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The AI Demand Bubble

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Re: The AI Demand Bubble

#81

Post by ElProlactin »

cmiles8 wrote: post #58
vonneumannstan wrote: post #55

Earlier quoted context omitted.

Its up 80% on the year. How do your investments compare?

This is the most misquoted bit in that whole fiasco. He apparently had to sell every liquid thing in the portfolio. What’s left is allegedly just some highly illiquid paper assets that they’ve also been trying to unload. The present value of those is iffy at best and may well also plummet before they can be cashed in. That “80%” can’t be realized right now in any traditional sense. No matter how you slice it the whol…

> No matter how you slice it the whole sequence of events last week was an unmitigated disaster.

It actually wasn't an unmitigated disaster. He was overleveraged and apparently had the dumbest hedges (he was long AI and short software and when AI was down software was up so his hedges didn't hedge).

Citadel swooped in and bought the public equity portfolio. That's the definition of mitigated. There was no propagation of the fund's losses to other financial institutions. This made for great headlines but it was a nothingburger as far as markets are concerned.

> He’ll likely never manage other people’s money ever again.

He didn't close the fund so he's still managing other people's money. And while nothing about his profile would ever persuade me to be his LP, you're underestimating the fact that a pristine track record isn't required to raise money. Given this kid's profile and the fact that he made an obvious mistake (even if it was big), there are probably people out there who still have an appetite for parking money with him.

Re: The AI Demand Bubble

#82

Post by dofm »

srveale wrote: post #40
parineum wrote: post #31

Earlier quoted context omitted.

Would you expect someone in the AI industry to predict the collapse of the AI industry? I'm sure there weren't a ton of bankers predicting the mortgage collapse of 2008 but I, a young programmer of mortgage software could see something was weird (but didn't realize that it wasn't the norm).

If it does come to pass, the AI version of the Big Short will be wildly entertaining

If it gets a distributor!

Re: The AI Demand Bubble

#83

Post by dofm »

cmiles8 wrote: post #47
LogicFailsMe wrote: post #17

This guy has zero zip nada null AI background. He is a videogame reviewer and PR guy. He is a pure influencer feeding on the AI backlash he helped to create. He has been predicting a crash for how many years now? And while I can totally see Anthropic and OpenAI going through some things on the way to post-IPO FMV, those things do not include AI going away. It truly doesn't matter whether closed source Frontier lab mo…

1) Doesn’t make him wrong, and his thesis is looking more and more correct every day 2) The bullish AI side is full of grifters and folks that were block-chain and NFT “experts” before they became AI “experts.” 99% of the folks in AI know almost nothing about AI apart from thinking it’s cool and having played around with it a bit. The folks that correctly call BS on a thing tend to not be deep in the thing. Thats how…

> The bullish AI side is full of grifters and folks that were block-chain and NFT “experts” before they became AI “experts.”

At the beginning of this whole thing, when I still had an X account to log in with, I used to scroll back on an AI influencer's profile to see how many tweets I'd have to go past before I saw "ETH" or "NFT".

Re: The AI Demand Bubble

#84

Post by [deleted] »

LogicFailsMe wrote: post #17

This guy has zero zip nada null AI background. He is a videogame reviewer and PR guy. He is a pure influencer feeding on the AI backlash he helped to create. He has been predicting a crash for how many years now? And while I can totally see Anthropic and OpenAI going through some things on the way to post-IPO FMV, those things do not include AI going away. It truly doesn't matter whether closed source Frontier lab mo…

[deleted]

Re: The AI Demand Bubble

#85

Post by rich_sasha »

arctic-true wrote: post #80
rich_sasha wrote: post #74

Earlier quoted context omitted.

I largely agree with this take. What gives me disquiet is that I thought more or less exactly this about Uber, and was proven comprehensively wrong. Despite burning money like a furnace on an app for taxis, it seems that anyone who invested privately made a handsome return, and they are at a profitable steady state. Is AI the same?

The cash burn is not the problem. You can’t build a big business without it. The difference is network effects. With ride sharing apps, you need a lot of drivers and riders collected on one platform. It is nearly always better, for both drivers and riders, to switch to a larger platform. Thus, it was worthwhile to spend the money to become the biggest fish. Once this was accomplished, Uber could raise prices because…

This only works up to a point. Plenty of different makers of phones for example all making fungible phones at ever lower prices, yet managing to eke out a profit. I can see a world where OpenAI, Anthropic, Chinese companies corner the market, make themselves indispensable and start charging market rates, while also getting better and more cost efficient.

