there must be a person inside that mechanical turk.

Sci-fi AI has always been characterised by learning on the fly, which these models do not do. I guess we've got pretty close to what sci fi has often called "VI", autonomous machines that can carry out pre determined tasks to a level that looks concious, but are incapable of learning further.

Re: The AI bubble is popping; we just don't know it yet

#90

Post by pu_pe »

onlyrealcuzzo wrote: post #37
cmiles8 wrote: post #12

Outside a relatively small world of circular investment and FOMO feeding FOMO the general consensus seems to be “let it burn.” It appears very unlikely we will ever see an IPO of OpenAI. Anthropic appears less doomed, but still iffy at best. Tons of other large, but little discussed, AI startups are just dead-companies-walking at this point. The likes of AWS are showing good headline numbers but are taking out massiv…

Anthropic is almost purely a model company. They own close to no data centers. If models are becoming commodities, and the main bottleneck is actually serving them at scale, Anthropic does not appear particularly well positioned. If AWS had a ~60-80% margin for decades, I see no reason why inference can't have a ~60-80% margin for quite some time. The problem is, if costs continue to drop ~90% for the same level of q…

Anthropic is perceived as the leading AI company in the world. Even if they started selling inference alone, people would prefer to pay them a premium for it rather than figuring out how to operate opencode or other replacements. Add to that government contracts, enterprise and other markets, and I think Anthropic would be totally fine even if models plateau.

Transistor count has increased exponentially for decades and so did demand for compute. I think we will see a similar phenomenon with AI.

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