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IBM CEO says there is 'no way' spending on AI data centers will pay off

businessinsider.com

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Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#141

Post by SequoiaHope »

ayaros wrote: post #37
scroot wrote: post #24

As an elder millennial, I just don't know what to say. That a once in a generation allocation of capital should go towards...whatever this all will be, is certainly tragic given current state of the world and its problems. Can't help but see it as the latest in a lifelong series of baffling high stakes decisions of dubious social benefit that have necessarily global consequences.

I'm a younger millennial. I'm always seeing homeless people in my city and it's an issue that I think about on a daily basis. Couldn't we have spent the money on homeless shelters and food and other things? So many people are in poverty, they can't afford basic necessities. The world is shitty. Yes, I know it's all capital from VC firms and investment firms and other private sources , but it's still capital . It shou…

The Sikhs in India run multiple facilities across the country that each can serve 50,000-100,000 free meals a day. It doesn’t even take much in the form of resources, and we could do this in every major city in the US yet we still don’t do it. It’s quite disheartening.

https://youtu.be/5FWWe2U41N8

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#142

Post by estearum »

dotancohen wrote: post #70
johnrob wrote: post #55

Earlier quoted context omitted.

Invest in making food/shelter cheaper?

Food and shelter are cheaper than at almost any time in human history. Additionally, people have more variety of healthy foods all year long. No matter how cheap food and shelter are, there will always be people who can not acquire them. Halting all human progress until the last human is fed and sheltered is a recipe for stagnation. Other cultures handle this with strong family bonds - those few who can not acquire f…

The US has built its physical infrastructure to make familial interdependence extremely difficult and often impossible.

Too monotonous housing mixes over too large of areas.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#144

Post by estearum »

dkural wrote: post #75
droopyEyelids wrote: post #57

Earlier quoted context omitted.

What if some of the homeless people are children or people who could lead normal lives but found themselves in dire circumstances? Some of us believe that keeping children out of poverty may be an investment in the human capital of a country.

Anthropologists measure how civilized a tribe or society was by looking if they took care of the elderly, and what the child survival rates were. USA leads to developed world in child poverty, child homelessness, and highest rate of child death due to violence. Conservatives often bring up the statistic by race. It turns out bringing people over as slaves, and after freedom, refusing to provide land, education, fair…

Yep

> purposely create underclass

> wait

> act surprised that underclass exists

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#145

Post by asadotzler »

arisAlexis wrote: post #66
mbreese wrote: post #62

I would add an addendum to this -- there is no way the announced spending on AI data centers will all come to fruition. I have no doubt that there will be a massive build-out of infrastructure, but it can't reach the levels that have been announced. The power requirements alone will stop that from happening.

[flagged]

What qualifies you to question this?

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#146

Post by maxglute »

Octoth0rpe wrote: post #31
mcculley wrote: post #22

Earlier quoted context omitted.

But if your competitor is running newer chips that consume less power per operation, aren't you forced to upgrade as well and dispose of the old hardware?

Sure, assuming the power cost reduction or capability increase justifies the expenditure. It's not clear that that will be the case. That's one of the shaky assumptions I'm referring to. It may be that the 2030 nvidia accelerators will save you $2000 in electricity per month per rack, and you can upgrade the whole rack for the low, low price of $800,000! That may not be worth it at all. If it saves you $200k/per rack…

Demand/suppy economics is not so hypothetical.

Illustration numbers: AI demand premium = $150 hardware with $50 electricity. Normal demand = $50 hardware with $50 electricity. This is Nvidia margins @75% instead of 40%. CAPEX/OPEX is 70%/20% hardware/power instead of customary 50%/40%.

If bubble crashes, i.e. AI demand premium evaporates, we're back at $50 hardware and $50 electricity. Likely $50 hardware and $25 electricity if hardware improves. Nvdia back to 30-40% margins, operators on old hardware stuck with stranded assets.

