IBM CEO says there is 'no way' spending on AI data centers will pay off • Hacker News Board

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#411

Post by bitwize » Wed, Dec 03, 2025, 4:09 AM UTC

7thaccount wrote: post #377

stingraycharles wrote: post #277

Earlier quoted context omitted.

I still have PTSD from how much Watson was being pushed by external consultants to C levels despite it being absolutely useless and incredibly expensive. A/B testing? Watson. Search engine? Watson. Analytics? Watson. No code? Watson. I spent days, weeks arguing against it and ended up having to dedicate resources to build a PoC just to show it didn’t work, which could have been used elsewhere.

This is going on all over again.

Agentic AI really is changing things. I've had a complete change of heart about it. It's good enough now to boost productivity MASSIVELY for devs.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#412

Post by al_borland » Wed, Dec 03, 2025, 4:10 AM UTC

CrI0gen wrote: post #381

al_borland wrote: post #368

Earlier quoted context omitted.

I see Watson stuff at work. It’s not a direct to consumer product, like ChatGPT, but I see it being used in the enterprise, at least where I’m at. IBM gave up on consumer products a long time ago.

Just did some brief Wikipedia browsing and I'm assuming it's WatsonX and not Watson? It seems Watson has been pretty much discontinued and WatsonX is LLM based. If it is the old Watson, I'm curious what your impressions of it is. It was pretty cool and ahead of its time, but what it could actually do was way over promised and overhyped.

I’m not close enough to it to make any meaningful comments. I just see the name pop up fairly regularly. It is possible that some of it is WatsonX and everyone just says Watson for brevity.

One big ones used heavily is Watson AIOps. I think we started moving to it before the big LLM boom. My usage is very tangential, to the point where I don’t even know what the AI features are.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

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Post by Arainach » Wed, Dec 03, 2025, 4:10 AM UTC

smoe wrote: post #360

SamvitJ wrote: post #339

Earlier quoted context omitted.

"They have great R&D but just can’t make products" Is this just something you repeat without thinking? It seems to be a popular sentiment here on Hacker News, but really makes no sense if you think about it. Products: Search, Gmail, Chrome, Android, Maps, Youtube, Workspace (Drive, Docs, Sheets, Calendar, Meet), Photos, Play Store, Chromebook, Pixel ... not to mention Cloud, Waymo, and Gemini ... So many widely adopt…

I don't think Google is bad at building products. They definitely are excellent at scaling products. But I reckon part of the sentiment stems from many of the more famous Google products being acquisitions orignally (Android, YouTube, Maps, Docs, Sheets, DeepMind) or originally built by individual contributors internally (Gmail). Then here were also several times where Google came out with multiple different products…

Starting with an acquisition is a cheap way of accelerating once your company reaches a certain size.

Look at Microsoft - Powerpoint was an acquisition. They bought most of the team that designed and built Windows NT from DEC. Frontpage was an acquisition, Azure came after AWS and was led by a series of people brought in in acquisitions (Ray Ozzie, Mark Russinovich, etc.). It's how things happen when you're that big.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

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Post by crystal_revenge » Wed, Dec 03, 2025, 4:13 AM UTC

edm0nd wrote: post #278

getnormality wrote: post #265

A decade ago, IBM was spending enormous amounts of money to tell me stuff like "cognitive finance is here" in big screen-hogging ads on nytimes.com. They were advertising Watson, vaporware which no one talks about today. Are they bitter that someone else has actually made the AI hype take off?

Honestly I'm not even sure what IBM does these days. Seems like one company that has slowly been dying for decades. but when I look at their stock, its at all time highs lol no idea

I can think of nothing more peak HN than criticizing a company worth $282 Billion with $6 billion in profit (for startup kids that means they have infinite runway and then some) that has existed for over 100 years with "I'm not even sure what they do these days". I mean the problem could be with IBM... what a loser company!

