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The Hater's Guide to the AI Bubble

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Re: The Hater's Guide to the AI Bubble

#71

Post by hiAndrewQuinn »

appreciatorBus wrote: post #37
cobertos wrote: post #13

Earlier quoted context omitted.

"Cost is rapidly coming down" but capital expenditures are still high. They'll have to charge for this eventually, no?

Not necessarily. The ppl and firms making the capital expenditures can go bankrupt for instance. The world will carry on without them, while the infrastructure they built with those expenditures continues to provide value, just to someone else, and now at a dramatically lower capital cost. We could compare it to the railroad boom, and the telecom boom - in both cases vast sums capital expenditures were made, and reas…

I am so, so glad you brought up what should be the obvious conclusion here. "B-but they spent all that money, how do they get it back!?" "That's the fun part, they don't."

Creative destruction is a woefully underappreciated force in capitalism. Shareholders can lose everything. Debt can be restructured or sold for pennies on the dollar. Debt can go unsold and unpaid, and the creditors can lose everything.

I think here it has to be mentioned that bankruptcy in the United States actually works very differently to bankruptcy in the European Union, where creditors have a lot more legal means at their disposal to haunt you if you try risky plays like taking on more debt to moonshot your way out of your current debt. In a funny way, a country's bankruptcy laws are their most important ones when it comes to wealth transfer.

Re: The Hater's Guide to the AI Bubble

#72

Post by helicalmix »

BoredPositron wrote: post #12
jakobnissen wrote: post #7

I think the author's take is overly bleak. Yes, he supports his claim that AI businesses are currently money pits and unsustainable. But I don't think it's reasonable to claim that AI can't be profitable. This whole thing is moving so extremely fast. Models are getting better by the month. Cost is rapidly coming down. We broadly speaking still don't know how to apply AI. I think it's hubris to claim that, in the wake…

We are pretty much plateauing in base model performance since gpt4. It's mostly tooling and integration now. The target is also AGI so no matter your product you will get measured on your progress towards it. With new "sota" models popping up left and right you also have no good way of user retention because the user is mostly interested in the models performance not the funny meme generator you added. looking at you…

The transformer paper was published in 2017, and within 8 years (less so, if i'm being honest), we have bots that passed the Turing test. To people with shorter term memories, passing the turing test was a big deal.

My point is that even if things are pleatuing, a lot of these advancements are done in step change fashion. All it takes is one or two good insights to make massive leaps, and just because things are plateauing now, it's a bad predictor for how things will be in the future.

Re: The Hater's Guide to the AI Bubble

#73

Post by entropi »

kevindamm wrote: post #65
entropi wrote: post #39

Earlier quoted context omitted.

I am pretty optimistic that as long as hardware capacity exists, people will find ways of using it. Whether it will be profitable or not is another story of course.

Rivers overflowing with legacy hardware and villages incinerating boards for their metals, and the caustic effects on people & their environment that causes, are already happening. The hardware capacity exists only as long as it is operational and within a few generations. Perhaps we should be careful before building Manhattan-sized data centers. Up to a point it is better than having additional compute sitting idle…

I completely agree with a lot of your points; the whole thing is quite stupid. My only objection is that the infrastructure will probably not go unused. And if we are lucky, those uses will be better than helping teenagers cheat themselves out of a good education.

Re: The Hater's Guide to the AI Bubble

#74

Post by troupo »

nicce wrote: post #25
jakobnissen wrote: post #7

I think the author's take is overly bleak. Yes, he supports his claim that AI businesses are currently money pits and unsustainable. But I don't think it's reasonable to claim that AI can't be profitable. This whole thing is moving so extremely fast. Models are getting better by the month. Cost is rapidly coming down. We broadly speaking still don't know how to apply AI. I think it's hubris to claim that, in the wake…

It is not about profitability alone, but whether benefits are net positive for society over the long term. Profitability is easy with current standards. Get the users. Make them dependent. Increase the price. Make AI mandatory. List goes on.

> Profitability is easy with current standards. Get the users. Make them dependent. Increase the price. Make AI mandatory. List goes on.

"Easy". "Just" get more users and "just" increase prices to somehow cover hundreds of billions of invested dollars and hundreds of millions of running costs.

It's that easy. I'm surprised none of the companies mentioned in the article thought of that.

