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xAI is looking more like a datacentre REIT than a frontier lab

martinalderson.com

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Re: xAI is looking more like a datacentre REIT than a frontier lab

#21

Post by plaidthunder »

throwaway67678 wrote: post #16
hawkice wrote: post #2

They have developed an LLM, so they are an AI lab, but the quality of that model suggests they're not a frontier anything.

[flagged]

It's a general problem of defining yourself in negative terms. Being "un-{thing I don't like}" doesn't say what you are. It only excludes one possibility while leaving behind an infinitude of mostly crappy alternatives to try to choose from.

Having a positive set of beliefs annoys people and and can make them feel judged, but at least it provides a vector that points somewhere definite in possibility space.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#22

Post by e9 »

leetharris wrote: post #15
hawkice wrote: post #2

They have developed an LLM, so they are an AI lab, but the quality of that model suggests they're not a frontier anything.

I have the pro account for ChatGPT, Claude, Gemini, and Grok. They all have various strengths and weaknesses. My favorite is still ChatGPT, then Gemini/Claude, then Grok. Grok often feels 1-2 generations behind the competition in general use, but it has three things that I love: 1. It seems to be the best at understanding current events. Maybe due to X integration, or some other tool call optimization in the backend?…

I recently worked with NRC dataset, specifically about nuclear reactor events and status reports(example: https://www.nrc.gov/reading-rm/doc-collections/event-status/...). Public data that just needed some cleaning. Several time Claude API would refuse to engage. Because of that I can't trust Claude to clean production data sets.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#23

Post by raducu »

bpodgursky wrote: post #9
TSiege wrote: post #6

> And Google is a major shareholder in SpaceX, so they certainly have incentive to juice the valuation of the IPO. Google own 5-6% of the shares of SpaceX. SpaceX is seeking a valuation of $1.77T which means Google's shares would be worth $88.5B-$106.2B. I'm not a skeptic of AI/LLMs but this makes me deeply suspicious of these circular deals. What happens when the music stops?

A lot of people are emotionally unprepared for a world where the music doesn't stop.

> A lot of people are emotionally unprepared for a world where the music doesn't stop.

I've been wrong before. However, when was the last time this business model made sense -- that facebook, SpaceX and others, all just pivot from their market niche to general purpose AI datacenter providers.

How on Earth does this make sense?

What happens in a few years when DeepSeek runs on the chinese chips like the Huawei Ascend at a fraction of the cost ?

These are all very high value added companies going into comodity AI hosting and they're all going to make a killing?

Re: xAI is looking more like a datacentre REIT than a frontier lab

#25

Post by 9cb14c1ec0 »

So we know what they are renting these GPUs for. I'm really curious about the input costs of their power generation. Is there actually enough margin in these deals for xAI to cover their depreciation cost?

Edit: from the footnotes: > Colossus actually runs largely on its own on-site gas turbines, which comes out even cheaper: at a simple-cycle heat rate of ~10,000 Btu/kWh and Henry Hub gas at ~$3.50/MMBtu, the fuel bill is only around $90mn a year.

OK, that's crazy. How can I get into renting GPUs to hyperscalers?

Re: xAI is looking more like a datacentre REIT than a frontier lab

#26

Post by chatmasta »

stefan_ wrote: post #17
treis wrote: post #14

Earlier quoted context omitted.

There's no realistic way for the music to stop. The demand for LLMs is staggering and the big providers are charging full freight for inference. They might not make back the money from training but these data centers are definitely going to be fully utilized for at least the next 5 years.

Data center operators are in the business of selling electricity. They do not command large PE multiples. This is an even worse business, because xAI decided to also be the bagholder for the NVIDIA graphic cards. Not to mention they finance an unreasonable number of 20-somethings on way too large salaries with shitty opinions and no AGI delivered.

Datacenter operators who rent space are selling electricity. SpaceX is selling a fully built datacenter with compute designed for a specific purpose. They’re operating at a higher level of the value chain and can charge accordingly.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#27

Post by chatmasta »

fooker wrote: post #18
hawkice wrote: post #2

They have developed an LLM, so they are an AI lab, but the quality of that model suggests they're not a frontier anything.

> the quality of that model I guess the benchmarks disagree, but whenever I need to find specific information that does not easily show up with a web search, I try chatgpt, gemini and grok. Grok surfaces what I was looking for more often than the others. Things like "find the github repo from 2017 that does $vague_thing".

Grok does seem to have the best searching capabilities, and not just for twitter. I wonder what search engine they’re using on the backend.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#28

Post by treis »

stefan_ wrote: post #17
treis wrote: post #14

Earlier quoted context omitted.

There's no realistic way for the music to stop. The demand for LLMs is staggering and the big providers are charging full freight for inference. They might not make back the money from training but these data centers are definitely going to be fully utilized for at least the next 5 years.

Data center operators are in the business of selling electricity. They do not command large PE multiples. This is an even worse business, because xAI decided to also be the bagholder for the NVIDIA graphic cards. Not to mention they finance an unreasonable number of 20-somethings on way too large salaries with shitty opinions and no AGI delivered.

They're not any sort of bag holder. They're going to make back what they spent on these data centers in a year.

It's a fairly sweet deal for everyone involved. Anthropic/Google get to sell more tokens and xAI gets a war chest for another bite at the apple. I don't have much confidence that they'll do anything with it but that doesn't mean these deals don't make sense for them.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#29

Post by SecretDreams »

TSiege wrote: post #6

> And Google is a major shareholder in SpaceX, so they certainly have incentive to juice the valuation of the IPO. Google own 5-6% of the shares of SpaceX. SpaceX is seeking a valuation of $1.77T which means Google's shares would be worth $88.5B-$106.2B. I'm not a skeptic of AI/LLMs but this makes me deeply suspicious of these circular deals. What happens when the music stops?

> What happens when the music stops?

That's a problem for your kids to figure out ~ those currently getting enriched from these schemes.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#30

Post by dsgn93 »

bpodgursky wrote: post #5
beepbopboopp wrote: post #3

Earlier quoted context omitted.

Or the model was a marketing expense to capitalize the data center model. Im not saying it was intentionally that, but its been an effective "that."

Eh. It was a leading model for a few weeks, it was a real effort, but they never built a real revenue model around it. It wasn't SaaS, it wasn't for governments, it couldn't get B2C payments. Made it hard to justify the training cost to stay at the frontier.

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