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#415

Post by westurner » Wed, Dec 03, 2025, 4:14 AM UTC

Ctrl-F this thread for terms like: cost, margin

Is transistor density cost still the limit?

Cost model, Pricing model

What about more recyclable chips made out of carbon?

What else would solve for e.g. energy efficiency, thermal inefficiency, depreciation, and ewaste costs?

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#416

Post by protocolture » Wed, Dec 03, 2025, 4:16 AM UTC

Octoth0rpe wrote: post #18

> Krishna also referenced the depreciation of the AI chips inside data centers as another factor: "You've got to use it all in five years because at that point, you've got to throw it away and refill it," he said This doesn't seem correct to me, or at least is built on several shaky assumptions. One would have to 'refill' your hardware if: - AI accelerator cards all start dying around the 5 year mark, which is possib…

Actually my biggest issue here is that, assuming it hasnt paid off, you dont just convert to regular data center usage.

Honestly if we see a massive drop in DC costs because the AI bubble bursts I will be stoked.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

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Post by josh2600 » Wed, Dec 03, 2025, 4:19 AM UTC

skippyboxedhero wrote: post #258

arisAlexis wrote: post #66

Earlier quoted context omitted.

[flagged]

The incentive for CEOs is announcing the plan to do something, they have no idea if they will actually be able to do it, and it probably won't matter. This happened in the dotcom too btw. Companies built out fibre networks, it wasn't possible to actually build all the physical infra that companies wanted to build so many announced plans that never happened and then, towards the end, companies began aggressively acqui…

I think this was definitely true of CEOs in the past but Google and Meta have managed spectacular infrastructure buildouts over many decades with proper capacity planning.

There were a lot of lessons learned in the dotcom boom (mainly related to the great telecom heist if you ask me). If you look back on why there was dotcom bubble it's broadly, imho, related to the terrible network quality in the US compared to other first world countries.

Our cellular services for example lag behind basically every asian market by at least 1 maybe 2 generations now.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#418

Post by afavour » Wed, Dec 03, 2025, 4:21 AM UTC

duped wrote: post #402

darth_avocado wrote: post #295

Earlier quoted context omitted.

Isn’t that what Michael Burry is complaining about? That five years is actually too generous when it comes to depreciation of these assets and that companies are being too relaxed with that estimate. The real depreciation is more like 2-3 years for these GPUs that cost tens of thousands of dollars a piece. https://x.com/michaeljburry/status/1987918650104283372

How different is this from rental car companies changing over their fleets? I don't know, this is a genuine question. The cars cost 3-4x as much and last about 2x as far as I know, and the secondary market is still alive.

Rental car companies aren’t offering rentals at deep discount to try to kickstart a market.

It would be much less of a deal if these companies were profitable and could cover the costs of renewing hardware, like car rental companies can.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#419

Post by Archelaos » Wed, Dec 03, 2025, 4:23 AM UTC

Gartner estimates that worldwide AI spending will total 1.5 Trillion US$ in 2025.[1] As of 2024, global GDP per year is 111.25 Trillion US$.[2] The question is how much this can be increased by AI. This describes the market volumn for AI. Todays investments have a certain lifespan, until they become obsolet. For custom software I would estiamte that it is 6-8 years. AI investments should be somewhere in this range.

Taking all this into consideration, the investment volumn does not look oversized to me -- unless one is quite pessimistic about the impact of AI on global GDP.

[1] https://www.gartner.com/en/newsroom/press-releases/2025-09-1...

[2] https://data.worldbank.org/indicator/NY.GDP.MKTP.CD

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#420

Post by ojr » Wed, Dec 03, 2025, 4:27 AM UTC

As long as the dollar remains the reserve currency of the world and US retains its hegemony, a lot of the finances will work itself out, the only threat to the US empire crumbling is by losing a major war or extreme civil unrest and that threat is astronomically low. The US is orders of magnitude stronger than the Roman Empire, I don't think people realize the scale or control.