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IBM CEO says there is 'no way' spending on AI data centers will pay off
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Re: IBM CEO says there is 'no way' spending on AI data centers will pay off
#822Earlier quoted context omitted.
100GW per year is not going to happen. The largest plant in the world is the Three Gorges Dam in China at 22GW and it’s off the scales huge. We’re not building the equivalent of four of those every year. Unless the plan is to power it off Sam Altman’s hot air. That could work. :) https://en.wikipedia.org/wiki/List_of_largest_power_stations
China added ~90GW of utility solar per year in last 2 years. There's ~400-500GW solar+wind under construction there. It is possible, just may be not in the U.S. Note: given renewables can't provide base load, capacity factor is 10-30% (lower for solar, higher for wind), so actual energy generation will vary...
> China added ~90GW of utility solar per year in last 2 years. There's ~400-500GW solar+wind under construction there.
Source?
Re: IBM CEO says there is 'no way' spending on AI data centers will pay off
#823Earlier quoted context omitted.
Not the OP you're replying to, but I've put together quite a few projects using only LLMs, no hand crafted code anywhere (I couldn't do it!) https://dnbfamily.com https://eventme.app https://blazingbanana.com https://play.google.com/store/apps/details?id=com.blazingban... https://play.google.com/store/apps/details?id=com.blazingban... https://play.google.com/store/apps/details?id=com.blazingban... Are they perfect? N…
Maybe the most depressing part of all this is if people start thinking they would not have been able to do things without the LLM. Of course they would have, it's not like LLMs can do anything that you cannot. Maybe it would have taken more time at least the first time and you would have learned a few things in the process.
Sure, I can write all of it. But I simply won’t. I have Claude generated Avalonia C# applications and there is no way I would have written the thousands of lines of xaml they needed for the layouts. I would just have done it as a console app with flags.
Re: IBM CEO says there is 'no way' spending on AI data centers will pay off
#824Earlier quoted context omitted.
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…
Are OpenAI or Anthropic et al seriously building towards “world models”? I haven’t seen any real evidence of that. It seems more like they are all in on milking LLMs for all they are worth.
I mentioned it in my other comment but people like LeCun, Demis Hassabis, Fei-Fei Li do.
There are indications that Open AI is doing this but nothing official as far as i know and i have not heard anything from Anthropic.
Re: IBM CEO says there is 'no way' spending on AI data centers will pay off
#825Earlier 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…
> It's only about bookkeeping.
> Some of them are now at 6 years.
There are three distinct but related topics here, it's not "just about bookkeeping" (though Michael Burry may be specifically pointing to the bookkeeping being misquoted):
1. Financial depreciation - accounting principals typically follow the useful life of the capital asset (simply put, if an airplane typically gets used for 30 years, they'll split the cost of purchasing an airplane across 30 years equally on their books). Getting this right has more to do with how future purchases get financed due to how the bookkeepers show profitability, balance sheets, etc.. Cashflow is ultimately what might create an insolvent company.
2. Useful life - per number 1 above - this is the estimated and actual life of the asset. So if the airplane actually is used over 35 years, not 30, it's actual useful life is 35 years. This is to your point of "some of them are 6 years old". Here is where this is going to get super tricky with GPUs. We (a) don't actually know what the useful life is or is going to be (hence Michael Burry's question) for these GPUs (b) the cost of this is going to get complicated fast. Let's say (I'm making these up) GPU X2000 is 2x the performance of GPU X1000 and your whole data center is full of GPU X1000. Do you replace all of those GPUs to increase throughput?
3. Support & maintenance - this is what actually gets supported by the vendor. There doesn't seem to be any public info about the Nvidia GPUs but typically these are 3-5 years (usually tied to the useful life) and often can be extended. Again, this is going to get super complicated to financially because we don't know what future advancements might happen to performance improvements to GPUs (and therefore would necessitate replacing old ones and therefore creating renewed maintenance contracts).
Re: IBM CEO says there is 'no way' spending on AI data centers will pay off
#826> Krishna also referenced the depreciation of the AI chips inside data centers as another factor: "You've got to use it all in five years because at that point, you've got to throw it away and refill it," he said This doesn't seem correct to me, or at least is built on several shaky assumptions. One would have to 'refill' your hardware if: - AI accelerator cards all start dying around the 5 year mark, which is possib…
It's just the same dynamic as old servers. They still work fine but power costs make them uneconomical compared to latest tech.
> They still work fine but power costs make them uneconomical compared to latest tech.
That's not necessarily the driving financial decision, in fact I'd argue company's with data center hardware purchases barely look at this number. It's more simple than that - their support runs out and its cheaper to buy a new piece of hardware (that IS more efficient) because the hardware vendors make extended support inordinately expensive.
Put yourselves in the shoes of a sales person at Dell selling enterprise server hardware and you'll see why this model makes sense.
Re: IBM CEO says there is 'no way' spending on AI data centers will pay off
#827Earlier quoted context omitted.
100GW per year is not going to happen. The largest plant in the world is the Three Gorges Dam in China at 22GW and it’s off the scales huge. We’re not building the equivalent of four of those every year. Unless the plan is to power it off Sam Altman’s hot air. That could work. :) https://en.wikipedia.org/wiki/List_of_largest_power_stations
Amazing that 4 of the top 5 are renewables in China.
Because its cheaper. That's it.
Re: IBM CEO says there is 'no way' spending on AI data centers will pay off
#828Despite the flashy title that's the first "sober" analysis from a CEO I read about the technology. While not even really news, it's also worth mentioning that the energy requirements are impossible to fulfill Also now using ChatGPT intensely since months for all kinds of tasks and having tried Claude etc. None of this is on par with a human. The code snippets are straight out of Stackoverflow...
Take this "sober" analysis with a big pinch of salt. IBM have totally missed the AI boat, and a large chunk of their revenue comes from selling expensive consultants to clients who do not have the expertise to do IT work themselves - this business model is at a high risk of being disrupted by those clients just using AI agents instead of paying $2-5000/day for a team of 20 barely-qualified new-grads in some far-off c…
How do you see the math working out?
The numbers are staggering.
Re: IBM CEO says there is 'no way' spending on AI data centers will pay off
#829Earlier quoted context omitted.
Take this "sober" analysis with a big pinch of salt. IBM have totally missed the AI boat, and a large chunk of their revenue comes from selling expensive consultants to clients who do not have the expertise to do IT work themselves - this business model is at a high risk of being disrupted by those clients just using AI agents instead of paying $2-5000/day for a team of 20 barely-qualified new-grads in some far-off c…
Is this true in 2025? Asking because the biggest IT consulting branch of IBM, Global Technology Services (GTS), was spun off into Kyndryl back in 2021[0]. Same goes for some premier software products (including one I consulted for) back in 2019[1]. Anecdotal evidence suggests the consulting part of IBM was already significantly smaller than in the past. It's worth noting that IBM may view these AI companies as compet…
The part that was spun off was "Infrastructure Services" (from the Wiki article.) Outsourcing and operations, not the business consulting organization that provides high level strategy to coding services.
Re: IBM CEO says there is 'no way' spending on AI data centers will pay off
#830Please, can we get more analysis from the geniuses at International Business Machines in 2025?