The Hater's Guide to the AI Bubble • Hacker News Board

Re: The Hater's Guide to the AI Bubble

#121

Post by 827a » Wed, Jul 23, 2025, 12:28 AM UTC

cwmma wrote: post #97

hotpotat wrote: post #69

Lots of in-depth analysis, but I think the author is very clearly emotionally invested to the point that they are only drawing conclusions that justify and support their emotions. I agree that we’re in a bubble in the sense that a lot of these companies will go bankrupt, but it won’t be Google or Anthropic (unless Google makes a model that’s an order of magnitude better or order of magnitude cheaper with capability p…

It is not clear at all if Claude will actually be profitable, are there enough people who will actually pay the subsidized costs especially if they end up being a significant fraction of an additional dev's salary.

I think there's enough people willing to pay Claude's token rates today, either via subscription or via proxy through e.g. Cursor, that they can effectively turn the "new model R&D cost" knob to whatever their financials can support, and they'll survive for as long as their models can remain competitive.

The challenge all these frontier labs have is: Their existing models can have high token profitability, but they have to invest everything they've got (and everything they're given) into new model R&D, because if they don't xAI will beat them, or Anthropic will beat them, or Google will. That's the nature of frontier spaces like this.

But the flipside is, model capability will plateau, they probably are already, and as that happens it becomes safer to aim for profitability. And I have zero doubt that OpenAI and Anthropic can find profitability. xAI, Perplexity, Mistral, and the other labs, I'm less sure about.

Re: The Hater's Guide to the AI Bubble

#122

Post by 827a » Wed, Jul 23, 2025, 12:35 AM UTC

> Outside of OpenAI, Anthropic and Anysphere (which makes AI coding app Cursor), there are no Large Language Model companies — either building models or services on top of others' models — that make more than $500 million in annualized revenue (meaning month x 12), and outside of Midjourney ($200m ARR) and Ironclad ($150m ARR), according to The Information's Generative AI database, and Perplexity (which just announced it’s at $150m ARR), there are only twelve generative AI-powered companies making $100 million annualized (or $8.3 million a month) in revenue. Though the database doesn't have Replit (which recently announced it hit $100 million in annualized revenue), I've included it in my calculations for the sake of fairness.

I think this is among the most unhinged paragraphs I've ever read in my entire life. It deeply, metaphysically, struggles to frame what its presenting in a bad light, but the data is so overwhelmingly positive that it just can't do it.

"Ugh, there's only twelve companies basically none of which existed two years ago making over a hundred million dollars in revenue. What a failure of an industry. And only three of them are making a half a billion? What utter failures. See, no one is using any of this stuff!!"

Re: The Hater's Guide to the AI Bubble

#123

Post by andsoitis » Wed, Jul 23, 2025, 1:14 AM UTC

cmrdporcupine wrote: post #66

andsoitis wrote: post #36

Earlier quoted context omitted.

> If there's anything that can be reliably predicated to be true over multiple decades it's that capitalism will continually seek to reduce labour costs and automate everything. what about improved life quality? what about an explosion of types of jobs? > You and I are too expensive, and have had too much power. do you think the average citizen (or the collective) have MORE power or LESS power than 100 years ago, tha…

I never said anything about life quality, only that automation is an inevitability. What I said vs what you imagined I said are two different things.

Fair enough. Maybe I read too much between the lines. Apologies.

Re: The Hater's Guide to the AI Bubble

#124

Post by queenkjuul » Wed, Jul 23, 2025, 2:00 AM UTC

wulfstan wrote: post #87

variadix wrote: post #85

Earlier quoted context omitted.

Hopefully they can be repurposed for something like cheap drug discovery rather than shitcoin mining.

If that ends up being the case then we could all genuinely agree that good has eventually emerged from the compute/inference infrastructure that LLMs paid for. I hope that comes to pass.

Yeah but we all know it's definitely gonna be shitcoin mining

Re: The Hater's Guide to the AI Bubble

#125

Post by queenkjuul » Wed, Jul 23, 2025, 2:03 AM UTC

miltonlost wrote: post #58

frithsun wrote: post #31

I believe this is a "good" bubble in the sense that the 19th century railroad bubble and original dot com bubble both ended up invested in infrastructure that created immense value. That said, all of these LLMs are interchangeable, there are no moats, and the profit will almost entirely be in the "last mile," in local subject matter experts applying this technology to their bespoke business processes.

Ok, but what's the infrastructure that will remain after the AI bubble that can be retooled like railroads or dot com?

