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xAI is looking more like a datacentre REIT than a frontier lab

martinalderson.com

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Re: xAI is looking more like a datacentre REIT than a frontier lab

#501

Post by HarHarVeryFunny »

icepush wrote: post #125
SlinkyOnStairs wrote: post #45

Earlier 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…

Unemploying everyone was what openai described as their success condition when it was founded a decade ago. There was a q&a on their website that said "How will you know when you have reached AGI? When the system performs most or all economically valuable work." Lots of people thought they were joking, or it was marketing, but they were 100% serious from the first.

I think they've since changed that definition, but the reason for it is their agreement with Microsoft which stops granting MSFT IP rights to OpenAIs tech once they reach "AGI". So, it's in OpenAI's best interests to be able to claim "AGI" ASAP.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#502

Post by HarHarVeryFunny »

SlinkyOnStairs wrote: post #93
treis wrote: post #59

Earlier quoted context omitted.

The pricing on Open router is clear. Anthropic, OpenAI, and Google all garner a massive premium over deepseek and qwen. There's no other realistic explanation except that they're making bank.

> There's no other realistic explanation except that they're making bank. If they were, they'd never shut up about it. Yet they keep quiet about the financials.

Well, as soon as they IPO they won't be able to keep quiet about it anymore.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#504

Post by alsetmusic »

frankacter wrote: post #360
overgard wrote: post #343

AFAIK the Colossus data center was more or less "brute force" when it comes to building a datacenter fast -- ie it was very expensive and they cut some pretty ugly corners (their generators are "temporary" to get around regulations, but I don't see how they can possibly be "temporary" and they create a massive amount of pollution compared to other power sources). The reason I point that out is the article mentions th…

Cheap. Fast. Good. Pick two. Colossus is the world's largest single, unified GPU cluster, all GPUs acting as one coherent supercomputer rather than fragmented pools or multi-site setups. They spun it up in a fraction of the time by all estimates. It's not something you can just throw money at and reproduce the results. Per Jensen Huang: "As far as I know, there's only one person in the world who could do that; Elon i…

> Elon is singular in his understanding of engineering and construction and large systems and marshaling resources

Why would I believe a rich guy hyping his company's temporarily magical product when he hypes another guy who is a proven liar and flagrant fraudster? The cool thing is how the Twitter purchase was "on hold" due to bots and now it's mostly bots. But if you own the company making the software that powers the bots, I guess that's ok.

Jensen is smart enough to know he's glossing over the many shortcomings of an ultra-rich loser because it benefits him in the markets. I have no respect for that.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#505

Post by duped »

frankacter wrote: post #360
overgard wrote: post #343

AFAIK the Colossus data center was more or less "brute force" when it comes to building a datacenter fast -- ie it was very expensive and they cut some pretty ugly corners (their generators are "temporary" to get around regulations, but I don't see how they can possibly be "temporary" and they create a massive amount of pollution compared to other power sources). The reason I point that out is the article mentions th…

Cheap. Fast. Good. Pick two. Colossus is the world's largest single, unified GPU cluster, all GPUs acting as one coherent supercomputer rather than fragmented pools or multi-site setups. They spun it up in a fraction of the time by all estimates. It's not something you can just throw money at and reproduce the results. Per Jensen Huang: "As far as I know, there's only one person in the world who could do that; Elon i…

You can also pick "none of the above." These things don't need to exist. Not all market demand needs to be met.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#506

Post by leopd »

As far as business models go I think REIT for GPUs looks much more durable than Frontier Lab these days. The AI economy has a few big parts:

- Raw materials: Silicon, electricity

- Data centers: turn raw materials into compute

- Model vendors: turn compute into tokens

The frontier labs are competing in the idea that their tokens are worth more $/mtok than the others. If you look at the cost/quality Pareto curves, yes OpenAI and Anthropic are in the corner of expensive & good. But you need a log scale on price to look at these charts because the Chinese models are almost as good for a small fraction of the price. For this business model to be sustainable they need to keep innovating faster than everybody else AND for the quality difference to stay meaningful. Neither of those seem like sure things or frankly even likely to happen.

In contrast, further down the supply chain, folks supplying compute and raw materials both seem to be providing solid services that will be useful in the long term.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#507

Post by oofbey »

leopd wrote: post #506

As far as business models go I think REIT for GPUs looks much more durable than Frontier Lab these days. The AI economy has a few big parts: - Raw materials: Silicon, electricity - Data centers: turn raw materials into compute - Model vendors: turn compute into tokens The frontier labs are competing in the idea that their tokens are worth more $/mtok than the others. If you look at the cost/quality Pareto curves, yes…

Nice breakdown. But data centers are increasingly responsible for their own electricity. As in Colossus.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#508

Post by RetroTechie »

blensor wrote: post #410
nl wrote: post #309

Earlier 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 (!!)

I also feel that the GPU/NPU value does not lose money as fast anymore. What I am wondering though is how long can you run such a system at basically full load without interruption before it starts to just physically degrade. If I have a H100 and I let it run for 4 years at full throttle does it still have the same theoretical value as it had at the start or are the chips just burning out. I think I remember that bac…

https://en.wikipedia.org/wiki/Electromigration

Temperature is a big factor, as well as current density.

But there's also the # and magnitude of thermal cycles (which translate into mechanical stress, leading to metal-fatigue like effects on contact points etc), attack from chemicals in the air, cosmic radiation, ESD damage & more. Some may matter, some not.

That's why "new" > "used" in case of electronics. Especially since you don't know the (ab)use history of used parts.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#509

Post by lumost »

Is this the inevitable outcome of frontier labs who own their hardware? the GPUs and datacenters are the major cost. The inference and training a higher tier value proposition, if the company gets nervous that the investment in hardware won't pay off - renting it becomes a major topic of conversation.

A frontier model team having to fight their board on whether to monetize the datacenters directly or continue to invest in AI work is going to have a hard time.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#510

Post by WarmWash »

kranke155 wrote: post #484
WarmWash wrote: post #160

Earlier quoted context omitted.

>For the investors get their money back and the bubble to not implode, they functionally need to unemploy everyone in the US. More like $75/mo per user for the next 5-10 years if they can get 5% of the global population to pay that.

Can 5% of the population even pay for that? Some kind of huge increase in prices for compute and inference and companies maintaining large bills for AI assistants for key employees or teams (1000-2000$) seems most likely to me.

It would be akin to a cell phone bill, so pricier in the first world, cheaper in the 3rd, but 70% of the global population has a cell phone.
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