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The biggest sign of an AI bubble is starting to appear – debt

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Re: The biggest sign of an AI bubble is starting to appear – debt

#111

Post by tim333 »

dragonwriter wrote: post #104
infecto wrote: post #67

Earlier quoted context omitted.

No the tone is generally that some mythic AI winter is going to happen because of current valuations and that AI is simply the current crypto grift.

AI winters are a recurring phenomenon, not a myth, and, like the dotcom bust, involve a collapsing hype bubble, reductions in focussed speculative investment in the field, but the technologies that were big during the preceding hype cycle continuing to be important, and develop, though in the case of AI winters often they stop being thought of as AI and just get referred to with a name for the specific technology (of…

Googling, there seem to have been two AI winters, the first (late 1970s - early 1980s) when people first figured AI was overhyped, and the second (late 1980s - early 1990s) with the collapse of expert systems. I don't think we are about to get one now - more like AI spring leading to AGI summer.

Re: The biggest sign of an AI bubble is starting to appear – debt

#112

Post by throw219080123 »

infecto wrote: post #100
throw219080123 wrote: post #97

Earlier quoted context omitted.

To save months the output would have to be reliable, but it isn't. It saves very little, especially at data input and coding. It does save time for tasks where the output is easily checked, such as image generation and translations. But the quality is often mediocre.

I cannot say for your work but for classification steps and data structuring it’s quite accurate and this is with regular testing. I cannot speak for your work but for mine and folks in adjacent industries, LLM are fantastic and adding a lot of value to our workflows. You’re honestly holding on to this dead idea that LLM outputs are full of hallucinations. Throwaway account with throwaway comment.

It's "quite accurate" which is not acceptable for almost all relevant tasks is a business context. Somebody needs to manually check everything. Almost no time is saved.

Talking as someone who has built many small OpenAI integrations aka wrappers in business apps.

Re: The biggest sign of an AI bubble is starting to appear – debt

#113

Post by ndiddy »

nitwit005 wrote: post #109
JCM9 wrote: post #48

Earlier quoted context omitted.

Any big bust will have broader market implications, but I don’t think this has the broad systemic impact that the financial crisis did. It will likely be really ugly for those caught up in it, but a news story and minor blip to the 401k of everyone else. If you are well diversified keep your head down and keep going. If you’re a VC that heavily invested in AI, I suggest preparing for a Cat 5 hurricane now. The bigges…

I would caution that people who think they've diversified are not. A huge portion of the S&P 500 is the top handful of companies, so an index fund may mostly end up heavily invested in those firms. Some people have shifted investments around to fix that, but I'm sure many people will be quite surprised.

Agreed. If you look at what's in the S&P 500, 7.49% is nVidia, 6.33% is Microsoft, 4.88% is Google, 3.86% is Amazon, and 2.95% is Meta. That's over 25% of the S&P 500 in companies that will see their share prices fall heavily if there's yet another AI winter.

Re: The biggest sign of an AI bubble is starting to appear – debt

#114

Post by rsync »

nitwit005 wrote: post #109
JCM9 wrote: post #48

Earlier quoted context omitted.

Any big bust will have broader market implications, but I don’t think this has the broad systemic impact that the financial crisis did. It will likely be really ugly for those caught up in it, but a news story and minor blip to the 401k of everyone else. If you are well diversified keep your head down and keep going. If you’re a VC that heavily invested in AI, I suggest preparing for a Cat 5 hurricane now. The bigges…

I would caution that people who think they've diversified are not. A huge portion of the S&P 500 is the top handful of companies, so an index fund may mostly end up heavily invested in those firms. Some people have shifted investments around to fix that, but I'm sure many people will be quite surprised.

Under diversification, as you are describing, is the first ingredient…

I suspect the second ingredient is US boomers right on the edge of retirement or otherwise shifting to fixed income… And a normal correction causes all of them to divest simultaneously from equities.

There is a potential for a stampede out of US equities.