Maybe we'll all be able to afford secondhand H100s and finally get to see raytraced cyberpunk at 4k120

Re: The Hater's Guide to the AI Bubble

#126

Post by queenkjuul » Wed, Jul 23, 2025, 2:13 AM UTC

andsoitis wrote: post #36

cmrdporcupine wrote: post #33

Earlier quoted context omitted.

If there's anything that can be reliably predicated to be true over multiple decades it's that capitalism will continually seek to reduce labour costs and automate everything. You can bet that even if the specific forms attempted in this interval don't take hold, they will eventually. You and I are too expensive, and have had too much power.

> If there's anything that can be reliably predicated to be true over multiple decades it's that capitalism will continually seek to reduce labour costs and automate everything. what about improved life quality? what about an explosion of types of jobs? > You and I are too expensive, and have had too much power. do you think the average citizen (or the collective) have MORE power or LESS power than 100 years ago, tha…

Than 100 years ago? Very much might be less, honestly, given modern police, media, and surveillance power and the decimation of labor unions since then.

Re: The Hater's Guide to the AI Bubble

#127

Post by queenkjuul » Wed, Jul 23, 2025, 2:23 AM UTC

tim333 wrote: post #106

elktown wrote: post #84

Earlier quoted context omitted.

I guess I expect higher standards than the kind of confident extrapolation you find in pseudo-science. And "vision of the future" is your euphemistic rewrite. If that's clearly stated I obviously have no problem with people's fanciful speculation. But these are claims in the format: "X will be replaced in a couple of years, how should we adapt as a society?" etc etc.

Although if there is some small possibility that X will be replaced in a couple of years shouldn't people be able to consider it?

Small possibility some natural disaster ends all life on earth in two years. Large possibility it will within decades

But hey more fun to pretend the chatbot will turn into Terminator

Re: The Hater's Guide to the AI Bubble

#128

Post by queenkjuul » Wed, Jul 23, 2025, 2:45 AM UTC

Apocryphon wrote: post #118

jsnell wrote: post #110

The analysis is just bogus. He is basically comparing two years of inflated AI capex estimates to a low-ball estimate of one year of trailing revenue. Let's unpack that a bit. Capex is spending on capital goods, with the spending being depreciated over the expected lifetime of the good. You can't compare a year of capex to a year of revenue: a truck doesn't need to pay for itself in year 1, it needs to pay for itself…

> he basically ends up comparing a year of revenue to two years of Capex He appears to only be doing that for the seven companies cumulatively, and in each company's case is only comparing year with year. > Both capex and revenue are growing rapidly, and revenue will lag behind. Even if his capex estimates are inflated, unless they're off by magntitudes, isn't the ratio between the two figures still alarming? What wa…

Jeff wants 8K RTX on all his screens

Re: The Hater's Guide to the AI Bubble

#129

Post by troupo » Wed, Jul 23, 2025, 5:06 AM UTC

827a wrote: post #120

thoroughburro wrote: post #8

The bubble will pop, just like the web bubble popped; and that’s going to suck. AI technologies will remain and be genuinely transformative, just like the web remained and was transformative (for good and ill).

The nasdaq composite p/e at its peak during the dotcom bubble breached 200. Today we're at 40, and Nvidia alone is at 49. As much as everyone wants this to be a bubble: it isn't. ChatGPT was the fastest "thing" in history to reach 100M MAUs, and is believed to be a top 5 most visited website today, across the entire internet. Cursor was the fastest company in human history to reach $500M in revenue. Midjourney, the c…

> But I seriously do not understand how people can see these real, hard statistics, not fake money like VC dollars

You're commenting this under an article showing how deeply unprofitable most of "AI" companies are. Revenue isn't profit. Midjourney is probably the only company that is profitable.

> 48% of survey respondents to a recent survey said they've used ChatGPT for therapy [1]. FORTY EIGHT PERCENT.

No idea why you provide this frankly scary statistic. It's not proof that this isn't a bubble.

> This is: "we physically cannot buy enough GPUs to satisfy demand, our services keep going down every week because so many people want to pay for this".

It's called a mania. Manias always end.

Re: The Hater's Guide to the AI Bubble

#130

Post by tim333 » Wed, Jul 23, 2025, 5:09 AM UTC

K0balt wrote: post #86

I too am deeply skeptical of the current economic allocation, but it’s typical of frontier expansions in general. Somehow, in AI, people lost sight of the fact that transformer architecture AI is a fundamentally extractive process for identifying and mining the semantic relationships in large data sets. Because human cultural data contains a huge amount of inferred information not overtly apparent in the data set, ma…

Different algorithms do different things but “generative” AI can certainly come up with new stories and images and with different algorithms AI can work with not fully solved problems like protein folding.