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The AI bubble is all over now, baby blue

garymarcus.substack.com

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Re: The AI bubble is all over now, baby blue

#21

Post by camgunz »

tim333 wrote: post #15

There was an interesting take on it on youtube today, Bill Gurley (VC) talking to Tim Ferris (interviewer) on if it's a bubble, based on some research: > ...every time there's been a technology wave that leads to wealth creation, especially fast wealth creation, that will inherently invite speculators, carpetbaggers, interlopers that want to come take advantage of it. Think of the gold rush, you know, and so people w…

Yeah but the thing that distinguishes the gold rush from mesmerism or whatever is actual gold. Most LLM promises are NFTs with extra steps.

The arguments here are totally bonkers. People didn't wonder what airplanes were for, or cars, or computers, or vaccines. They had immediate, obvious benefits and uses, but still none of them experienced this speed of investment. This is something else entirely.

Re: The AI bubble is all over now, baby blue

#22

Post by camgunz »

Havoc wrote: post #11
grim_io wrote: post #10

Earlier quoted context omitted.

It only gets better daily at stuff it already kinda could do. It can write my code a bit less shitty tomorrow, but that doesn't sound like the fulfillment of the promises given. Tomorrow, another company will yet again fail to integrate agentic workflows.

That seems true. Even with current abilities if they're just rolled out it's still trillions of the economy. A bit like OK Waymo isn't perfect but it works in SF...we don't need a giant breakthrough to bring it to another 1000 cities. Everyone is focused on how to make the models better (rightly), but impact and economic viability is in implementation and there is a lot of low hanging fruit there. >another company wi…

> A bit like OK Waymo isn't perfect but it works in SF...we don't need a giant breakthrough to bring it to another 1000 cities

Well, a lot of cities have snow, or different flora and fauna, or different road rules (Karachi, Mexico City). Maybe the same approach works (spend hellacious amounts of money to train) but again, for what economic benefit?

Re: The AI bubble is all over now, baby blue

#23

Post by tim333 »

camgunz wrote: post #21
tim333 wrote: post #15

There was an interesting take on it on youtube today, Bill Gurley (VC) talking to Tim Ferris (interviewer) on if it's a bubble, based on some research: > ...every time there's been a technology wave that leads to wealth creation, especially fast wealth creation, that will inherently invite speculators, carpetbaggers, interlopers that want to come take advantage of it. Think of the gold rush, you know, and so people w…

Yeah but the thing that distinguishes the gold rush from mesmerism or whatever is actual gold. Most LLM promises are NFTs with extra steps. The arguments here are totally bonkers. People didn't wonder what airplanes were for, or cars, or computers, or vaccines. They had immediate, obvious benefits and uses, but still none of them experienced this speed of investment. This is something else entirely.

I'm pretty sure AI is a real thing. Sure some arguments are bonkers but there's a lot of real stuff happening like Waymos, Claude code, AlphaFold, MuZero and the like. Of those only Claude is really a language model. Skeptics get over hung up on the limits of language models - they are not the only AI.

There was some puzzlement as to what computers were for. See:

>Thomas J. Watson, the chairman of IBM in 1943, who purportedly said, "I think there is a world market for maybe five computers

Also the speed of investment isn't unprecedented - the railway boom was much larger as a percent of gdp.

Re: The AI bubble is all over now, baby blue

#24

Post by AnimalMuppet »

idontwantthis wrote: post #4

> Whether it all falls apart suddenly, or gradually, I do not know. And LLMs will continue to exist. This is one thing I don't get. Why will LLMs still exist if AI companies go bust? Will we have stagnant models that can't be improved anymore as a service? Isn't each query still a monumental computing task that they lose money on?

Take railroads, for instance. Back in the 1800s, too many were built. Many of them (almost all, I think) went bankrupt at one time or another. At that point, the creditors made a rational evaluation: Is this worth keeping, or not? If yes, then let's try to reorganize a business that can actually survive. If not, tear it up and sell the scrap. Some were kept, some were torn up.

But the post-bankruptcy railroads that were kept were able to operate without the burden of the construction costs, because that had been destroyed in the bankruptcy (along with the original owners).

So, AI: I suspect that the training costs (plus hardware costs) dominate the operating costs. If that is so, then a post-bankruptcy AI company could still be a profitable business. It wouldn't be able to grow its hardware very fast, or be able to re-train new models very often, but it could still be an ongoing business. The current owners would still get nothing, though.

Re: The AI bubble is all over now, baby blue

#25

Post by camgunz »

tim333 wrote: post #23
camgunz wrote: post #21

Earlier quoted context omitted.

