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After the Bubble

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Re: After the Bubble

#81

Post by evanelias »

keeda wrote: post #77
kevin061 wrote: post #74

Earlier quoted context omitted.

OK, that is interesting. Separating infra from AI valuation. I can see what you mean though because stock prices are volatile and unpredictable but a datacenter will remain in place even if its owner goes bankrupt. However, I think the AI datacenter craze is definitely going to experience a shift. GPU chips get obsolete really fast, especially now that we are moving into specialised neural chips. All those datacenter…

Right, the obsolence rate of GPUs is one of the primary drivers of the depreciation shenanigans aspect of the bubble. However, I've come across a number of articles that paint a very different picture. E.g. this one is from someone in the GPU farm industry and is clearly going to be biased, but by the same token seems to be more knowledgeable. They claim that the demand is so high that even 9-year old generations sti…

> They claim that the demand is so high that even 9-year old generations still get booked like hot cakes

What does this prove? Demand is inflated in a bubble. If the AI company valuation bubble pops, demand for obsolete GPUs will evaporate.

The article you're linking here doesn't say what percentage of those 9-year-old GPUs already failed, nor does it say when they were first deployed, so it's hard to draw conclusions. In fact their math doesn't seem to consider failure at all, which is highly suspicious.

In another subthread, you pointed to the top comment here about a 5-year MTBF as supposedly contradicting the original article's thesis about depreciation. 5 years is obviously less than the 9 years here, so clearly something doesn't add up. (Besides, a 5-year MTBF is rather poor to begin with, and there isn't normally a correlation between depreciation and MTBF. So this is not a smoking gun which contradicts anything in Tim Bray's original article.)

Re: After the Bubble

#82

Post by keeda »

brazukadev wrote: post #78
keeda wrote: post #71

Earlier quoted context omitted.

How do his accomplishments (numerous as they may be) matter if they are only tangentially related to the topic he's discussing? The fact that his take aligns with many others' does not help if they are all outsiders ruminating on hearsay and innuendo about tightly guarded, non-public numbers. He may well simply be echoing the talking points he has heard. I mean, per the top comment in this thread, he cites an article…

> My only goal here is to get a real sense of the depreciation story It doesn't look like your goal is to get a real sense or at least your strategy is really poor as you have an opinion already and wants to confirm it

It won't be great for my financial interests, even though partial, if my decisions were based on presupposed notions rather than evidence ¯\_(ツ)_/¯

Re: After the Bubble

#83

Post by keeda »

evanelias wrote: post #81
keeda wrote: post #77

Earlier quoted context omitted.

Right, the obsolence rate of GPUs is one of the primary drivers of the depreciation shenanigans aspect of the bubble. However, I've come across a number of articles that paint a very different picture. E.g. this one is from someone in the GPU farm industry and is clearly going to be biased, but by the same token seems to be more knowledgeable. They claim that the demand is so high that even 9-year old generations sti…

> They claim that the demand is so high that even 9-year old generations still get booked like hot cakes What does this prove? Demand is inflated in a bubble. If the AI company valuation bubble pops, demand for obsolete GPUs will evaporate. The article you're linking here doesn't say what percentage of those 9-year-old GPUs already failed, nor does it say when they were first deployed, so it's hard to draw conclusion…

> Demand is inflated in a bubble.

Is it? The dot-com fiber bubble for instance was famous for laying far more fiber than would be needed for the next decade even as the immediate organic demand was tiny.

In this case however, each and every hyperscaler is bemoaning / low-key boasting that they have been capacity constrained for the past multiple quarters.

The other data point is the climbing rate of AI adoption as reported by non-AI affiliated sources, which also lines up with what AI companies report, like:

https://www.stlouisfed.org/on-the-economy/2025/nov/state-gen...

That article is a little crazy. Not only are 54% of Americans using AI, that is 10 percentage points over last year... and usage at work may even be boosting national-level metrics!

