How the AI Bubble Bursts • Hacker News Board

Re: How the AI Bubble Bursts

#401

Post by Macha » Mon, Mar 30, 2026, 4:54 PM UTC

Analemma_ wrote: post #327

pydry wrote: post #153

Earlier quoted context omitted.

Jevons paradox only applies if demand hasnt already been saturated. The fact that public LLM usage is leveling off at a price of $0 and Jensen "we make the shovels in this gold rush" Huang is rather desperately claiming that you need to spend $250k/year in tokens to be taken seriously suggests that demand saturation may not be that far off. Whether Jevons' Paradox applies to software engineers I think is another open…

We’re not even close to demand saturation with tokens. Have you seen the people rending their garments with rage that Anthropic and Google won’t let them use their flat-rate subscriptions to burn millions of tokens per hour on OpenClaw? And that’s a tiny set of die-hard tinkerers. The ceiling of token use when everyone has something akin to OpenClaw just running as a background process on their phone is way higher th…

Is that not appealing to those users _because_ its a subsidised flat rate? Like those users could go and swap to API pricing right now if they wanted to, but at API pricing they don’t want to

Re: How the AI Bubble Bursts

#402

Post by irke » Mon, Mar 30, 2026, 4:59 PM UTC

monknomo wrote: post #387

pydry wrote: post #316

Earlier quoted context omitted.

Executive FOMO disease is being exploited by the model providers to push for maximal token usage even when it is pointless. This includes encouraging people to set up elaborate multi model set ups (e.g. "gas town") for coding that do not meaningfully improve productivity but which certainly do cause token usage to explode. It also includes encouraging execs to use token consumption as a proxy for productivity - almos…

nobody know how to measure software productivity + ai is supposed to mean productivity goes up = more ai means more productivity As best as I can tell, that's the thinking. It's one number, it's very easy to find and manage, and there is a belief that it directly measures productivity. I disagree that it does; seems to me the throughput of useful features is a better measure, but I'm not in the drivers seat on this o…

Incremental revenue and cost-savings, at least for enterprises, is where it would show up. There’s also a present value consideration - if LLM’s make those dollars come into existence closer to the present, they are worth more.

The personal use case stuff is messy and subjective.

Re: How the AI Bubble Bursts

#403

Post by financltravsty » Mon, Mar 30, 2026, 5:02 PM UTC

yobbo wrote: post #240

wongarsu wrote: post #166

Earlier quoted context omitted.

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…

> We can assume they are doing so at a profit This is false. We may assume it's the most efficient way of generating revenue given their GPUs, but their overall profitability will just be a guess. They would still have incentives to run hardware at maximum, even when it's uncertain to eventually recoup costs. > a world where those API prices aren't profitable A lab with employees and models in training has other cost…

The actual inference is operated at a 95%+ margin.

Re: How the AI Bubble Bursts

#404

Post by financltravsty » Mon, Mar 30, 2026, 5:04 PM UTC

drakythe wrote: post #195

paulddraper wrote: post #87

Earlier quoted context omitted.

Anthropic has said inference is profitable. That’s a biased source, but the math pencils. This is why switching to local open weight models saves a lot of money. (Even though it’s not apples to apples.)

Anthropic also recently tweaked their usage limits to discourage use during peak hours. Why would they do that if inference was profitable?

Their infra team is very understaffed and they are reacting to the public backlash of "no 9s?"

Re: How the AI Bubble Bursts

#405

Post by irke » Mon, Mar 30, 2026, 5:04 PM UTC

mcv wrote: post #399

JCTheDenthog wrote: post #325

Earlier quoted context omitted.

My favorite was when Google revealed Project Genie a month ago (which lets you generate video game worlds with AI, basically) and stocks for game companies immediately dropped. Anyone familiar with games and gaming knows that what Project Genie offers (essentially empty worlds with minimal interactivity that you can just kind of wander around in, and they struggle with simple things like object permanence if you look…

I've always seen the stock market as a mix of mass hysteria and pyramid scheme. With actual value underlying it of course, but actual stock values are frequently irrational.

Short term it’s mood and momentum

Re: How the AI Bubble Bursts

#406

Post by financltravsty » Mon, Mar 30, 2026, 5:05 PM UTC

gruez wrote: post #255

schmidtleonard wrote: post #135

Earlier quoted context omitted.

Overinflated relative to the wet dreams of the ownership class.

It's not exactly stuff of "wet dreams of the ownership class" to say that of the possible white collar careers, software engineering is pretty hard to beat in terms of salary vs work you need to put in.

Compensation is usually more tightly coupled with leverage, rather than "work."

Re: How the AI Bubble Bursts

#407

Post by therealdrag0 » Mon, Mar 30, 2026, 5:09 PM UTC

rileymichael wrote: post #204

infecto wrote: post #177

Earlier quoted context omitted.

I know there is a large force on HN that want to deny the value of tokens and I know it’s anecdotal but the writing is on the wall. If it’s not valuable to your workflow today it will be soon. I already have tests being written, automated hooks into bugs where an initial PR gets generated with a potential fix. It’s far from perfect but junior engineers are far less productive.