Re: The Hater's Guide to the AI Bubble

#75

Post by blackoil »

narrator wrote: post #35
impossiblefork wrote: post #32

Earlier quoted context omitted.

So, how do you feel about the recent IMO stuff? Don't they cause a consistency problem for your view that we've plateaued-- to me at least, I felt we were something like two years away from this kind of thing. Probably very expensive to run of course, probably ridiculously so, but they were able to solve really difficult maths problems.

The biological brain of the top human IMO guy runs on 20 watts. I wonder how much electricity Google used to match that performance.

What is the training cost of such human? Reliability is another concern. There is no manufacturer whom you can pay 10 billion and get few 1000 of trained processor.

Re: The Hater's Guide to the AI Bubble

#76

Post by troupo »

thoroughburro wrote: post #8

The bubble will pop, just like the web bubble popped; and that’s going to suck. AI technologies will remain and be genuinely transformative, just like the web remained and was transformative (for good and ill).

It's a source of constant amusement to me that "arguments" used for AI are indistinguishable from "arguments" used for crypto.

(With a caveat that LLMs actually do have their uses)

Re: The Hater's Guide to the AI Bubble

#77

Post by michalf6 »

kevindamm wrote: post #65
entropi wrote: post #39

Earlier quoted context omitted.

I am pretty optimistic that as long as hardware capacity exists, people will find ways of using it. Whether it will be profitable or not is another story of course.

Rivers overflowing with legacy hardware and villages incinerating boards for their metals, and the caustic effects on people & their environment that causes, are already happening. The hardware capacity exists only as long as it is operational and within a few generations. Perhaps we should be careful before building Manhattan-sized data centers. Up to a point it is better than having additional compute sitting idle…

Aren't AI GPUs a drop in the bucket compared to consumer electronics?

Nvidia sold ~3M blackwells in 2025: https://wccftech.com/nvidia-has-sold-over-three-million-blac...

Compare that to laptops which sell in tens of millions per manufacturer: https://en.wikipedia.org/wiki/List_of_laptop_brands_and_manu...

Plus, it's way easier to collect boards for recycling from a centralized data center.

Re: The Hater's Guide to the AI Bubble

#78

Post by andrewstuart »

miltonlost wrote: post #64
andrewstuart wrote: post #19

These sound very much in tone like the criticisms of Web 1.0 AI/LLMs are an infant technology, it’s at the beginning. It took many many years until people figured out how to use the internet for more than just copying corporate brochures into HTML. I put it to you that the truly valuable applications of AI/LLMs are yet to be invented and will be truly surprising when they come (which they must of course otherwise we’…

AI is not infant. LLMs? yes. But not AI as a whole. Conflating the two is part of the problem when deciding what is useful and profitable.

AI is to LLM

what

The Internet is to the World Wide Web

Re: The Hater's Guide to the AI Bubble

#79

Post by bee_rider »

wulfstan wrote: post #51
frithsun wrote: post #31

I believe this is a "good" bubble in the sense that the 19th century railroad bubble and original dot com bubble both ended up invested in infrastructure that created immense value. That said, all of these LLMs are interchangeable, there are no moats, and the profit will almost entirely be in the "last mile," in local subject matter experts applying this technology to their bespoke business processes.

I keep saying to people - "if you have a good idea that can make use of large amounts of really really cheap GPUs to do something genuinely useful - get ready for a massive glut of spare capacity". I still haven't thought of anything, unfortunately...

These are sort of compute-focused GPUs, right? I bet a lot of university labs would like them.

I wonder if ubiquitous, user-friendly finite elements analysis tools could become a boon for 3D printers.

Re: The Hater's Guide to the AI Bubble

#80

Post by bdelmas »

appreciatorBus wrote: post #37
cobertos wrote: post #13

Earlier quoted context omitted.

"Cost is rapidly coming down" but capital expenditures are still high. They'll have to charge for this eventually, no?

Not necessarily. The ppl and firms making the capital expenditures can go bankrupt for instance. The world will carry on without them, while the infrastructure they built with those expenditures continues to provide value, just to someone else, and now at a dramatically lower capital cost. We could compare it to the railroad boom, and the telecom boom - in both cases vast sums capital expenditures were made, and reas…

“The world will carry on without them”. Sure but at the end of the day it’s not because companies can go bankrupt that debts etc magically disappear. It still impact other companies.
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