> In fact their math doesn't seem to consider failure at all, which is highly suspicious.

That's a good point! If I had to guess, that may be because Burry et al don't mention failure rates either, and seem to assume a ~2 year obsolescence based on releases of new generations of GPUs.

As such, everybody is responding to those claims. The article I linked was making the point that even 9-year old generations are still in high demand, which also explains the 5 years vs 9 years difference -- two entirely different generations and models, H100 vs M4000.

And while MTBF is not directly related to depreciation, it's Bray who brings up failure rates in a discussion about depreciation. This is one reason I think he's just riffing off what he's heard rather than speaking from deep industry knowledge.

I've been trying to find any discussion that mentions concrete failure rates without luck. Which makes sense, since they're probably heavily-NDA'd numbers.

Re: After the Bubble

#84

Post by evanelias »

keeda wrote: post #83
evanelias wrote: post #81

Earlier quoted context omitted.

> They claim that the demand is so high that even 9-year old generations still get booked like hot cakes What does this prove? Demand is inflated in a bubble. If the AI company valuation bubble pops, demand for obsolete GPUs will evaporate. The article you're linking here doesn't say what percentage of those 9-year-old GPUs already failed, nor does it say when they were first deployed, so it's hard to draw conclusion…

> Demand is inflated in a bubble. Is it? The dot-com fiber bubble for instance was famous for laying far more fiber than would be needed for the next decade even as the immediate organic demand was tiny. In this case however, each and every hyperscaler is bemoaning / low-key boasting that they have been capacity constrained for the past multiple quarters. The other data point is the climbing rate of AI adoption as re…

> Is it?

Yes, demand is absolutely inflated in a bubble. We're talking about GPUs, so look at hardware sales for the comparison, not utility infrastructure. Sun Microsystems' revenue during and after the dotcom bubble, for example. Or Cisco's, for a less extreme but still informative case.

> it's Bray who brings up failure rates in a discussion about depreciation

Yes, I understood his point to be that depreciation schedules for GPUs are overly optimistic (too long) while their MTBF is unusually low. Implying what is on the books as assets may be inflated compared to previous normal practices in tech.

In any case, at this point I agree with the other commenter who said you're just trying to confirm your existing opinion, so not really much sense in continuing this discussion.

Re: After the Bubble

#85

Post by brazukadev »

keeda wrote: post #82
brazukadev wrote: post #78

Earlier quoted context omitted.

> My only goal here is to get a real sense of the depreciation story It doesn't look like your goal is to get a real sense or at least your strategy is really poor as you have an opinion already and wants to confirm it

It won't be great for my financial interests, even though partial, if my decisions were based on presupposed notions rather than evidence ¯\_(ツ)_/¯

Sure, you might not find someone here willing to bring you some evidence as we are all busy but are you confident we are not in a bubble?

Re: After the Bubble

#86

Post by keeda »

brazukadev wrote: post #85
keeda wrote: post #82

Earlier quoted context omitted.

It won't be great for my financial interests, even though partial, if my decisions were based on presupposed notions rather than evidence ¯\_(ツ)_/¯

Sure, you might not find someone here willing to bring you some evidence as we are all busy but are you confident we are not in a bubble?

I really do not want to impose on anyone, but I do want different perspectives so I appreciate all these discussions!

I think we are actually in two bubbles -- see sibling thread: https://news.ycombinator.com/item?id=46211400 -- 1) AI infra + hyperscalers, and 2) pure-play AI company / startup valuations.

My take is only the second one will pop and cause a temporary deflation in the first one, and the GPU depreciation story is going to influence when it happens, how painful it will be, and how long it will last.

However, I'm convinced this will be a temporary blip. By all the data points I can find -- academic studies, quarterly earnings, government reports, industry surveys, not to mention my daily experiences with AI -- the AI growth story looks very real and very unstoppable. To the extent I'm concerned for my kids' prospects when they say they're interested in software engineering!

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