> there is a large force on HN that want to deny the value of tokens there is an even larger force on HN that financially _needs_ the value of tokens to be inflated (so much so that bots have overwhelmed the site)

Really? Do you think there are more bots and employees of AI stakeholder companies than there are vanilla engineers on the site?

Re: How the AI Bubble Bursts

#408

Post by keybored » Mon, Mar 30, 2026, 5:13 PM UTC

win311fwg wrote: post #329

keybored wrote: post #315

Earlier quoted context omitted.

The corollary of “if we took a stand” is that Capital took a stand and collectively undid a lot of the gains of the post-WWII social democratic order. So no. It wasn’t caused by tech beyond the uninteresting factors like modern society being complex and, of course, that tech developments influence things (pretty much all things).

The productivity gains we've seen above the capacity of human productivity would have been impossible without tech. It absolutely was caused by tech. The benefactor of those gains was also entirely decided by those who created the tech. We could have given use of that tech to everyone. In some cases we actually did (e.g. open source), but in most cases we gained (at least partial) ownership of the capital so it was i…

> The productivity gains we've seen above the capacity of human productivity would have been impossible without tech. It absolutely was caused by tech.

Would have been impossible without and being caused by are different things.

The sense of being “caused by” in a political context are the people who have the power to direct things. Which are not necessarily the people who implement something.

> The benefactor of those gains was also entirely decided by those who created the tech.

You assert that they were decided by. Based on what?

The vast majority of tech work was done in employment, either for some government or for private entities. The private entitites were controlled by Capital. The governments were controlled by democratic forces and Capital.

> We could have given use of that tech to everyone. In some cases we actually did (e.g. open source),

Again I reference the meme of Overworked Nebraska OSS Maintainer.

The impressive work done on OSS by tech workers directly have been done in their free time. The bulk of OSS work done by people as a living is probably through corporations like e.g. Intel working on the Linux Kernel.[1]

That impressive free time work has gotten the reputation as a treasure trove for the highly motivated and tech literate. In contrast to something that regular people can plug-and-play as an alternative to Big Tech dominance.

> , but in most cases we gained (at least partial) ownership of the capital so it was in our best personal economic interest to keep it for ourselves and our close friends.

Yes, well played. For those that got away with their financial-independence millions. For the rest, well, I guess they never managed to learn the moral lesson of Monopoly.

[1] Or am I wrong here? I could be off-base.

Re: How the AI Bubble Bursts

#409

Post by pigpop » Mon, Mar 30, 2026, 5:15 PM UTC

hajile wrote: post #379

Marha01 wrote: post #336

Earlier quoted context omitted.

Demand for top models is definitely not saturated, at least when it comes to programming. If I could afford to use 5x more Claude Opus 4.6 tokens, I would!

Demand is relative. How many Claude tokens would you buy if they had a 10x price hike? The market has achieved it's current saturation level with loss-leader prices that remind me of the Chinese bike share bubble[0]. Once those prices go up to break even levels (let alone profitable levels), the number of people who can afford to pay will go down dramatically (and that's not even accounting for the bubble pop further…

If they've already built themselves a loyal customer base (which is usually the point of fighting a price war) and the customers are happy with the technology they have, then if funding is tight and turning a profit is more important why wouldn't they pivot to optimizing inference by stopping further training, freezing the model versions, burning the weights into silicon and building better caching strategies and improving harnesses and tools that lower their cost and increase their margin?

If all they do is hike prices then they'll lose customers to competitors who don't or who find a way to serve a similar model cheaper.

The demand isn't going to go away purely through higher prices. Once people know something is possible they will demand it whether supply is constrained or not. That's a huge bounty for anyone who can figure out how to service that demand.

Re: How the AI Bubble Bursts

#410

Post by Aperocky » Mon, Mar 30, 2026, 5:21 PM UTC

hirako2000 wrote: post #318

infecto wrote: post #270

Earlier quoted context omitted.

But unlike the dot com boom, demand for tokens has not let up and there is increasing demand. I don’t know where it falls, certainly companies don’t get or right and they either over or under build. With the current demand rate changes it’s hard to understand why you would stop building today.

Demands for tokens exists yes. On one side you have huge demand for the infinitely subsidized tokens so that people can post a "unique" illustration when posting on social media, along with the text itself even. On the other end we have professionals happy to pay a subscription for heavier use, to build something in the hope to sell it. I figured I don't believe in value when my dad explained to me his mate fired his…

> I figured I don't believe in value

Maybe you don't, but it's fairly obvious that a lot of things are changing and things are moving.

Maybe your dad's mate didn't have to expand on his business, good for him. Other business are expanding because they now can.

Will the positive overweigh the negative? Not necessarily, but to go "it's tulip" is the kind of argument so devoid of nuance that we shouldn't be discussing so on HN.

The overwhelming demand for token would not coming from people wanting a unique illustration - it would be from professional usage. In fact, I'm not even sure who is subsidized. The $20 subscription surely isn't being used fully across all members of that subscription.