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How the AI Bubble Bursts

martinvol.pe

451–460 of 557 posts

Re: How the AI Bubble Bursts

#451
post #281

Earlier quoted context omitted.

LLMs haven't remotely begun to be integrated into the lives of the typical person. Not even close. The typical person is using LLMs not at all as it pertains to their daily life tasks. They're using them almost entirely for limited discussion matters (eg having a discussion with GPT about a medical issue, or a work related matter). This is the first or second inning in the LLM rollout. It'll take 15-20 more years for…

>The typical person is using LLMs not at all as it pertains to their daily life tasks. This doesnt track at all with my experience. Everybody is using it everywhere. Moreover people are using them for daily life tasks even when it is not an appropriate use of LLMs - e.g. getting medical advice as you referred to or writing emails which are clearly pissing off their coworkers. In this respect I see it as akin to radiu…

> getting medical advice

Id be careful stating this is an inappropriate use of LLMs. Im semi tapped in to the medical literature community and there is a lot of serious discussion and research going into the usage of LLMs for medical advice and most of it is showing that LLMs are barely worse than doctors, and much much cheaper/more convenient. They definitely arent ready to completely replace doctors, but it seems they can provide competent medical advice in a pinch. Look out for the literature on this in the coming year, its only the last few months that researchers seem to be taking LLMs seriously.

Re: How the AI Bubble Bursts

#452
post #201
post #167

Earlier quoted context omitted.

> RAM prices spiked speculatively Didn't OpenAI buy up 40% of the capacity all at once?

No, they signed a bunch of contracts for future deliveries. That's not a supply constraint. The factories making RAM continued operating and serving their existing deliveries, and in fact they still are. Freshman economics would say that supply is fine and that prices shouldn't move. But they did anyway. And the reason is speculation.

According to this he ordered them uncut and unfinished and may just warehouse until needed:

https://www.mooreslawisdead.com/post/sam-altman-s-dirty-dram...

Its still speculative that OpenAI won't go bankrupt and have to free it back to the market, but if it is holding them unfinished it is a supply constraint on finished RAM chips even if not on wafer output.

Re: How the AI Bubble Bursts

#453

Earlier quoted context omitted.

> I think OpenAI is going to be bigger than Microsoft in market cap within the next 3 years. I am yet to see how a one-legged business model with just a single product (that is not crude oil), without a plan and money is going to become sustainable. Oh yeah, maybe they'll finally make money on those autonomous lethal weapons. That sounds the easiest.

Sure. I'll give you a basic plan without any insider knowledge on OpenAI. First, OpenAI and Anthropic are the leaders in model capabilities. Google is a close 3rd but 3rd nonetheless. Second, ChatGPT likely has about 1 billion active users right now. I think ads on ChatGPT will surpass even Google search ads in the future. There will be a class of users who will never pay for ChatGPT subscriptions and that's ok. Meta…

I don't discount this as a possibility but my impression is that the OpenAI brand isn't very sticky.

Internet Explorer being pre-installed on Windows devices didn't prevent it from being demolished by newcomer Chrome throughout the 2010s. Now we're looking at a product that's even less integrated, and whose value is exposed through universal interfaces (human language, images, etc.).

If OpenAI succeeds, I imagine that remarkably little of it will have come from the brand. But subtracting the first-mover brand advantage: they can either compete on the frontier, which seems difficult and bears potentially diminishing returns (particularly wrt to distillation); or compete as a commodity, which I imagine cannot justify their valuation/spend.

It seems very uphill of a battle.

Re: How the AI Bubble Bursts

#454

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 has a paid option. and the antigravity subreddit is full of people who claim to be paid users, complaining about constantly hitting limits.

where do I find the paid option? I can not find that on their product page. There are only two options I can see; one "Available at no charge" and another one "Coming soon - For organizations"

Can you upgrade in the IDE? It would be strange that Google has a performance problem for paid users while I do not experience any such issues at all with Claude and Codex.

Re: How the AI Bubble Bursts

#455
post #240

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…

Why would a company sell inference on Openrouter if they're not profitable? Except for Grog/Cerebras and a few other hardware companies looking to showcase their new chips.

If they're losing money and have no VC backing, they'd just turn off the lights.

Re: How the AI Bubble Bursts

#457
post #330

Earlier quoted context omitted.

Check the token prices for open weight LLMs at various independent inference providers. That gives you a very good estimate of "how much can you serve the tokens of a model of the size N for while making a profit". Now, keep in mind: Kimi K2.5 is 1T MoE. Today's frontier LLMs are in the 1T to 5T range, also MoE. Make an estimate. Compare that estimate with the actual frontier lab prices.

I don't think it's as easy as looking at open weight API prices. We don't know whether the operators are making a profit on all the hardware they bought. Maybe the prices we pay just cover electricity. And it's not even certain that running costs are covered by API prices: The operators may be siphoning content and subsidize from selling that. In the current volatile environment, the API prices are more of a baseline…

That doesn't make sense in this environment because everyone is compute constrained with huge backlogs they can't fulfill. If these inference providers aren't making any money, they'd simply sell their GPUs to those who are starved for compute.

Re: How the AI Bubble Bursts

#458

Earlier quoted context omitted.

it has a paid option. and the antigravity subreddit is full of people who claim to be paid users, complaining about constantly hitting limits.

where do I find the paid option? I can not find that on their product page. There are only two options I can see; one "Available at no charge" and another one "Coming soon - For organizations" Can you upgrade in the IDE? It would be strange that Google has a performance problem for paid users while I do not experience any such issues at all with Claude and Codex.

Maybe it's unavailable in your region. Four options on this page for me.

https://antigravity.google/pricing

Re: How the AI Bubble Bursts

#459

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?

They do it because their demand is higher than the compute that they have available to them. Their GPUs must be melting during peak hours so they're encouraging people who move their workload to off peak hours if possible.

This is the opposite of an AI bubble burst.

Re: How the AI Bubble Bursts

#460

Earlier quoted context omitted.

here you go: https://x.com/wccftech/status/2037921057097892018 Ram prices are dropping

Every response to the original post calls it out as being factually incorrect...

And one more: https://x.com/AGCast4/status/2038638898151383519
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