Alphabet's cash burn raises alarm for Big Tech as AI spending climbs • Hacker News Board

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

#81

Post by skybrian » Thu, Jul 23, 2026, 1:53 PM UTC

ForHackernews wrote: post #9

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?

No, because the LLMs will keep getting more efficient and capable. Distillation and quantization will mean firms spending trillions on giant data centres are left holding the bag. I suspect Apple ends up laughing all the way to the bank. https://github.com/microsoft/BitNet

I suppose there is some limit, but it’s a bit hard to believe that Google won’t find a good use for more data centers.

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

#82

Post by TeMPOraL » Thu, Jul 23, 2026, 1:53 PM UTC

mcphage wrote: post #75

budsniffer952 wrote: post #42

Earlier quoted context omitted.

[flagged]

They are! Coincidentally, there's been a precipitous decline in software quality and reliability the last few years.

No, there wasn't. The step decline started when SaaS was embraced, and everything turned into webshit.

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

#83

Post by weakfish » Thu, Jul 23, 2026, 1:54 PM UTC

budsniffer952 wrote: post #58

dgellow wrote: post #46

Earlier quoted context omitted.

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?

How could you? Can _someone_ in this thread _please_ provide a source?

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

#84

Post by Zigurd » Thu, Jul 23, 2026, 1:54 PM UTC

Looking at cash burn is looking at the wrong end of the horse. Some companies, like Meta, have burned huge piles of cash in pursuit of, for example, the Metaverse and they've got nothing to show for it, not even a slight increment in ad tech, and yet they earned enough to shrug it off.

There's a big difference between Google spending tens of billions on AI infrastructure and what Oracle is doing. Oracle is spending to get on a bandwagon. Google is transforming their business, so far seemingly correctly. If AI flops big-time, Google will be left with some stranded assets, but it won't be existential the way it would be to Oracle.

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

#85

Post by serial_dev » Thu, Jul 23, 2026, 1:55 PM UTC

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...

How is RPE relevant if they are spending hundreds of billions on compute and data centers?

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

#86

Post by tristanj » Thu, Jul 23, 2026, 1:55 PM UTC

ghoshbishakh wrote: post #14

Only google serves its own model - increasing its cloud revenue. The growth chart shows linear increase over time, indicating exponential growth if cloud revenue for google.

Meta, Microsoft, Amazon also serve their own models, though these models are not frontier models.

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

#87

Post by flextheruler » Thu, Jul 23, 2026, 1:55 PM UTC

budsniffer952 wrote: post #63

vrganj wrote: post #51

Earlier quoted context omitted.

Sure, and my nephew is building nice little trucks with Legos. The point is, is anyone getting any value from it?

> The point is, is anyone getting any value from it? No, you're right, no one is getting any value from it.

Sarcasm over a legitimate question really? After about 4 years I think it's totally acceptable to ask where the profit is on any company's 10-K. Where are even the revenues on a 10-K?

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

#88

Post by FartyMcFarter » Thu, Jul 23, 2026, 1:56 PM UTC

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

> they didn't plan to just spend cash without any return.

No return? Annual earnings have kept increasing at 20-40% for the last 4 years.

Plus there's this:

https://www.theregister.com/paas-and-iaas/2026/07/22/google-...

> Google Cloud is killing it

> It's Alphabet's fastest-growing business and now makes up more than a fifth of the juggernaut's revenue and operating profit

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

#89

Post by TheOtherHobbes » Thu, Jul 23, 2026, 1:56 PM UTC

budsniffer952 wrote: post #58

dgellow wrote: post #46

Earlier quoted context omitted.

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?

Because there are almost no "We used AI to save money, improve our services, and gain more customers" success stories.

There's a lot of "We fired a lot of people because we're sheep and now we're having to hire some of them back" stories. And a lot of "A few engineers are doing a lot more, but we're not quite sure how to turn that into actual money" stories. And even more "We told everyone to tokenmaxx, and they did, and then we realised it was costing too much, so we stopped," stories.

But there really hasn't been a deluge of "AI has cut costs and increased profits while also improving quality" stories.

There has been a small outbreak of vibe-startups offering fairly generic services - mostly marketing and adjacent - who are doing okay, possibly.

But established tech? Doubt.

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

#90

Post by Zigurd » Thu, Jul 23, 2026, 1:57 PM UTC

dominotw wrote: post #35

ghoshbishakh wrote: post #14

Only google serves its own model - increasing its cloud revenue. The growth chart shows linear increase over time, indicating exponential growth if cloud revenue for google.

meta does too?

Meta at least has a theory that it will transform their ad business. No guarantees but it seems like a pretty decent theory, with direct connections to revenue.