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

#661

Post by DoctorOW » Wed, Dec 03, 2025, 11:13 AM UTC

gloosx wrote: post #638

bloppe wrote: post #590

Earlier quoted context omitted.

Would you mind sharing some of these projects? I've found Claude's usefulness is highly variable, though somewhat predictable. It can write `jq` filters flawlessly every time, whereas I would normally spend 30 minutes scanning docs because nobody memorizes `jq` syntax. And it can comb through server logs in every pod of my k8s clusters extremely fast. But it often struggles making quality code changes in a large code…

It is always "I'm producing 300 projects in a nanosecond" but it's almost never about sharing or actually deploying these ;)

The problem I had that the larger your project gets, the more mistakes Claude makes. I (not a parent commenter) started with a basic CRUD web app and was blown away by how detailed it was, new CSS, good error handling, good selection and use of libraries, it could even write the terminal commands for package management and building. As the project grew to something larger Claude started forgetting that some code already existed in the project and started repeating itself, and worse still when I asked for new features it would pick a copy at random leaving them out of sync with eachother. Moving forward I've been alternating between writing stuff with AI, then rewriting it myself.

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

#662

Post by ReptileMan » Wed, Dec 03, 2025, 11:15 AM UTC

hinkley wrote: post #550

helsinkiandrew wrote: post #514

Earlier quoted context omitted.

> IBM has not exactly had a stellar record at identifying the future. IBM invented/developed/introduced magnetic stripe cards, UPC Barcodes, the modern ATM, Hard drives, floppies, DRAM, SQL, the 360 Family of Mainframes, the PC, Apollo guidance computers, Deep Blue. IBM created a far share of the future we're living in. I'm no fan of much of what IBM is doing at the moment but it could be argued that its consultancy/…

They also either fairly accurately predicted the death of HDDs by selling off their research division before the market collapsed, or they caused the end of the HDD era by selling off their research division. They did a lot of research.

The hdd being dead will surely come as a surprise to the couple of 12TB rusties spinning joyously in my case right now.

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

#663

Post by gizmo » Wed, Dec 03, 2025, 11:16 AM UTC

enopod_ wrote: post #599

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

That's exactly the thing. It's only about bookkeeping. The big AI corps keep pushing depreciation for GPUs into the future, no matter how long the hardware is actually useful. Some of them are now at 6 years. But GPUs are advancing fast, and new hardware brings more flops per watt, so there's a strong incentive to switch to the latest chips. Also, they run 24/7 at 100% capacity, so after only 1.5 years, a fair share…

Flops per watt is relevant for a new data center build-out where you're bottlenecked on electricity, but I'm not sure it matters so much for existing data centers. Electricity is such as small percentage of total cost of ownership. The marginal cost of running a 5 year old GPU for 2 more years is small. The husk of a data center is cheap. It's the cooling, power delivery equipment, networking, GPUs etc that costs money, and when you retrofit data centers for the latest and greatest GPUs you have to throw away a lot of good equipment. Makes more sense to build new data centers as long as inference demand doesn't level off.

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

#664

Post by akst » Wed, Dec 03, 2025, 11:17 AM UTC

stevenjgarner wrote: post #240

"It is 1958. IBM passes up the chance to buy a young, fledgling company that has invented a new technology called xerography. Two years later, Xerox is born, and IBM has been kicking themselves ever since. It is ten years later, the late '60s. Digital Equipment DEC and others invent the minicomputer. IBM dismisses the minicomputer as too small to do serious computing and, therefore, unimportant to their business. DEC…

"The amount being spent on AI data centres not paying off" is a different statement to "AI is not worth investing in". They're effectively saying the portions people are investing are disproportionately large to what the returns will end up being.

It's a difficult thing to predict, but I think there's almost certainly some wasteful competition here. And some competitors are probably going to lose hard. If models end up being easy to switch between and the better model is significantly better than its competitors, than anything invested in weaker models will effectively be for nothing.

But there's also a lot to gain from investing in the right model, even so it's possible those who invested in the winner may have to wait a long time to see a return on their investment and could still possibly over allocate their capital at the expense of other investment opportunities.

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

#665

Post by catwell » Wed, Dec 03, 2025, 11:18 AM UTC

Glemkloksdjf wrote: post #652

helsinkiandrew wrote: post #514

Earlier quoted context omitted.

> IBM has not exactly had a stellar record at identifying the future. IBM invented/developed/introduced magnetic stripe cards, UPC Barcodes, the modern ATM, Hard drives, floppies, DRAM, SQL, the 360 Family of Mainframes, the PC, Apollo guidance computers, Deep Blue. IBM created a far share of the future we're living in. I'm no fan of much of what IBM is doing at the moment but it could be argued that its consultancy/…

For the fact that they invented Deep Blue, they are really struggling with AI

Their Granite family of models is actually pretty good! They just aren't working on the mainstream large LLMs that capture all the attention.

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

#666

Post by EagnaIonat » Wed, Dec 03, 2025, 11:21 AM UTC

Glemkloksdjf wrote: post #653

EagnaIonat wrote: post #524

Earlier quoted context omitted.

