There is a lawsuit against xAI about those datacenters. They have a strong case that Musk is clearly flouting environmental laws. If they are able to get a preliminary injunction against the datacenters, then they are dead in the water. That's the only reason why they build them so quickly.
xAI is looking more like a datacentre REIT than a frontier lab
391–400 of 580 posts
Re: xAI is looking more like a datacentre REIT than a frontier lab
#392Earlier quoted context omitted.
> generally it's a commodity The NVIDIA GPUs, HBM, land-use permits and power-supply agreements xAI nailed down are absolutely not commodities. I think xAI is a mess. But let’s call a spade a spade, they speculated on AI compute and they are currently right.
My read is that xAI built a lot of compute for their own use, but they didn't get any adoption so they are reselling the unused capacity to recoup at least some of the costs. So calling it a good bet is kind of misleading
"Some" of the cost? More like 120%-200% recovery during shortage and it's still going to be an asset after that period.
Re: xAI is looking more like a datacentre REIT than a frontier lab
#393Earlier quoted context omitted.
> Compute is also a rapidly depreciating asset. That's the default assumption but in the new GPU+Memory constrained age isn't true. Time on 4 year old H100 servers costs more now than when they were new (!!)
> That's the default assumption but in the new GPU+Memory constrained age isn't true. Is it an age or a temporary situation?
Everything is a temporary situation on long enough timeframes, especially if it’s exponentially growing. Moore’s law which dictates that compute depreciates quickly has been slowing down a lot in the last few years, coupled with the explosion in demand we’ve found ourselves in a prolonged shortage situation. The bubble will pop, but if you predict when correctly, you will be a rich man.
Re: xAI is looking more like a datacentre REIT than a frontier lab
#394Earlier quoted context omitted.
GPUs do have a life expectancy. They don’t run forever, especially at high temperatures and full utilization.
You undervolt them because the last 50% of power adss 10% of compute.
Undervolting is not running at max utilization by definition almost.
…but the real question whether you want to undervolt your asset if you’re renting it out is why bother? You probably expect to replace it anyway after it’s spec lifetime, for sure want to replace it when a more efficient solution is available since datacenters are power and volume constrained and customers care about performance much more than hardware longevity (otherwise they’d buy instead of rent).
Re: xAI is looking more like a datacentre REIT than a frontier lab
#395> 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?
Or, hear me out, maybe there's a compute shortage and xAI has compute and manages that well. There are no dark GPUs. Compute translates directly to money for these frontier labs. I think everyone is reading way too much into this. Sure there is some circular transactions that are sus, but this ain't it.
> There are no dark GPUs.
There are actually lots of GPUs in storage somewhere waiting for data center megawatts to put them in.
Re: xAI is looking more like a datacentre REIT than a frontier lab
#396Earlier quoted context omitted.
>There are no dark GPUs This might not be true. Someone was comparing Nvidia's production rate with known data center capacity, and they do not match. Their conclusion was that people (possibly even Nvidia) were hoarding GPUs- in the very short term this might be a good strategy, but GPUs go EOL fast. There are other stories about paused datacenter builds that match with this. TSMC is definitely fully allocated, base…
All that means is that there's a bottleneck at the data center layer. When he says "dark GPUs" he's saying that there are no dark DEPLOYED GPUs. This is a reference to the 1990's dot com bubble where internet infrastructure companies overbuilt network capacity, leading to the term "dark fiber". That was an indicator of a bubble because it showed that capacity was larger than demand. OP is saying that this is specific…
> IMO none of these things point to a AI being a bubble (over-hyped, demand does not match the stated value).
I agree the demand is there, but hyperscaler capex is what now? 3% GDP? This is an absurd amount of money and people who question whether the ROI is there have a point just because of the order of magnitude of this spend number.
Re: xAI is looking more like a datacentre REIT than a frontier lab
#397Earlier quoted context omitted.
> That's the default assumption but in the new GPU+Memory constrained age isn't true. Is it an age or a temporary situation?
It's very unclear to me. The key question is on direction of LLMs. Right now, LLMs are taking over human jobs. If the cost of silicon+power If this applies to SWEs, lawyers, business analysts, many research scientists, .... this situation could persist for a long, long time. While capital costs less than the inputs of labor (nominal food, housing, etc.), there is no need for labor. The key question is about continued…
What I don't understand is if nobody has jobs, who's paying the machines to do anything?
So okay cool you don't need people to design and build cars. Who's going to buy the cars and where exactly are they finding money?
But see also the "radiologists driving to work" meme for why I think tech in general is currently getting high off their own farts.
Re: xAI is looking more like a datacentre REIT than a frontier lab
#398Elon is controversial, and I know the popular mood is to dunk on this IPO, but in the end he gets a lot right. I think it's very likely the Tesla deal happens, and I further thing that regardless what Google and Anthropic do long-term — SpaceX/Tesla will likely have an awful lot of Optimus robots, and those robots will need an awful lot of compute. I'd be very surprised if Elon lets some frontier lab be the intelligence layer of his robotics stack when he has all the raw materials himself. And in fact, rather than introduce model COGS, he will have had the frontier labs paid for all the CapEx he'll need to run robotic inference using his own models.
Pretty smart if that's what happens.
Re: xAI is looking more like a datacentre REIT than a frontier lab
#399Earlier quoted context omitted.
> the big providers are charging full freight for inference. Except they're not. Anthropic's claims of temporary profitability line up exactly with when SpaceX is giving them discounted compute, OpenAI's such a shitfest they threw the CFO off the glass cliff for daring to push back against the IPO. "Profitable on inference" is an unsubstantiated rumour. Just look at the copilot changes. Demand switching to other prov…
> "Profitable on inference" is an unsubstantiated rumour. So is "unprofitable on inference". Thankfully we should find out for real as soon as those S-1 documents arrive.
Don't count on it. They might not break out inference from training.
Re: xAI is looking more like a datacentre REIT than a frontier lab
#400Earlier quoted context omitted.
Uh, only when people don't seem to understand it, or try to personify it. Which is quite often.
People “personify” their cars but I don’t think because they think cars have human cognition
People are weird about their cars and make major errors in judgement as a result (e.g. we tolerate incredibly high rates of people getting killed because they were "hit by a car", as though the driver had nothing to do with it). Pushing back on that is absolutely worthwhile.