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Hyperscalers have already outspent most famous US megaprojects

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Re: Hyperscalers have already outspent most famous US megaprojects

#221

Earlier quoted context omitted.

Sure. But if that fully depreciates, $1100/year GPU produces $20k of economic benefit, would you decommission it as long as there is demand?

I want to see math on how a single GPU will pull down that much revenue, because that seems like a dubious outcome.

Fair, I was hand waving to make a point. “If it generates more than $1100 + (resale price * WACC) + opportunity cost from physical space/etc” would have been more accurate.

But the point is — you don’t decommission profit generators just because a competitor has a lower cost structure. You run things until it is more profitable for you to decommission them.

Re: Hyperscalers have already outspent most famous US megaprojects

#222

Earlier quoted context omitted.

I just don’t see it. Both professionally and personally I’m producing so much more now. Back burner projects that weren’t worth months of my time are easily worth a few hours and $20 or whatever. Why would I pull back?

You're forgetting that the 20$ are not a sustainable price point. Would your backburner personal app thingy be worth 200$?

Yes, I have often paid more than that to have someone else develop a personal side project.

Re: Hyperscalers have already outspent most famous US megaprojects

#223
post #205

Earlier quoted context omitted.

I just don’t see it. Both professionally and personally I’m producing so much more now. Back burner projects that weren’t worth months of my time are easily worth a few hours and $20 or whatever. Why would I pull back?

Lol are people like you going to be enough to support the large revenues? Nope. A firm that see's rising operating expenses but no not enough increase in revenue will start to cut back on spending on LLMs and become very frugal (e.g. rationing).

Before they cut back on human programmers?

Re: Hyperscalers have already outspent most famous US megaprojects

#224
post #40

Earlier quoted context omitted.

The F-35 case is interesting. Lockheed Martin can, given peak rates seen in 2025, produce a new F-35 approximately every 36 hours, as they fill orders for US allies arming themselves with F-35's. US pilot training facilities are brimming with foreign pilots. It's the most successful export fighter since the F-16 and F-4, and presently the only means US allies have to obtain operational stealth combat technology. What…

> Lockheed Martin can, given peak rates seen in 2025, produce a new F-35 approximately every 36 hours ... it's a operating line at full rate production that could conceivably build a US Navy squadron every ~15 days, plus a complete logistics and training system, all on the front burner. That's amazing. I had no idea the US was still capable of things like that. I wonder if there's a way to get close to that, for thin…

It took a while to reach full production rate for the F-35. Partly because the supply chain (mostly US based because of the Buy American Act) had to come up to speed[0]. But also because there were running-changes being made to the plane, necessitating changes to the production line to accommodate them.

The F-22 production tooling is supposedly in storage at Sierra Army Depot. Why there and not at the boneyard at Davis-Monthan is an interesting question[1]. Spooling production of the F-22 back up will take less time than originally, but still won't be quick (a secure factory floor large enough has to be found, workforce knowledge has been lost, adding upgrades, etc.)

[0] Scattered across as many congressional districts as possible.

[1] I was at Sierra in the 80's on TDY and it was all Army and Army civilians. A USAF guy like me really stood out.

Re: Hyperscalers have already outspent most famous US megaprojects

#225

Earlier quoted context omitted.

I’m not sure tax depreciation rates are the best measure here. Those GPUs will be used for much longer than 6 years, and the returns from the businesses will be an order of magnitude longer.

actually the physical lifetime (not financial depreciation) for AI data center GPUs is even lower (3 to 4 years)

Like, they break? Or it just becomes more profitable for the data center to replace them?

Re: Hyperscalers have already outspent most famous US megaprojects

#226

Earlier quoted context omitted.

Each of these GPUs pull up to a kilowatt of power. The average commercial power cost is 13.4 ¢/kWh. That means running a single H100 full tilt 24/7 is a power operationing cost of $1,100 per card per year. In three years the current generation of GPUs will be 50% or more faster. In six years your talking more than 100% faster. For the same energy costs. If you're running a GPU data center on six year old GPUs, your c…

Sure. But if that fully depreciates, $1100/year GPU produces $20k of economic benefit, would you decommission it as long as there is demand?