I read the actual article. He is pointing out that the current costs to create the data centres means you will never be able to make a profit to cover those costs. $800 Billion just to cover the interest. OpenAI is already haemorrhaging money and the space data centres has already been debunked. There is even a recent paper that points out that LLMs will never become AGI. The article also finishes out with some other…

Sry to say but the fact that you argue with LLMs never become AGI, you are not up-to-date. People don't assume LLM will be AGI, people assume that World Models will lead us to AGI. I personally never asumed LLM will become AGI, i always assumed that LLM broke the dam for investment and research into massivce scale compute ML learning and LLMs are very very good in showing were the future goes because they are already…

> People don't assume LLM will be AGI,

I wish that was true.

> people assume that World Models will lead us to AGI.

Who are these people? There is no consensus around this that I have seen. You have anything to review regarding this?

> as soon as GPT-3 came out.

I don't think that was true at all. It was impressive when it came out, but people in the field clearly saw the limitations and what it is.

RL isn't magical either. Google AlphaGo as an example often required human intervention to get the RL to work correctly.

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

#667

Post by freehorse » Wed, Dec 03, 2025, 11:23 AM UTC

gloosx wrote: post #638

bloppe wrote: post #590

Earlier quoted context omitted.

Would you mind sharing some of these projects? I've found Claude's usefulness is highly variable, though somewhat predictable. It can write `jq` filters flawlessly every time, whereas I would normally spend 30 minutes scanning docs because nobody memorizes `jq` syntax. And it can comb through server logs in every pod of my k8s clusters extremely fast. But it often struggles making quality code changes in a large code…

It is always "I'm producing 300 projects in a nanosecond" but it's almost never about sharing or actually deploying these ;)

At this point my prior is that all these 300/ns projects are some kind of internal tools, with very narrow scope and many just for a one-off use.

Which is also fine and great and very useful and I am also making those, but it probably does not generalize to projects that require higher quality standards and actual maintenance.

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

#668

Post by fuzzfactor » Wed, Dec 03, 2025, 11:27 AM UTC

rchaud wrote: post #254

stevenjgarner wrote: post #240

"It is 1958. IBM passes up the chance to buy a young, fledgling company that has invented a new technology called xerography. Two years later, Xerox is born, and IBM has been kicking themselves ever since. It is ten years later, the late '60s. Digital Equipment DEC and others invent the minicomputer. IBM dismisses the minicomputer as too small to do serious computing and, therefore, unimportant to their business. DEC…

Got anything vis-a-vis the message as opposed to the messenger? I'm not sure these examples are even the gotchas you're positing them as. Xerox is a dinosaur that was last relevant at the turn of the century, and IBM is a $300bn company. And if it wasn't obvious, the Apple II never made a dent in the corporate market, while IBM and later Windows PCs did. In any case, these examples are almost half a century old and d…

>the message as opposed to the messenger?

Exactly.

The message is plain to see with very little advanced math.

The only news is that it is the CEO of IBM saying it out loud.

IMHO he has some of the most credible opinions at this scale that many people have seen.

It's "highly unlikely" that all this money will be paid back to everyone that invested at this point. The losers probably will outnumber the winners, and nobody knows whether it will end up becoming a winner-take-all situation yet. A number of wealthy players remain at the table, raising stakes with each passing round.

It's so much money that it's already too late to do anything about it, and the full amount hasn't even changed hands yet.

And the momentum from something so huge can mean that almost the entire amount will have to change hands a second time before a stable baseline can be determined relative to pre-existing assets.

This can take longer than anyone gives credit for just because of massiveness, in the mean time, established real near-term growth opportunities may languish or even fade as the skew in rationality/solvency balance awaits the rolling dice to come to rest.

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

#669

Post by newsclues » Wed, Dec 03, 2025, 11:28 AM UTC

ReptileMan wrote: post #662

hinkley wrote: post #550

Earlier quoted context omitted.

They also either fairly accurately predicted the death of HDDs by selling off their research division before the market collapsed, or they caused the end of the HDD era by selling off their research division. They did a lot of research.

The hdd being dead will surely come as a surprise to the couple of 12TB rusties spinning joyously in my case right now.

HDDs would be much more important today if flash storage didn’t exist.

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

#670

Post by leoc » Wed, Dec 03, 2025, 11:35 AM UTC

ahartmetz wrote: post #628

Aperocky wrote: post #522

Earlier quoted context omitted.

The other way to look at it is that the entire consulting industry is teetering on catastrophe. And IBM, being largely a consulting company now, is not being spared.

> The other way to look at it is that the entire consulting industry is teetering on catastrophe Oh? Where'd you get that information? If you mean because of AI, it doesn't seem to apply much to IBM. They are probably not great at what they do like most such companies, but they are respectable and can take the blame if something goes wrong. AI doesn't have these properties.

If anything there’s likely plenty of work for body shops like IBM in reviewing and correcting AI-generated work product that has been thrown into production recently.