> Profitability is easy with current standards. Get the users. Make them dependent. Increase the price. Make AI mandatory. List goes on. "Easy". "Just" get more users and "just" increase prices to somehow cover hundreds of billions of invested dollars and hundreds of millions of running costs. It's that easy. I'm surprised none of the companies mentioned in the article thought of that.
> I'm surprised none of the companies mentioned in the article thought of that. I was just stating the obvious. That is what they are doing.
Currently they are throwing money onto the fire. Almost all of them are not just unprofitable. They are abysmally unprofitable.
The only reason they are raising prices is to try and recoup some of the ongoing operational costs. In the end it will only be Google left standing because Google has unlimited money, and they can price dump indefinitely long, and offer most things for free.
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).
It's a source of constant amusement to me that "arguments" used for AI are indistinguishable from "arguments" used for crypto. (With a caveat that LLMs actually do have their uses)
I think they are somewhat distinguishable. Going by the HN consensus most people thought cryptocurrency was not much use beyond crime and gambling. On the other hand I think most people see that if AI achieves human level thinking it'll be able to do human like jobs which would be a big deal economically.
I am so, so glad you brought up what should be the obvious conclusion here. "B-but they spent all that money, how do they get it back!?" "That's the fun part, they don't." Creative destruction is a woefully underappreciated force in capitalism. Shareholders can lose everything. Debt can be restructured or sold for pennies on the dollar. Debt can go unsold and unpaid, and the creditors can lose everything. I think her…
It's also a common misconception in housing debates! "B-but the developer always has to make the money back so rents & prices can never go down!" "That's the fun part, they don't!" The builder/buyer/lender/landlord/etc can go bankrupt but as long as the building actually got built, it will carry on and benefit the rest of us, regardless of what happened to the ppl who paid for it to be built. Also fun when landlords…
IDK, there are whole developments in FL that are just going to be bulldozed. Same thing happened in TX after the S&L crash 35 years ago.
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…
>we physically cannot buy enough GPUs to satisfy demand
is caused by mispricing - VC money is used to pay for the GPUs but the product is mostly given away for free. If companies just charged the public what the service cost to provide usage would go down dramatically.
It's a source of constant amusement to me that "arguments" used for AI are indistinguishable from "arguments" used for crypto. (With a caveat that LLMs actually do have their uses)
I think they are somewhat distinguishable. Going by the HN consensus most people thought cryptocurrency was not much use beyond crime and gambling. On the other hand I think most people see that if AI achieves human level thinking it'll be able to do human like jobs which would be a big deal economically.
That's a huge if that you can only accept if you buy into "AGI has been achieved internally" marketing.
His comments about Apple ring true to my ears. Apple is definitely lagging behind in the "AI" world, but that is really what they tend to do. They aren't the first company but they are usually the best. Historically, they wait until everyone else makes the mistakes and then introduce something better. I guess they felt like they couldn't wait for the "AI" trend to blow over; probably because Siri is just not very good.
I think that Apple will hold on to their "AI" stuff for a while longer and wait until it really dies down. Then they will introduce a much better Siri and get rid of the "summarize your email" and "re-write this sentence" bullshit.
I think they are somewhat distinguishable. Going by the HN consensus most people thought cryptocurrency was not much use beyond crime and gambling. On the other hand I think most people see that if AI achieves human level thinking it'll be able to do human like jobs which would be a big deal economically.
That's a huge if that you can only accept if you buy into "AGI has been achieved internally" marketing.
I'm thinking more that AGI will happen within a few years. It's one of the reasons for the present financial weirdness. Throwing so much money into current AI would make no sense if it stays as it is. It only makes sense if you think the tech will improve.
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…
> Let's unpack that a bit. I’m not accusing you of anything, just giving the feedback that this line makes your post sound like it is AI slop. This is an extremely typical phrase when you prompt any current AI with some variation of “explain this post”. Honestly, the verbosity of the rest of your post also reinforces this signal. The typo here also indicates cutting and pasting things together “Given what he has to s…
Please don't do this here, it's easy enough for you to see their comment history. Believe it or not, people still care about writing comments on HN in an informative and engaging manner.
“The world will carry on without them”. Sure but at the end of the day it’s not because companies can go bankrupt that debts etc magically disappear. It still impact other companies.
Not directly, no. The impact of firms and people going bankrupt that other people making investment and lending decisions will see risk more clearly and may (for a time) be less greedy and stupid when they make capital allocation decisions. Debts can & do magically disappear. To be clear someone paid for the lost money, but at that stage it's far too late for them to be able to do anything about it, let alone raise p…
“Debts can & do magically disappear. To be clear someone paid for the lost money,” you contradict yourself.
So no it doesn’t magically disappear. A bankruptcy somewhere is a loss for others somewhere else. Even cutting dept to pennies on the dollar means lenders are losing money. Bankruptcy is not a magic trick…
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…
S&P 500 P/E is 30 and historically used to be much lower. Some of it can be surely attributed to increasing inequality and increased wealth of the hyperwealthy who have no other option than to store their money in stocks absent a hypergrowth market, even at lower expected profit. But "growth" can only so long serve as an argument to justify a 40-50 P/E vs. a 25-30 as in other parts of the stock market. If that growth stalls, there is a lot of room to fall, even if the companies will still be profitable and won't go under. Ed at no point claims that Nvidia, Microsoft or Google would cease to exist as companies, as they can of course be very profitable in smaller markets than those that are currently being priced in and without AI contributing to revenue. But companies that purely rely on AI for revenue will have a hard time to ever turn a profit and there is not a single example to proof otherwise. And if that happens, you might also see -20%, -30% or more on some of these larger players that will survive.