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The AI Demand Bubble

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Re: The AI Demand Bubble

#131

Post by LogicFailsMe »

surgical_fire wrote: post #120
dwaltrip wrote: post #117

Earlier quoted context omitted.

I don’t trust someone who is dumb enough to think LLMs aren’t useful at all. Of course, he may just be deceiving himself or his audience about this belief. I don’t think he is actually dumb. But this alternative is equally problematic.

I choose evaluate claims on their merit. Many times in the past I was convinced by good arguments that came from people I dislike. I think Zitron is wrong in the usefulness of AI; but then again, so are the people hyping AI way beyond its capabilities. The numbers he brings up in the article are solid though. That said, if Zitron irks you, you can watch the most recent Patrick Boyle video on the big tech debt: https:…

Great video, thank you.

But why do you think everyone in AI is hyping it beyond its capabilities? That's a specific San Francisco-driven AGI cult and a handful of annoying billionaires. I'm doing what Patrick Boyle said is the biggest use case: running a one person consultancy on $400/month of AI services. It's working far better than I expected. And if the rates go up too much down the road, I'll pivot to running locally.

I suppose if you still consume influencer content, it's pretty bleak slop right now too, but then there are occasional slopcore geniuses that manage something entertaining so I say let the future work itself out. No worries, it will.

As for the sanity of the gold rush phase of anything... Are you kidding me? Really...

The global GDP annually is ~$120T. $2T is not that big a number at that scale. It's interesting that the critics stick to the domestic tech GDP when the global tech GDP is ~$20T to insist AI hitting $2T annually is impossible.

Re: The AI Demand Bubble

#132

Post by cadamsdotcom »

jdkee wrote: post #28

https://x.com/edzitron/status/1817955630784917548

> I hypothesize that OpenAI will collapse in the next 12-24 months unless it raises more funding than in the history of the valley and creates an entirely new form of AI.

That unless is pretty interesting.

Re: The AI Demand Bubble

#133

Post by InsideOutSanta »

dubeye wrote: post #123
InsideOutSanta wrote: post #10

Earlier quoted context omitted.

> that is growing It seems like user numbers are stagnating, and the ad play isn't working out so far. Where is the revenue growth coming from? I don't think API can be the answer, because API has absolutely no switching costs. > The obvious way to recoup spend is to grow, rugpull by cranking up costs 6x Presumably, that was the plan, but I don't see how that can possibly work with how quickly the Chinese models caug…

revenue is probably the better indicator of whether revenue is growing or not

These companies don't disclose revenue.

Re: The AI Demand Bubble

#134

Post by InsideOutSanta »

xethos wrote: post #128
InsideOutSanta wrote: post #10

Earlier quoted context omitted.

> that is growing It seems like user numbers are stagnating, and the ad play isn't working out so far. Where is the revenue growth coming from? I don't think API can be the answer, because API has absolutely no switching costs. > The obvious way to recoup spend is to grow, rugpull by cranking up costs 6x Presumably, that was the plan, but I don't see how that can possibly work with how quickly the Chinese models caug…

> API has absolutely no switching costs. Were that true, many embedded maps would have switched to OSM instead of Google Maps after Google massively increased costs. Adding your business to OSM is free, and API costs would fall pretty dramatically

I'm talking about inference APIs.

Re: The AI Demand Bubble

#135

Post by rich_sasha »

arctic-true wrote: post #94
rich_sasha wrote: post #85

Earlier quoted context omitted.

This only works up to a point. Plenty of different makers of phones for example all making fungible phones at ever lower prices, yet managing to eke out a profit. I can see a world where OpenAI, Anthropic, Chinese companies corner the market, make themselves indispensable and start charging market rates, while also getting better and more cost efficient.

Here again you have network effects, though. I personally have an iPhone because it’s what all my friends and family use and there are communication functions that are much easier to engage with if you all have the same sort of device. It’s also not trivial to switch, you need to, at minimum, go to the store or wait for something to get delivered - to say nothing of the wasted money from buying multiple phones. If I…

Mmaybe- not sure. For technical applications like coding, perhaps. Though even there you have plenty of opinions about different models’ differences on subtle features, this model writes bad tests, that one is bad at JavaScript etc.

But the real sales pitch is that AI overtakes everything. That the YC cohort of 2032 will be just CEO, sales guy and a massive AI bill. It’s not entirely impossible IMO, either.

Then you totally get network effects. All your company documents, discussions, context etc are in there, your agents/employees whom you finally taught to do the job right. And I’m guessing the REST API for extracting your data is absent.

Re: The AI Demand Bubble

#136

Post by LarsDu88 »

derdi wrote: post #60
LarsDu88 wrote: post #15

Earlier quoted context omitted.

