eh sometimes you don't need any thorough dismissal. for all the "AI does make you productive" headlines, there's bound to be a few that goes the opposite way. Its just statistics, and these headlines get upvoted because of emotional reasons.
There's no way AI is going away, nor any way companies are going to use AI even less than they are today. Hell, even Linus Torvalds is using AI. At this point, there's no need for a serious rebuttal to these arguments.
> Last year, for instance, Anthropic lost $80 billion, and Amazon had negative $42 billion free cash flow. The entire big tech complex, it seems, has moved from minting cash to burning it. And investors are, well, not panicking exactly, but wondering if the bubble is ending
Is this really the quality of such newsletters? I’m not asking rhetorically because I’d like to also have trustable sources to understand the underlying reality. I actually spent time understanding this part and the 80B dollar loss thing is completely misrepresented here (also went viral in other media).
It doesn’t help Google to create an AI-powered business which turns $1B in profit annually if it results in them losing a search/ads business which turns $5B in profit annually.
The CapEx spend for AI not only makes AI itself more expensive (and thus less profitable), it’s now driving everything else in technology to be more expensive (and thus less profitable).
AI is a profitability tax on the entire tech sector and it remains unclear if the profit AI will deliver is going to be worth that.
I would say they should slow down on build-out to balance supplier/labor availability with available cash flows, but I suspect all the Big Tech companies are worried about falling behind the other and being put in the position to need to rent out compute.
It’s more or less certain that Anthropic is already profitable if you discount the losses due to becoming too valuable.
What you are saying here
> The CapEx spend for AI not only makes AI itself more expensive (and thus less profitable),
There’s nothing inherently unique about this. It’s just supply and demand - the only problem is that the ecosystem of raw materials can’t keep up with the demand. It will catch up soon and the prices will stabilise.
Your only problem seems to be this aspect only: that RAM production hasn’t increased according to demand.
No I don’t agree they should slow down. I think RAM and other things should rather speed up to react appropriately to the demand.
It’s like saying the iPhone is not profitable because too many people want it and its price is going up.
Over last 3 years on HN I have seen such low quality comments : prophesizing the end of times - the bubble will burst and we will all be so happy after that.
Any tiny news article that indicates even a modicum of challenges for OpenAI will be met with slurry of such comments.
Perhaps it’s good to keep a good epistemic hygiene in all this. OpenAI isn’t going away anywhere soon. AI isn’t going away, in fact we haven’t even started yet.
It's a reaction to the constant drum beat of doom marketing:
- "our product is too dangerous to release but we can't be bothered to prove its capabilities working in public hacking competitions"
- "our product is going to kill everyone"
- "our product is going to take all the jobs"
- "we have a $40T addressable market"
- "in a few days AI will be able to improve itself without human intervention and it's capabilities will hocky stick to infinity!!!"
Followed by absurd financials that spin massive losses as "getting in on the ground floor" before historic profits arrive based on the doom marketing above.
No one is saying AI is going away soon). But OpenAI and Anthro will go the way of Netscape when the market finally stops blindly accepting the doom marketing. Anyone with eyes can see LLMs will create historic increase in productivity among knowledge workers AND it will be a commodity. The massive profits frontier labs need to justify valuations are not coming.
There are AI bears and AI bulls. It's easy to cherry pick extreme and clearly wrong statements from each. But if you actually believe the bears are the more extreme/wrong overall you just aren't paying attention to what the bulls are saying.
At some level this all just comes off as post hoc justification for a really bad cortisol addiction.
Why are we keeping score in a game with completely arbitrary rules? The polarity is the hallmark sign for me of someone who enjoys a ride that certain neurotransmitter. I used to commute to and from work 2 hours every day. I know what it's like to be addicted to this stuff.
In other contexts people would ask me not to cherry pick extreme statements like “OpenAI and Anthropic will go away”. So I don’t have to cherry pick. I just have to pick what you said.
You have conflated two completely unrelated concepts. LLMs aren't going anywhere, but what good does that do a company burning hundreds of billions to do 20% better than Chinese models trained with millions? The economics don't economic.
It's far too late for a prescription now because they're already committed to hundreds of billions in spending they don't have, but the reason Chinese companies will win the long game is because they are serious and the Americans are deeply unserious. From the beginning, Chinese labs have viewed LLMs as software tools and developed efficiently. Conversely, Americans are selling a fantasy about creating the machine god if they just throw another hundred billion at it every few months. Altman, Amodei, and Musk are all pathological liars who have oriented their entire companies around deceiving investors and marketing hype rather than engineering principles. They are unbelievably successful at what they set out to do, but what they set out to do was not to build a long-lasting foundation for success.
