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Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

reuters.com

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Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#51

Post by vrganj »

budsniffer952 wrote: post #42
vrganj wrote: post #25

Earlier quoted context omitted.

I'm not sure I've seen what I would call dramatic improvement since maybe GPT4? Sure, things got better. But I'd call it iterative more than revolutionary. I still wouldn't trust any of the models to do anything meaningful unattended. They all still do dumb shit all the time. Plus, even if they were genuinely dramatically better, the businesses sure as hell aren't. They're burning money left and right, they have no m…

[flagged]

Sure, and my nephew is building nice little trucks with Legos.

The point is, is anyone getting any value from it?

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#52

Post by Aurornis »

paxys wrote: post #2

These alarms have been going off for a long time now. Everyone is already in too deep to admit that there’s a problem.

The alarms in this case are that the profits and margins won’t be as high as we’ve come to expect from cloud companies.

Other than Oracle’s questionable spending spree, these big tech companies are still in very good financial positions. The enormous R&D and infrastructure spends are just feeling unusual to investors who got comparable with the unusually high margins and low costs for SaaS companies. Now they have to put a lot of that money back into the business like more normal companies.

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#53

Post by InsideOutSanta »

erwald wrote: post #24
InsideOutSanta wrote: post #10

Earlier quoted context omitted.

The problem is that the dramatic improvement in capabilities is not translating to a dramatic increase in revenue.

"Anthropic and OpenAI generate a lot of revenue with relatively few employees – an estimated $9M and $5.5M in revenue per employee (RPE), respectively. If either company were to go public, it would have a higher RPE than any public tech company on Forbes’ Global 2000 list." https://epoch.ai/data-insights/revenue-per-employee-ai-compa...

The revenue needs to be way, way higher than this to warrant the investment.

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#56

Post by Aurornis »

vrganj wrote: post #25
mynameisjonny_ wrote: post #6

Earlier quoted context omitted.

> Everyone is in too deep to now admit that there’s a problem I'm not sure how to square this with the dramatic improvement in LLM capabilities in the last 8-9 months. If anything, it makes the earlier investments look prescient?

I'm not sure I've seen what I would call dramatic improvement since maybe GPT4? Sure, things got better. But I'd call it iterative more than revolutionary. I still wouldn't trust any of the models to do anything meaningful unattended. They all still do dumb shit all the time. Plus, even if they were genuinely dramatically better, the businesses sure as hell aren't. They're burning money left and right, they have no m…

> I'm not sure I've seen what I would call dramatic improvement since maybe GPT4?

LLM conversations online are so weird. Whenever I read things like this it’s like I’m living in a different world than the other person.

GPT4 was almost useless compared to what we have available today.

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#57

Post by dktp »

gonzalohm wrote: post #18
FartyMcFarter wrote: post #4

Why does it raise alarm? Pretty sure all this spending was planned.

I'm pretty sure they didn't plan to just spend cash without any return. It raises an alarm because there is no end in sight for the money burning

There is pretty clear return as of now. And half a trillion in backlog

Also the ~4% drop is really not a big swing for earnings. This looks like a non story

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#58

Post by budsniffer952 »

dgellow wrote: post #46
budsniffer952 wrote: post #42

Earlier quoted context omitted.

[flagged]

It doesn’t matter… are those companies using AI getting a positive ROI? So far there is no signs it is the case, unless you’re yourself selling AI stuff

>are those companies using AI getting a positive ROI?

Yes.

>So far there is no signs it is the case

How could you possibly know this?

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#59

Post by epistasis »

I'm thinking Apple has been really smart in their AI strategy here.

It seems a mistake to make unprecedentedly large capital expenditures, in a very very crowded space, without much evidence of a moat. Presumably people thought the moat would be singularity-like self-improvement of AI, but the singularity is merely a religious concept, and nobody should take religious myth as fact, it's merely narrative for orientation and inspiration.

Re: Alphabet's cash burn raises alarm for Big Tech as AI spending climbs

#60

Post by budsniffer952 »

dgellow wrote: post #44
budsniffer952 wrote: post #28

Earlier quoted context omitted.

> not translating to a dramatic increase in revenue. Completely false. AI and AI related revenues are growing exponentially .

Not for the companies using the LLMs…

Are you denying that AI revenues are growing?

Or are you just adding nonsense about "yeah but yeah but no value"?

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