Re: The AI Demand Bubble

#86

Post by tim333 »

gizmodo59 wrote: post #42
GolfPopper wrote: post #39

Earlier quoted context omitted.

Yeah, it's not like there are AI-focused hedge funds crashing and burning right now.

If your comment is referring to situational awareness, its due to 4x leverage. leverage is always risky. AI/semis are still doing extremely well (over last 2 years) despite the recent dip

And run by a ~23 year old who I don't think had managed money before. It's easy to screw up leveraged trading irrespective of the virtues of AI.

The fund is still well up because approximately 25% of the fund’s assets were invested in Anthropic, which has done well but is not very liquid yet.

Re: The AI Demand Bubble

#87

Post by LogicFailsMe »

GolfPopper wrote: post #39
LogicFailsMe wrote: post #17

This guy has zero zip nada null AI background. He is a videogame reviewer and PR guy. He is a pure influencer feeding on the AI backlash he helped to create. He has been predicting a crash for how many years now? And while I can totally see Anthropic and OpenAI going through some things on the way to post-IPO FMV, those things do not include AI going away. It truly doesn't matter whether closed source Frontier lab mo…

Yeah, it's not like there are AI-focused hedge funds crashing and burning right now.

So the thing is just like America isn't entirely Donald Trump, AI is not entirely Sam Altman, Elon Musk, Jensen Huang, Mark Zuckerberg, Dario Amodei, and Leopold Aschenbrenner, but you wouldn't know it reading the social media feeds.

Re: The AI Demand Bubble

#88

Post by catdog »

rich_sasha wrote: post #74
arctic-true wrote: post #71

Several top level comments are attacks on the author’s credibility that do not engage the substance of the piece at all. I think the fundamental problem for people on all sides of the various debates surrounding AI is that “AI is a powerful, transformative technology” and “Anthropic and OpenAI are both doomed, and this poses risks to the broader economy” are compatible statements of fact. Just because you believe (1)…

I largely agree with this take. What gives me disquiet is that I thought more or less exactly this about Uber, and was proven comprehensively wrong. Despite burning money like a furnace on an app for taxis, it seems that anyone who invested privately made a handsome return, and they are at a profitable steady state. Is AI the same?

Taxis in general are a working and proven business model. You could have been skeptical about the way they approached it but surprise surprise, you can make money providing taxi services. Less so with "AI", it's not proven at all that this can be made profitable in the near future.

Re: The AI Demand Bubble

#89

Post by lowbloodsugar »

arctic-true wrote: post #71

Several top level comments are attacks on the author’s credibility that do not engage the substance of the piece at all. I think the fundamental problem for people on all sides of the various debates surrounding AI is that “AI is a powerful, transformative technology” and “Anthropic and OpenAI are both doomed, and this poses risks to the broader economy” are compatible statements of fact. Just because you believe (1)…

TFA admits that Amazon's AI revenue is only 59% from Anthropic and OpenAI, with 41% coming from actual customers using bedrock. That seems like they are in a winning position. I've run Qwen on Bedrock. Big models on Bedrock do outperform the models I can fit on my single RTX PRO 6000.

Re: The AI Demand Bubble

#90

Post by LogicFailsMe »

dofm wrote: post #76
LogicFailsMe wrote: post #68

Earlier quoted context omitted.

So some value, but how much value? You clearly don't like the idea there are some businesses in the AI mix that will continue making money and/or diversify their divisions to cover for any losses they suffer during this hypothetical crash or I wouldn't be getting downvoted for it. META, for example, is running a gross margin of 80% or so right now. You really think they're in trouble? So really, after all of these co…

> You clearly don't like the idea there are some businesses in the AI mix that will continue making money and/or diversify their divisions to cover for any losses they suffer during this hypothetical crash or I wouldn't be getting downvoted for it. Me? I didn't downvote you for it and you are projecting a lot onto me without a sound basis. Either way, my predictions are all personal, because as someone with his own p…

Look, if you like his vibes, that's totally cool but it's also a bit GPT-4o. He's predicting a vague crash that will happen someday and he's been predicting it for a while now (2024). It didn't happen yet. His value as a prophet of the AI bubble is going down by the day, but if it's the gospel you want and/or need to hear, by all means...

But also, if you don't want to talk about this stuff, why comment about it?

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