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Is AI Profitable Yet?

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Re: Is AI Profitable Yet?

#221

Post by fsckboy »

Retric wrote: post #217
fsckboy wrote: post #216

Earlier quoted context omitted.

> That’s an overly simplified model. AI companies spending results in infrastructure beyond the company such as manufacturing capacity, power lines, software systems, and even individual expertise. in a competitive marketplace, economic profit will go to zero. so whether an AI company buy or rents outside infrastructure, or builds it itself doesn't matter, it makes no difference. Therefore, if your argument is "outsi…

> in a competitive marketplace … current situation. Lots of words to say you don’t understand what you’re talking about. At the most simple level monopolies extract profits through raising prices above that of a competitive market. This price increase reduces total sales even as it drives up profits. As such the existence or non existence of a monopoly would change how much energy/etc AI was consuming among a host of…

again, nothing that you are talking about has anything to do with the conversation I initiated. (IBM used to be a monopoly, now they're not. How much power did they do they use? we don't need economics, we just look at their power bill, it's that much, that's the impact they have on the power grid.)

if you want to sound like you know what you are talking about, don't talk about "total sales", you want to talk about quantity demanded at the market clearing price vs the monopoly price, and the effect that has on producer surplus.

and what is bad about a monopoly in economic terms is not that they extract a higher price and profit from their smaller number of customers (those customer choose to purchase the product because it's worth it to them), it's the dead weight loss which represents unmet demand which slows the economy overall

Re: Is AI Profitable Yet?

#222

Post by fsckboy »

dwb wrote: post #214
fsckboy wrote: post #209

Earlier quoted context omitted.

I know what i'm talking about, and you don't. That does not come from me being rich, it comes from me being raised as a far left-socialist, and being on the spectrum, and then studying economics and finance in graduate school and realizing what was true and what was wishing. Capitalism and free competitive markets solve exactly the problem that centrally planned economies are explicitly trying to solve but always fai…

Hilarious; such ugly arrogance. Of course it “works” to the extent that you describe, otherwise we wouldn’t be in exactly the situation that I’m against. Where you came from doesn’t matter at all. The system is working for you so you are for it. You assume too much, that I am going to argue for centrally planned economies or something. I never claimed or implied I was an expert, or to what degree I’m “winning the rac…

economic efficiency does not refer to productive effiency, it refers to having prices that allow people to make optimal purchase decisions, and whether competition ensures prices will reflect costs.

so, according to you, you are not arrogant, you just legitimately know what's best for everybody else, and you are virtuous to boot?

writing tip: take all the emotionally charged words out of your prose, they don't have the effect you think they do.

Re: Is AI Profitable Yet?

#223

Post by Retric »

fsckboy wrote: post #221
Retric wrote: post #217

Earlier quoted context omitted.

> in a competitive marketplace … current situation. Lots of words to say you don’t understand what you’re talking about. At the most simple level monopolies extract profits through raising prices above that of a competitive market. This price increase reduces total sales even as it drives up profits. As such the existence or non existence of a monopoly would change how much energy/etc AI was consuming among a host of…

again, nothing that you are talking about has anything to do with the conversation I initiated. (IBM used to be a monopoly, now they're not. How much power did they do they use? we don't need economics, we just look at their power bill, it's that much, that's the impact they have on the power grid.) if you want to sound like you know what you are talking about, don't talk about "total sales", you want to talk about q…

> we just look at their power bill

We can’t look at next year’s power bill today. Hell finding their power bills from 1930 isn’t trivial either, thus we model the universe and test those models rather than just making up nonsense models that look pretty.

> that's the impact they have on the power grid.

That’s only the direct effect, the indirect effects get way more complicated.

The fact you’re constantly demonstrating profound ignorance is why I am treating you like a 5 year old. You understood what I said and had no defense, thus my use of simple terms was entirely justified. Using more words to say exactly what I just said doesn’t change my opinion. Instead try and apply that line of reasoning to your earlier statements and find the issue, that would demonstrate some actual understanding.

