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How the AI Bubble Bursts

martinvol.pe

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Re: How the AI Bubble Bursts

#241

Post by aiedwardyi »

aurareturn wrote: post #230
rhaen wrote: post #175

Earlier quoted context omitted.

Tulip futures skyrocketed, it was economic speculation on a useless asset, not supply and demand. Crypto is the analogy, not AI. Given that the major AI labs other than GDM are private, this is even more true. Agentic coding absolutely blew up from demand , users are not being tricked into paying $200 a month, and they’re not complaining about hitting rate limits because it’s useless.

users are not being tricked into paying $200 a month I can't believe people actually believe that people and companies are tricked into paying for tokens. My $20 Codex subscription is so useful, I can easily see myself paying $200 for it. This belief is so common amongst AI collapse people online. I'm guessing these people have only used free ChatGPT or worse, they use Windows and get Copilot shoved down their throat…

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Re: How the AI Bubble Bursts

#242

Post by ZitchDog »

wongarsu wrote: post #166
boriskourt wrote: post #48

Earlier quoted context omitted.

> The cost to serve tokens is absolutely profitable today and that’s been true for at least a year. > For the data center build outs, demand for tokens is still exceeding supply. Can you provide any numbers for this?

I can get Kimi K2.5 inference on openrouter for about $0.5/MTok input + $2.5/MTok output, from six providers that have no moat besides efficiently selling GPU time. We can assume they are doing so at a profit (they have no incentive to do this at a loss), giving us those numbers as the cost to serve a 1T-a32b model at scale. Now we don't know the true size of any of the proprietary models, but my educated guess is th…

> they have no incentive to do this at a loss

Are you sure? Surely there is a lot of interesting data in those LLM interactions.

Re: How the AI Bubble Bursts

#243

Post by upcoming-sesame »

wavemode wrote: post #163
baq wrote: post #95

Earlier quoted context omitted.

> It's a winner-takes-all market and everyone wants to be the next Google absolutely isn't! if billed per token, there is no reason to be married to a single model family provider at all. the models have very different strengths and weaknesses, you should be taking advantage of this at all times.

people used to say this about search engines and web browsers, as well regardless, eventually Google became the universal default for both. When it comes to software, the average person doesn't shop around for the technologically optimal choice, they just use what everyone else is using.

Google search is free to use. if they spike the models price up, people will look for alternatives

Re: How the AI Bubble Bursts

#244

Post by infecto »

jeromegv wrote: post #102
malfist wrote: post #52

Earlier quoted context omitted.

> The cost to serve tokens is absolutely profitable today How can you possibly say that? Everyone knows that's not the case, these companies are losing money every day selling tokens. Revenue is not the same thing as profit.

Yep, especially if we look at what happened just last week, both Google and Anthropic have dropped how much you get out of your existing plans.

Don’t confuse plan changes with profitability of inference. When people talk about the cost to serve a token and it being profitable we are referring to API cost not the plans which absolutely subsidize some level of use. Hard to know what is breakeven on plan math.

Re: How the AI Bubble Bursts

#245

Post by aiedwardyi »

gruez wrote: post #151
hirako2000 wrote: post #117

Earlier quoted context omitted.

Tulips sales also skyrocketed. Seriously, what value are tokens providing other than justifying layoffs. Concretely. Today. Not in the speculating scenario that cardiologist could be replaced with models. We see this new trend of agentic coding, again a promise software will be written that way going forward, despite the number of fiasco already experienced when trusting a model turned bad. The use case may provide v…

>Seriously, what value are tokens providing other than justifying layoffs. Concretely. Today. It's adding tests for me and doing medium complexity refactors that I'd otherwise have to spend hours on

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Re: How the AI Bubble Bursts

#246

Post by project2501a »

Aurornis wrote: post #60

This article tries to build upon a lot of half-truths or incorrect facts, like this: > OpenAI is struggling to monetize. They turned to showing ads in ChatGPT, The ads aren’t going into your paid plans (except maybe a highly discounted tier, depending on the market). The ads are a play to offer a free version. Having an ad-supported free tier isn’t new. The discussion about being unprofitable also repeats the reducti…

> This article tries to build upon a lot of half-truths or incorrect facts, like this:

yeah i was wondering why my bullshit detector was going off. This feels as if someone who cooks for Ramsey's kitchen is trying to predict the end of the market hike.

Re: How the AI Bubble Bursts

#247

Post by drakythe »

paulddraper wrote: post #202
nyeah wrote: post #94

Earlier quoted context omitted.

Can you give a few penciled numbers?

You can rent a H100 GPU for $4/hour. [1] 300k tokens for that hour. OpenAI charges $6. Those are pessimistic assumptions. [1] https://lambda.ai/instances

3.99 at 8x instances, with a minimum 2 week commitment. Good luck getting 70% usage average during that time. Useful when you're running a training round and can properly gauge demand, not so great when you're offering an API.

Re: How the AI Bubble Bursts

#248

Post by lstodd »

rvz wrote: post #114
A_D_E_P_T wrote: post #51

Earlier quoted context omitted.

Two things can be true at the same time: - AI is a genuinely transformative technology on par with the internet and on track to probably surpass the smartphone - The inflated valuations, the circular flows of money (or "money"), and the financial cup-shell game mean that the players of the game are all a few bad weeks away from catastrophe. This is, of course, nothing new for SV -- but the scale this time is new. Som…

Yes. Both things can be true at the same time. The question is when will the frontier AI companies turn a profit on said transformative technology since other than NVIDIA and big tech, it is losing them tens of billions and who will survive a crash when it comes. This is when you know you are in a bubble when people with a clear financial incentive are going on to newsletters, podcasts and posting extremely outlandis…

> The amount of engineers becoming ..

This is good. It's how you know they lacked the intellectual rigour required to be engineers in the first place and thus never were.

Re: How the AI Bubble Bursts

#249

Post by martinvol »

cwillu wrote: post #237
martinvol wrote: post #222

Earlier quoted context omitted.

RAM prices haven't crashed yet and it'll take time because it has to propagate within the supply chain. Micron is -20% from the top already https://www.investing.com/equities/micron-tech Stock price is the best forward indicator I can think of

That might be true, but it's still straightforwardly wrong to say that RAM prices have crashed, and it calls into question everything else they write.

yeah good point, although it's just one of all the catalysers I mentioned. I fact I had written most of the post already before I saw the news about RAM.

Re: How the AI Bubble Bursts

#250

Post by adventured »

butlike wrote: post #150
owlmirror wrote: post #119

Earlier quoted context omitted.

Isn't that at the moment still a free product? Of course they will not prioritize serving those requests. That tells you nothing.

It tells you there's no clear path to monetization.

They've all avoided loading up their LLMs with ads to this point. That is going to change dramatically over the next 2-3 years. All of them will be loaded with ads, and Google will partake as expected given their ad network & capabilities in that realm. They'll match GPT's ad roll-out.
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