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IBM CEO says there is 'no way' spending on AI data centers will pay off

businessinsider.com

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Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#851

Post by AlexandrB »

randomNumber7 wrote: post #600
jstummbillig wrote: post #106

Earlier quoted context omitted.

I don't know what to do with this take. We need an order of magnitude more clean productivity in the world so that everyone can live a life that is at least as good as what fairly normal people in the west currently enjoy. Anyone who think this can be fixed with current Musk money is simply not getting it: If we liquidated all of that, that would buy a dinner for everyone in the world (and then, of course, that would…

> I don't know why this time would be any different. This time there is the potential to replace human workers. In the past it only made them more productive.

I think that's a distinction without difference. If one person can do the job of 10 thanks to automation, what happens to the other 9 who were doing that job before?

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#852

Post by MDGeist »

mattlondon wrote: post #771
blablabla123 wrote: post #533

Despite 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…

IBM was ahead of the boat! They had Watson on Jeopardy years ago! /s

I think you make a fair point about the potential disruption for their consulting business but didn't they try to de-risk a bit with the Kyndryl spinout?

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#853

Post by fnord77 »

michaelbuckbee wrote: post #813

It's not going to pay off for everybody, this is a land grab for who will control this sort of central aspect of AI inference.

> this is a land grab

is it though? Unlike fiber, current GPUs will be obsolete in 5-10 years.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#854

Post by [deleted] »

SchemaLoad wrote: post #255
dangus wrote: post #247

Earlier quoted context omitted.

The problem is that the laid fiber can be useful for years while data center hardware degrades and becomes obsolete fast. It could be a massive e-waste crisis.

Those GPUs don't just die after 2 years though, they will keep getting used since it's very likely their electricity costs will be low enough to still make it worth it. What's very dubious is if their value after 2/3 years will be enough to pay back the initial cost to buy them. So it's more a crisis of investors wasting their money rather than ewaste.

[deleted]

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#855

Post by aenis »

staticassertion wrote: post #731
gloosx wrote: post #638

Earlier quoted context omitted.

It is always "I'm producing 300 projects in a nanosecond" but it's almost never about sharing or actually deploying these ;)

There's a massive incentive not to share them. If I wrote a project using AI I'd be reluctant to publish it at all because of the backlash I've seen people get for it.

People are and always were reluctant to share their own code just the same. There is nothing to be gained, the chances of getting positive reviews from fellow engineers are slim to none. We are a critical and somewhat hypocritical bunch on average.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#856

Post by AlexandrB »

542354234235 wrote: post #119
panick21_ wrote: post #73

Earlier quoted context omitted.

I'm not saying you are wrong that some redistribution can be good, but your analysis is simplistic and ignores many factors. You can just redistribute and then say 'well people will spend the money'. That's literally the 'Broken Window' fallacy from economics. You are ignoring that if you don't redistribute it, money also gets spend, just differently. Also, the central bank is targeting AD, so you're not actually inc…

Take a million dollars, give 1,000 poor people $1,000 and every dollar will be spent on goods and services. The companies running those services and making those goods will need to have their employees work more hours, putting more money back in poor people’s pockets in addition to the money the companies make. Those employees have a few extra dollars to spend on goods and services, etc. Give a rich person a million…

> Take a million dollars, give 1,000 poor people $1,000 and every dollar will be spent on goods and services.

If we're being realistic a bunch of this will go to paying off existing debt. Still good, but not the economic stimulus you're imagining. There are also "services" like gambling apps that act as a sponge to soak up money from those foolish enough to use them and transfer that money back to the wealthy shareholders. I'm sure there is research on what percentage of that $1000 can be expected to stimulate the economy, but it's not 100%.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#857

Post by Forgeties79 »

johncolanduoni wrote: post #477
Forgeties79 wrote: post #337

Earlier quoted context omitted.

Yeah I was going to say the same thing ha. I get what they’re (the commenter) saying, but one could also argue IBM is putting their money where their mouth is by not investing.

I suspect the reality is that they missed the boat, as they have missed tens of other boats since the mainframe market dried up. I guess you could argue they came to the boat too early with their pants on backwards (i.e. Watson), and then left before it showed up. But it’s hard to tell from the outside. Maybe that will turn out to be a good decision and Microsoft/Google/etc. will be crushed under the weight of hundre…

Totally. Just sort of mulling over possibilities. But I think you’re right it’s likely they just got it wrong

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#858

Post by pulse7 »

diggyhole wrote: post #802
mattlondon wrote: post #771

Earlier 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…

Right. Just like Intel completely shitting the bed on GPUs then their CEO tweeted a prayer. Old tech companies are going to be left behind.

IBM was founded in 1911 and it survived many things...

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#859

Post by mathattack »

itake wrote: post #250
mathattack wrote: post #245

Interesting to hear this from IBM, especially after years of shilling Watson and moving from being a growth business to the technology audit and share buyback model.

imho, IBM's quant computing says they are still hungry for growth. Apple and google still do share buy backs and dividends, despite launching new businesses https://www.ibm.com/roadmaps/

It’s been a different order of magnitude. IBM repurchased approximately half their outstanding stock. This is consistent with a low growth company that doesn’t know how to grow any more. (And isn’t bad - if you can’t produce a return on retained earnings, give them back to shareholders. Buybacks are the most efficient way to do this.)

I can’t explain why they have a PE ratio of 36 though. That’s too high for a “returning capital” mature company. Their top line revenue growth is single digit %s per year. Operating income and EBITDA are growing faster, but there’s only so much you can cut.

You may be right on the quantum computing bet, though that seems like an extraordinary valuation for a moonshot bet attached to a company that can’t commercialize innovation.

Re: IBM CEO says there is 'no way' spending on AI data centers will pay off

#860

Post by ratelimitsteve »

mattlondon wrote: post #771
blablabla123 wrote: post #533

Despite 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…

they have incentive but what's the sustainable, actually-pays-for-itself-and-generates-profit cost of AI? We have no idea. Everything is so heavily subsidized by burning investor capital for heat with the hope that they'll pull an amazon and make it impossible to do business on the internet without paying an AI firm. Maybe the 20 juniors will turn out to be cheaper. Maybe they'll turn out to be slightly better. Maybe they'll be loosely equivalent and the ability to automate mediocrity will drive down the cost of human mediocrity. We don't know and everyone seems to be betting heavily on the most optimistic case, so it makes an awful lot of sense to take the other side of that bet.
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