PS: The economic harm from monopolies extends to R&D etc but …

Re: Is AI Profitable Yet?

#224

Post by dwb »

fsckboy wrote: post #222
dwb wrote: post #214

Earlier quoted context omitted.

Hilarious; such ugly arrogance. Of course it “works” to the extent that you describe, otherwise we wouldn’t be in exactly the situation that I’m against. Where you came from doesn’t matter at all. The system is working for you so you are for it. You assume too much, that I am going to argue for centrally planned economies or something. I never claimed or implied I was an expert, or to what degree I’m “winning the rac…

economic efficiency does not refer to productive effiency, it refers to having prices that allow people to make optimal purchase decisions, and whether competition ensures prices will reflect costs. so, according to you, you are not arrogant, you just legitimately know what's best for everybody else, and you are virtuous to boot? writing tip: take all the emotionally charged words out of your prose, they don't have t…

I knew you were speaking more technically about economic efficiency, but what does that matter when the real processes are often so inefficient? Or when it results in so many bad outcomes?

I won’t be taking “writing tips” from you; my words are an expression, not pure calculated rhetoric. I never thought I was going to change your mind, I wanted you to face a teeny tiny bit of resistance.

Expressing an opinion and making observations is not arrogance. I said “I think” and “I’m against”, I never claimed any virtue, I didn’t brag, and I didn’t tell you that you don’t know what you’re talking about. According to me, I just have a view about part of the way the world works, that’s it. Reading tip: get better at it.

Re: Is AI Profitable Yet?

#227

Post by shanewei »

maxnevermind wrote: post #210
7thpower wrote: post #146

Earlier quoted context omitted.

With this line of thinking, nobody would have ever built refineries, or fabs, or clouds. The frontier labs have fantastic margin on inference. You do not understand how fantastic. And they have license to change inputs at will based on profitability. They are not only innovating on models and tooling, they are innovating on cogs (I wrote this btw, and I’m not going to stop writing this way because Claude discovered i…

> Customers are finding value. Where I can find confirmation of that in public sources?

[flagged]

Re: Is AI Profitable Yet?

#228

Post by rsoto2 »

YetAnotherNick wrote: post #121
rsoto2 wrote: post #100

Earlier quoted context omitted.

Uhh I think a lot of people and their families likely have investment exposure to nvidia/hyperscalers. if places like Amazon spent unrealistically on ai or their stock goes down massively that could mean major job losses too. If AI companies aren't that profitable...then they're going to stop spending so much money on GPUs to train AI models. A gigantic amount of Nvidia's profits would go bust overnight.

But inference is increasing dramatically. Google says they now do inference of 3.2 quadrillion tokens per month, 7x increase in a year. Claude code and others are here to grow even if they don't do any further training.

.. so what?

The cost(and size) to train models is also increasing and is still 60% of the cards that Nvidia is selling. Losing 60% of your most profitable revenue stream I think would do bad for a company regardless of how much inference is increasing "dramatically"(all this means is the GPUs are dead sooner and the cost to do this massive inference increases too)

Re: Is AI Profitable Yet?

#229

Post by mgh2 »

mgh2 wrote: post #60
crystal_revenge wrote: post #29

It’s weird to me that people here suddenly seem to care about profitability for relatively early stage companies just because they’re “AI”. I know a traditional SaaS company I worked for that IPO’d years ago and still has no signs that they can be profitable (and many others like it) and nobody seems particularly concerned.

The strategy of "scale for long term market dominance" or the idea of "build it and they will come" [1] were premised on the notion that adoption will be organic. AI usage seems to have plateaued overall [2], except for niche use cases like coding, that is why companies are forcing it on their employees to justify ROI [3] or creating "products" w/ AI features [4] or embedded addiction. [1] https://news.ycombinator.co…

[1a] https://youtu.be/WoWP6YmFJaw?si=0QelV60rCDnDryxx&t=573
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