Re: The biggest sign of an AI bubble is starting to appear – debt

#115

Post by port11 »

JCM9 wrote: post #4

The current bubble is getting scary. When this thing pops the blast it’s going to be a real mess. The big tech firms will hurt, fire some execs in a show of “making changes,” do a bunch of layoffs across “AI” teams to show the market they’re pivoting and getting costs in order, and move on. The startups ecosystem will suffer extensive and catastrophic damage. The funding ecosystem will be set back years as this wipes…

The banking sector in the US had assets north of 12 trillion dollars. AI last year had about 100–150 billion dollars of market cap.

I think because we hear about AI so much, we tend to exaggerate its importance?

Re: The biggest sign of an AI bubble is starting to appear – debt

#116

Post by beefnugs »

SoftTalker wrote: post #58
TrackerFF wrote: post #16

The thing is, the models do work. They add value to me each and every day, to a degree almost no other tech has done before. But that doesn't take away the fact that this is extremely expensive stuff (not for me, but for the companies pushing the envelope), far too expensive. And it is really taking its toll on other resources, like electricity.

But are you paying for them commensurate with the value they create? That's the problem. Tons of money being invested/borrowed on technology with not nearly enough revenue to justify it. Same thing that happened in the late 1990s.

Actually the problem is the same as all previous technology: is the company getting 100% benefit while employees get less than zero with lost jobs, lost negotiating power, lost unique skill marketability, etc

Re: The biggest sign of an AI bubble is starting to appear – debt

#117

Post by karmakurtisaani »

svara wrote: post #70
fhd2 wrote: post #20

Earlier quoted context omitted.

What about the rest of the economy? Deutsche Bank recently said that the AI hype is the only thing holding the US stock market together. And if that crashes, it tends to ripple world wide. Scary stuff, at least to someone who doesn't know all that much about market resilience. With what little I know, I'm hoping for a soft pop with slow deflation. But big tech seems to just pump harder right now.

> Deutsche Bank recently said that the AI hype is the only thing holding the US stock market together. Doesn't sound right. Russel 2000 is up ~10% YTD.

This 10% is largely due to weaker dollar though.

Re: The biggest sign of an AI bubble is starting to appear – debt

#118

Post by nyantaro1 »

ndiddy wrote: post #113
nitwit005 wrote: post #109

Earlier quoted context omitted.

I would caution that people who think they've diversified are not. A huge portion of the S&P 500 is the top handful of companies, so an index fund may mostly end up heavily invested in those firms. Some people have shifted investments around to fix that, but I'm sure many people will be quite surprised.

Agreed. If you look at what's in the S&P 500, 7.49% is nVidia, 6.33% is Microsoft, 4.88% is Google, 3.86% is Amazon, and 2.95% is Meta. That's over 25% of the S&P 500 in companies that will see their share prices fall heavily if there's yet another AI winter.

Right. And that without considering semiconductor manufacturing/design (AMD, TSMC, Broadcom, etc.) and other second order effects.

Re: The biggest sign of an AI bubble is starting to appear – debt

#119

Post by latchkey »

uxhacker wrote: post #17
JCM9 wrote: post #4

The current bubble is getting scary. When this thing pops the blast it’s going to be a real mess. The big tech firms will hurt, fire some execs in a show of “making changes,” do a bunch of layoffs across “AI” teams to show the market they’re pivoting and getting costs in order, and move on. The startups ecosystem will suffer extensive and catastrophic damage. The funding ecosystem will be set back years as this wipes…

It’s pretty scary. According to Barron’s, MicroStrategy, a bitcoin treasury company, alone makes up about 5% of the U.S. convertible bond market. That’s remarkable given that it isn’t a typical tech or biotech growth company issuing convertibles, but essentially a Bitcoin treasury company.

Not even AI!

Re: The biggest sign of an AI bubble is starting to appear – debt

#120

Post by latchkey »

vessenes wrote: post #18

META free cashflow last year : $20bn. Cash on Hand: $47bn. "Worrying" Debt: $15bn sought. ORCL, the other company they're talking about: $20bn in Cash from Operations, $21bn in capital expenditures, ORCL Cash on Hand: $11bn. ORCL's recent debt flotation: $18bn. ORCL has 40 years to pay back; demand was reportedly $88bn for the offering. I imagine pricing was close to T-bills. These flotations posit that demand for co…

> right now inference has an 80% margin

I'm curious about this. Source?

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