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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

#971

Post by robocat »

robocat wrote: post #907
baq wrote: post #556

Earlier quoted context omitted.

New datacenters are being planned next to natgas hubs for a reason. They’re being designed with on site gas turbines as primary electricity sources.

Natural gas production has peaked: https://www.eia.gov/todayinenergy/detail.php?id=66564 (see second graph) Planning gas turbines doesn't help much if gas prices are about to increase due to lack of new supply. New Zealand put in peaker gas turbines, but is running out of gas to run them, so its electricity market is gonna be fucked in a dry year (reduced water from weather for hydro): • Domestic gas production is fo…

Then again, apparently lots of new LNG supply coming:

https://oilprice.com/Energy/Natural-Gas/LNG-Exports-Will-Dri...

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

#972

Post by PeterStuer »

SirHumphrey wrote: post #541
PeterStuer wrote: post #515

If AI is a highlander market, then the survivor will be able to eventually aquire all those assets on the cheap from the failing competitors that flush their debt in bankruptcy. Meanwhile, highlander hopefuls are spending other peoples money to compete. Some of them with dreams of not just building a tech empire, but to truly own the machine that will rule the world in every aspect. Investors are keen on backing the…

Until China sees it valuable to fund open weights SOTA-ish models, even the winner might struggle. There is very little capture - protocols are mostly standard so models are mostly interchangeable and if you are trying to raise prices enough to break even on the whole operation, somebody else can probably profitably run inference cheaper.

You could always try to corner the hardware market so even though those open models exist, running them might get extremely costly ;)

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

#973

Post by PeterStuer »

dghf wrote: post #800
PeterStuer wrote: post #515

If AI is a highlander market, then the survivor will be able to eventually aquire all those assets on the cheap from the failing competitors that flush their debt in bankruptcy. Meanwhile, highlander hopefuls are spending other peoples money to compete. Some of them with dreams of not just building a tech empire, but to truly own the machine that will rule the world in every aspect. Investors are keen on backing the…

What's a highlander market, or a highlander hopeful? Google wasn't helpful.

A shrinking consolidation market in which "loser's" assets are absorbed by the "winners".

You've heard it here first!

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

#974

Post by mywittyname »

stanleykm wrote: post #225
mywittyname wrote: post #167

Earlier quoted context omitted.

Tokens are, roughly speaking, how you pay for AI. So you can approximate revenue by multiplying tokens per year by the revenue for a token. (6.29 10^16 tokens a year) * ($10 per 10^6 tokens) = $6.29 10^11 = $629,000,000,000 per year in revenue Per the article > "It's my view that there's no way you're going to get a return on that, because $8 trillion of capex means you need roughly $800 billion of profit just to pay…

im a little confused about why you are using revenue for a single datacenter against interest payments for 100 datacenters

I just misread the article, as it seems to bounce around between $nX capex for nY gigawatt hours in every paragraph.

But it looks like the investments are $80MMM for 1GW. Which, if true, would have the potential to be profitable, depending on depreciation and electricity costs.

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

#975

Post by araes »

Octoth0rpe wrote: post #18

> 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…

General question to people who might actually know.

Is there anywhere that does anything like Backblaze's Hard Drive Failure Rates [1] for GPU Failure Rates in environments like data centers, high-performance computing, super-computers, mainframes?

[1] https://www.backblaze.com/blog/backblaze-drive-stats-for-q3-...

The best that came back on a search was a semi-modern article from 2023 [2] that appears to be a one-off and mostly related to consumer facing GPU purchases, rather than bulk data center, constant usage conditions. It's just difficult to really believe some of these kinds of hardware deprecation numbers since there appears to be so little info other than guesstimates.

[2] https://www.tweaktown.com/news/93052/heres-look-at-gpu-failu...

Found an Arxiv paper on continued checking that's from UIUC UrbanaIL about a 1,056 A100 and H100 GPU system. [3] However, the paper is primarily about memory issues and per/job downtime that causes task failures and work loss. GPU Resilience is discussed, it's just mostly from the perspective of short-term robustness in the face of propagating memory corruption issues and error correction, rather than multi-year, 100% usage GPU burnout rates.

[3] https://arxiv.org/html/2503.11901v3

Any info on the longer term burnout / failure rates for GPUs similar to Backblaze?

Edit: This article [4] claims it's 0.1-2% failure rate per year (0.8% (estimated)) with no real info about where the data came from (cites "industry reports and data center statistics"), and then claims they often last 3-5 years on average.

[4] https://cyfuture.cloud/kb/gpu/what-is-the-failure-rate-of-th...

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

#976

Post by cylemons »

jojobas wrote: post #920
cylemons wrote: post #611

Earlier quoted context omitted.

How much did IBM itself benefit from the PC? I thought the clones ate their lunch there

Wikipedia says their PC revenue was twice Apple's by 1984 at $4 billion/year. Not bad for a side hustle? My understanding is that clones were a net positive, just like widespread Windows/Office piracy is a net positive for MS.

fair enough

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

#977

Post by AdrianB1 »

prmoustache wrote: post #501
AdrianB1 wrote: post #281

Earlier quoted context omitted.

I thought the same until I calculated that newer hardware consumes a few times less energy and for something running 24x7 that adds up quite a bit (I live in Europe, energy is quite expensive). So my homelab equipment is just 5 years old and it will get replaced in 2-3 years with something even more power efficient.

I guess you did the math but wouldn't it be more effective to spend the money on solar panels instead of replacing the computer hardware?

I have panels and the night is long. Batteries are still very expensive.

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

#978

Post by winddude »

oblio wrote: post #391
winddude wrote: post #387

8T is the high-end of the McKinsey estimate that is 4-8T, by 20230. That includes non-AI data-centre IT, AI data-centre, and power infrastructure build out, also including real estate for data centres. Not all of it would be debt. Google, Meta, Microsoft and AWS have massive profit to fund their build outs. Power infrastructure will be funded by govts and tax dollars.

There is mounting evidence that even places like Meta are increasing their leverage (debt load) to fund this scale out. They're also starting to do accounting tricks like longer depreciation for assets which degrade quickly, such as GPUs (all the big clouds increasing their hardware depreciation from 2-3-4 years to 6), which makes their financial numbers look better but might not mean that all that hardware is still…

I've read / hear the cloud providers like AWS started extending amortization periods in 2020ish

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

#979

Post by anticensor »

johncolanduoni wrote: post #306
slashdave wrote: post #283

Earlier quoted context omitted.

More than that. The equipment is depreciated on a 5 year schedule on the company balance sheet. It actually costs nothing to discard it.

There’s no marginal tax impact of discarding it or not after 5 years - if it was still net useful to keep it powered, they would keep it. Depreciation doesn’t demand you dispose of or sell the item to see the tax benefit.

"Depreciation doesn’t demand you dispose of or sell the item to see the tax benefit."

It does require to dispose the item if you are a government entity otherwise the budget for the new item isn't allocated.

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

#980

Post by anticensor »

loeg wrote: post #195
Octoth0rpe wrote: post #18

> 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 option #2. But 5 year deprecation is optimistic; 2-3 years is more realistic.

Isn't the depreciation timespan imposed by the particular accounting standard?
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