Yeah but the thing that distinguishes the gold rush from mesmerism or whatever is actual gold. Most LLM promises are NFTs with extra steps. The arguments here are totally bonkers. People didn't wonder what airplanes were for, or cars, or computers, or vaccines. They had immediate, obvious benefits and uses, but still none of them experienced this speed of investment. This is something else entirely.

I'm pretty sure AI is a real thing. Sure some arguments are bonkers but there's a lot of real stuff happening like Waymos, Claude code, AlphaFold, MuZero and the like. Of those only Claude is really a language model. Skeptics get over hung up on the limits of language models - they are not the only AI. There was some puzzlement as to what computers were for. See: >Thomas J. Watson, the chairman of IBM in 1943, who pu…

Well the other models are even less useful so I try and stick with the steelman version of these things. That IBM quote isn't ambiguity about what computers are for, but about who can afford them in their current, highly bespoke state. Finally, the railway boom wasn't $1.5 trillion in a few years. Also, again, we knew what railroads were for.

I'm not saying the tech isn't impressive. I'm impressed! Cursor bugbot has found some pretty gnarly bugs in my code, blessedly. But it's neither reliable nor economically viable, even if you don't think they owe anyone anything for training on their data (I do think they owe us).

Re: The AI bubble is all over now, baby blue

#26

Post by tim333 »

camgunz wrote: post #25
tim333 wrote: post #23

Earlier quoted context omitted.

I'm pretty sure AI is a real thing. Sure some arguments are bonkers but there's a lot of real stuff happening like Waymos, Claude code, AlphaFold, MuZero and the like. Of those only Claude is really a language model. Skeptics get over hung up on the limits of language models - they are not the only AI. There was some puzzlement as to what computers were for. See: >Thomas J. Watson, the chairman of IBM in 1943, who pu…

Well the other models are even less useful so I try and stick with the steelman version of these things. That IBM quote isn't ambiguity about what computers are for, but about who can afford them in their current, highly bespoke state. Finally, the railway boom wasn't $1.5 trillion in a few years. Also, again, we knew what railroads were for. I'm not saying the tech isn't impressive. I'm impressed! Cursor bugbot has…

>During the 19th-century "Railway Mania," railroad investment in the U.S. reached a peak of 6.0% of GDP, a level significantly higher than current AI infrastructure spending, which is estimated to be around 1.6% of U.S. GDP.

says Google. There was a big crash after, wiping out investors. Time will tell with this one.

Re: The AI bubble is all over now, baby blue

#27

Post by camgunz »

tim333 wrote: post #26
camgunz wrote: post #25

Earlier quoted context omitted.

Well the other models are even less useful so I try and stick with the steelman version of these things. That IBM quote isn't ambiguity about what computers are for, but about who can afford them in their current, highly bespoke state. Finally, the railway boom wasn't $1.5 trillion in a few years. Also, again, we knew what railroads were for. I'm not saying the tech isn't impressive. I'm impressed! Cursor bugbot has…

>During the 19th-century "Railway Mania," railroad investment in the U.S. reached a peak of 6.0% of GDP, a level significantly higher than current AI infrastructure spending, which is estimated to be around 1.6% of U.S. GDP. says Google. There was a big crash after, wiping out investors. Time will tell with this one.

Again though, it's about time

Re: The AI bubble is all over now, baby blue

#28

Post by tripletao »

tim333 wrote: post #26
camgunz wrote: post #25

Earlier quoted context omitted.

Well the other models are even less useful so I try and stick with the steelman version of these things. That IBM quote isn't ambiguity about what computers are for, but about who can afford them in their current, highly bespoke state. Finally, the railway boom wasn't $1.5 trillion in a few years. Also, again, we knew what railroads were for. I'm not saying the tech isn't impressive. I'm impressed! Cursor bugbot has…

>During the 19th-century "Railway Mania," railroad investment in the U.S. reached a peak of 6.0% of GDP, a level significantly higher than current AI infrastructure spending, which is estimated to be around 1.6% of U.S. GDP. says Google. There was a big crash after, wiping out investors. Time will tell with this one.

I spent some time looking for sources for the various "railroad investment as % of GDP" numbers floating around, and I don't think they're very good. The modern concept of GDP didn't even exist back then, so the denominator is calculated in retrospect from the limited contemporary data. The numerator is more confident, but the papers I found mostly showed closer to 3%. A pretty wide range is at least defensible though, and I guess VCs are comparing against the high end for obvious reasons.

https://news.ycombinator.com/item?id=44805979

This AI investment is interesting because it's mostly not in durable goods, unlike the railroad's rails and (most importantly) land. The buildings and power infrastructure for the datacenters could retain value for decades, but the servers won't unless something goes badly wrong. I believe this is the largest investment in human history justified primarily by the anticipated value of intellectual property.

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