The hyperscalers already had the compute monopoly. They just spent a bunch of money on even more compute. Compute is OK because it's reasonably general purpose to reallocate for what comes after chatbots (e.g. consumer robotics which is reasonably likely to take off in the next 4 years).

What kind of robots are we talking about? What will robots do for me five years from today?

Literally everything chatbots don't do along with everything chatbots currently do. They will gradually go from doing your dishes, to contructing an ADU in your backyard by 2040

System 2 (thoughtful slow planning) has already been cracked with VLA models. The seemingly easier system 1 (fast reactive) will be figured out in months... maybe with JEPA

Re: The AI Demand Bubble

#137

Post by LarsDu88 »

zozbot234 wrote: post #79
LarsDu88 wrote: post #2

This is a bit of a doomer article, but quite honestly, 200 billion dollars a year on a 30 billion dollar a year business that is growing does not really sound as bad as the author makes it out to be, especially when that business consists of growth startups that are currently primarily concerned with completely automating your current revenue stream. The obvious way to recoup spend is to grow, rugpull by cranking up…

> The actual risk that the author does not even broach upon for investors... the thing that will actually torpedo this massive investment are the open source open weight chinese models that commoditize the entire endeavor. I disagree that "the entire endeavor" is inherently doomed for Anthropic and OpenAI. There will always be a very top end of the market running humongous models (like the recently-teased OpenAI Astr…

There may be a market for the super models, but the reality is, the super models and the merely ok models already saturate on lower levels tasks.

You don't need Fields math PhDs to make you a web app or plan your vacation.

The remaining frontiers for high value ROI are ultra long horizon tasks, and lower cost faster inference. The former will rely on better architectures which will likely also get commoditized. The latter will probably be led by Chinese companies which already own most of the electronics manufacturing supply chain.

Video generation was already tried by OpenAI and was enormous bust. It busted so hard the current leading proprietary videogen model is Chinese, and the best open weight videogen model is also Chinese.

Re: The AI Demand Bubble

#138

Post by LarsDu88 »

bigbadfeline wrote: post #126
LarsDu88 wrote: post #2

This is a bit of a doomer article, but quite honestly, 200 billion dollars a year on a 30 billion dollar a year business that is growing does not really sound as bad as the author makes it out to be, especially when that business consists of growth startups that are currently primarily concerned with completely automating your current revenue stream. The obvious way to recoup spend is to grow, rugpull by cranking up…

> 200 billion dollars a year on a 30 billion dollar a year business that is growing does not really sound as bad as the author makes it out to be How do you know it's not "as bad"? Whenever things got that bad a crash followed, a lot of people lost their shirts and savings. For them it's that bad and then some . Why mislead these people? > The obvious way to recoup spend is to grow, rugpull by cranking up costs 6x an…

>Anyone who invests while convinced that only a monopoly would save his investments has got his brain screwed on backwards

Whats the common trait between Warren Buffet and Peter Thiel? They only invest in companies that are monopolies or on their way to being monopolies. As Thiel (who very much has his head screwed on backwards) says "Competition is for losers"

What does Rockerfeller, Carnegie, Gates, and Musk have in common? They own monopolies.

So yes! The only way these companies are going to make their investments back is by being monopolies.

Re: The AI Demand Bubble

#139

Post by LarsDu88 »

supern0va wrote: post #112
LarsDu88 wrote: post #2

This is a bit of a doomer article, but quite honestly, 200 billion dollars a year on a 30 billion dollar a year business that is growing does not really sound as bad as the author makes it out to be, especially when that business consists of growth startups that are currently primarily concerned with completely automating your current revenue stream. The obvious way to recoup spend is to grow, rugpull by cranking up…

>The actual risk that the author does not even broach upon for investors... the thing that will actually torpedo this massive investment are the open source open weight chinese models that commoditize the entire endeavor. If you don't have a monopoly, you cannot rugpull and 6x the costs on the consumer. This is the thing: let's just reason it out. What if OpenAI and Anthropic both fail and end up in bankruptcy? What…

I think the nuance that's being missed here is that the profit margin of inference serving when there's perfect competition is close to 0.

Zero profit means no recouping investment costs effectively bursting the bubble.

Technological progress can come at extreme pace but the lack of profits can still torch both the startup frontier labs and the hyperscalers.

We plebians can then pick up H100 gpus off Ebay to help us invent new superconductors and generate waifu videos in pur basement...

Re: The AI Demand Bubble

#140

Post by dgellow »

semiquaver wrote: post #72
dgellow wrote: post #62

Earlier quoted context omitted.

Because it’s economics, a social science. Not a physics experiment you can replicate in a lab. You do what a serious person does: look at the thesis, look at the sources, look at the numbers, and do your own analysis

And you’d consider zitron a serious person?

Yes, but I meant the readers. Ed Zitron himself is irrelevant, we should be able to look at the thesis and evaluate it independently. That’s media consumption 101…
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