If my data center sells a pflop at $5 because of our electricity use and the data center a state over with newer GPUs sells it at $2.50/pflop, it doesn't matter how much economic benefit it generates, my customers are all going to the data center a state over.

Re: Hyperscalers have already outspent most famous US megaprojects

#227

Earlier quoted context omitted.

I want to see math on how a single GPU will pull down that much revenue, because that seems like a dubious outcome.

Fair, I was hand waving to make a point. “If it generates more than $1100 + (resale price * WACC) + opportunity cost from physical space/etc” would have been more accurate. But the point is — you don’t decommission profit generators just because a competitor has a lower cost structure. You run things until it is more profitable for you to decommission them.

That all depends on if you're running your own hardware (unlikely) or renting.

Re: Hyperscalers have already outspent most famous US megaprojects

#228

Earlier quoted context omitted.

I think for many, if LLMs and AI only improves marginally in the next 5-10 years it is effectively a dead end. The capital expenditure necessitates AI does something exponentially more valuable than what it does now. I think we are saying the same thing.i just think the pull back on AI will be dramatic unless something amazing happens very soon.

I just don’t see it. Both professionally and personally I’m producing so much more now. Back burner projects that weren’t worth months of my time are easily worth a few hours and $20 or whatever. Why would I pull back?

You’re probably already experienced at your job and using AI to enhance that, or at least using that experience to keep the AI results clean. That’s something you or a company would want to pay for but it has to be a lot more than today’s prices to make it profitable. Companies want to get more out of you, or get a better price/performance ratio (an AI that delivers cheaper than the equivalent human).

But current gen AIs are like eternal juniors, never quite ready to operate independently, never learning to become the expert that you are, they are practically frozen in time to the capabilities gained during training. Yet these LLMs replaced the first few rungs of the ladder so human juniors have a canyon to jump if they want the same progression you had. I’m seeing inexperienced people just using AI like a magic 8 ball. “The AI said whatever”. [0] LLMs are smart and cheap enough to undercut human juniors, especially in the hands of a senior. But they’re too dumb to ever become a senior. Where’s the big money in that? What company wants to pay for the “eternal juniors” workforce and whatever they save on payroll goes to procuring external seniors which they’re no longer producing internally?

So I’m not too sure a generation of people who have to compete against the LLMs from day 1 will really be producing “so much more” of value later on. Maybe a select few will. Without a big jump in model quality we might see “always junior” LLMs without seniors to enhance. This is not sustainable.

And you enhancing your carpentry skills for your free time isn’t what pays for the datacenters and some CEO’s fat paycheck.

[0] I hire trainees/interns every year, and pore through hundreds of CVs and interviews for this. The quality of a significant portion of them has gone way down in the past years, coinciding with LLMs gaining popularity.

Re: Hyperscalers have already outspent most famous US megaprojects

#229
post #213

Earlier quoted context omitted.

Each of these GPUs pull up to a kilowatt of power. The average commercial power cost is 13.4 ¢/kWh. That means running a single H100 full tilt 24/7 is a power operationing cost of $1,100 per card per year. In three years the current generation of GPUs will be 50% or more faster. In six years your talking more than 100% faster. For the same energy costs. If you're running a GPU data center on six year old GPUs, your c…

One thing I am not entirely sure if there will be huge efficiency gains. Just looking at TDP that is the power consumption of say 3090 and 5090 and the increase is substantial then compare it to performance and the performance lift stops looking that great...

3x increase in compute for a 1.5x increase in tdp is pretty good considering the underlying process had barely changed. In anycase, consumer GPUs aren't a good metric as they operate with different economic constraints.

H100 to GB200 saw a 50x increase in efficiency, for example.

Re: Hyperscalers have already outspent most famous US megaprojects

#230
post #213

Earlier quoted context omitted.

One thing I am not entirely sure if there will be huge efficiency gains. Just looking at TDP that is the power consumption of say 3090 and 5090 and the increase is substantial then compare it to performance and the performance lift stops looking that great...

3x increase in compute for a 1.5x increase in tdp is pretty good considering the underlying process had barely changed. In anycase, consumer GPUs aren't a good metric as they operate with different economic constraints. H100 to GB200 saw a 50x increase in efficiency, for example.

https://www.nvidia.com/en-us/data-center/gb200-nvl72/

Nvidia only advertises 25x efficiency. And that is their word...

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