The key thing to understand is current racks are sold at grossly inflated premiums right now, scarcity pricing/tax. If the current AI economic model doesn't work then fundmentally that premium goes away and subsequent build outs are going to be costplus/commodity pricing = capex discounted by non trivial amounts. Any breakthroughs in hardware, i.e. TPU compute efficiency would stack opex (power) savings. Maybe by year 8, first gen of data centers are still depreciated to $80 hardware + $50 power vs new center @ $50 hardware + $25 power. That old data center is a massive write-down because it will generate less revenue than it costs to amoritize.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#147

Post by PrairieFire »

Atheros wrote: post #129
PrairieFire wrote: post #34

Earlier quoted context omitted.

agree the capital could be put to better use, however I believe the alternative is this capital wouldn't have otherwise been put to work in ways that allow it to leak to the populace at large. for some of the big investors in AI infrastructure, this is cash that was previously and likely would have otherwise been put toward stock buybacks. for many of the big investors pumping cash in, these are funds deploying the w…

> likely would have otherwise been put toward stock buybacks Stock buybacks from who ? When stock gets bought the money doesn't disappear into thin air; the same cash is now in someone else's hands. Those people would then want to invest it in something and then we're back to square one. You assert that if not for AI, wealth wouldn't have been spent on materials, land, trades, ect. But I don't think you have any reas…

Totally agree that the money doesn’t vanish. My point isn’t “buybacks literally destroy capital,” it’s about how that capital tends to get redeployed and by whom.

Buybacks concentrate cash in the hands of existing shareholders, which are already disproportionately wealthy and already heavily allocated to financial assets. A big chunk of that cash just gets recycled into more financial claims (index funds, private equity, secondary shares, etc), not into large, lumpy, real world capex that employs a bunch of electricians, heavy equipment operators, lineworkers, land surveyors, etc. AI infra does that. Even if the ultimate economic owner is the same class of people, the path the money takes is different: it has to go through chip fabs, power projects, network buildouts, construction crews, land acquisition, permitting, and so on. That’s the “leakage” I was pointing at.

To be more precise: I’m not claiming “no one would ever build anything else”, I’m saying given the current incentive structure, the realistic counterfactual for a lot of this megacap tech cash is more financialization (buybacks, M&A, sitting on balance sheets) rather than “let’s go fund housing, transit tunnels, or new aircraft.”

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#148

Post by dotancohen »

estearum wrote: post #142
dotancohen wrote: post #70

Earlier quoted context omitted.

Food and shelter are cheaper than at almost any time in human history. Additionally, people have more variety of healthy foods all year long. No matter how cheap food and shelter are, there will always be people who can not acquire them. Halting all human progress until the last human is fed and sheltered is a recipe for stagnation. Other cultures handle this with strong family bonds - those few who can not acquire f…

The US has built its physical infrastructure to make familial interdependence extremely difficult and often impossible. Too monotonous housing mixes over too large of areas.

Large houses make familial interdependence extremely difficult? That doesn't make sense. Or did I misunderstood? I don't live in the US.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#149

Post by Havoc »

beachy wrote: post #27
Octoth0rpe wrote: post #18

> Krishna also referenced the depreciation of the AI chips inside data centers as another factor: "You've got to use it all in five years because at that point, you've got to throw it away and refill it," he said This doesn't seem correct to me, or at least is built on several shaky assumptions. One would have to 'refill' your hardware if: - AI accelerator cards all start dying around the 5 year mark, which is possib…

It's just the same dynamic as old servers. They still work fine but power costs make them uneconomical compared to latest tech.

That could change with a power generation breakthrough. If power is very cheap then running ancient gear till it falls apart starts making more sense

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#150

Post by mywittyname »

_menelaus wrote: post #116
armitron wrote: post #96

Earlier quoted context omitted.

[flagged]

[flagged]

Ship them somewhere else, then print a banner saying, "mission accomplished."

It worked at a state level for years, with certain states bussing their homeless to other states. And recently, the USA has been building up the capability to do the same thing on an international scale.

That's the "solution" we are going to be throwing money at. Ship them to labor camps propped up by horrible regimes.

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