They successfully turned the entire tech sector into a giant pyramid scheme. That's one hell of an accomplishment. I hope history forever remembers the names of everyone who aided and abetted them.
Why do you think so? To me it seems like they actually fit the textbook definition very well. They're firms that require constant injection of massive amounts of new capital to stay solvent, with no clear path towards profitability. The only way anyone gets their money back is if more investors buy in. It would be easy to prove me wrong, all they have to do is start turning a profit. But they can't.
[edit] And worse, they've dragged major established players in the industry with them--Microsoft, Google, etc. So now an uncomfortably large fraction of the world's economy is resting on.. nothing. To be fair, I don't blame OpenAI or Anthropic for the bad behavior of the other tech giants. It's the entire tech sector that has lost their minds collectively. At some point making things that actually work lost out to fantastic delusions.
There's no should, only what economics incentivize. Right now we're not paying for the upfront training costs-it's great, the Millennial subsidy continues. But if, and big if right now, the infinite money font dries up and they have to recoup training investment direct from customers then that looks to be a huge price increase on the ground which makes cheap to train and good enough even more attractive than it already is.
Can also be read as observation, as I have observed that many colleagues haven't started yet using AI on a daily basis and I myself is still using methods from months ago (no agent orchestration).
Sure, but both can be true. The internet bubble bursting did not kill the internet. All that investment in severs and fibre was still there, and still got used. A lot of investors lost their shirts, but the Internet future still happened.
OpenAI going bust would not cause those data centres to cease to exist, they’d still be there just owned for cheap by someone else that can run them at cost.
A crash would drastically cut investment and research funding, but research would still happen. New companies would rise from the ashes of the old. It might still trigger a recession though.
> OpenAI going bust would not cause those data centres to cease to exist, they’d still be there just owned for cheap by someone else that can run them at cost.
Someone would have to see value in that. Right now the value prop of AI is that maybe someday it'll get better and we'll be able to build useful, profitable consumer products on it. That's not really a great investment thesis, unless you're drunk on the hype.
Now that the market is sobering up a bit, will operating a "cheap" GPU datacenter at cost be worth anything? Not "future value", but present value. Can you turn a healthy profit running a GPU datacenter today? I doubt it.
I'll concede that point, but it's still not enough to justify buying a used GPU datacenter on the cheap. To do so you need to believe that by powering up and running all those GPUs you will be able to turn a profit before you go insolvent. Or failing that, you need to be able to con enough investors into believing it, and then somehow make it happen before they stop believing. So far the AI industry has been very good at conning investors, and cataclysmically bad at generating profits.
So if you're in the market for a used GPU datacenter even at fire sale prices you better have a solid plan to profitability. So far, it doesn't actually seem like there's anything you can do with those GPUs that will get there in any known or even guessable timeframe. That makes it a really fucking dumb idea lol.
1. Guys so AI is a bubble but that doesn’t mean it’s not useful, just like dot com bubble
2. “Someone would have to see value in that. Right now the value prop of AI is that maybe someday it'll get better and we'll be able to build useful, profitable consumer products on it”
At this point AI company valuations only make sense if each of them captures most of the value of the entire IT sector. Soon. If that doesn’t happen, it’s a matter of time before reality catches up, but how much time? Who knows. It could be years still.
Or AI could in the next few years generate more value than the whole IT sector a few times over. That would be cool.
I think this is incorrect logic. OpenAI’s valuation doesn’t come from the sum of other tech company’s valuation.
You do know that all valuations can go up together right? It’s not zero sum. OpenAI can create trillions in value not by taking it from somewhere but by creating it from nothing.
For their stock holders, and upper management it definitely is, all the automation that AI will deliver to get rid of those pesky workers with their demands, vacations, sick days, bathroom breaks, protests for better work conditions,....
Google and Meta are the only Big Tech companies that even have a presence in AI and it’s being led by Anthropic and OpenAI, neither of which were Big Tech.
When they can eventually work directly with one another rather than sitting inside human hierarchies, we will be dealing with a genuinely new kind of economic input.
What does AI working directly with one another mean? I don’t think it’s anything new - it’s the same AI working on a long horizon task. A big part of the article works on the assumption that this is qualitatively new way AI can work but I see it as a human operating an AI agent that does long horizon task that internally can spawn multiple subagents (but this part is abstracted from the user who only gives it a prompt).
Unless there are domain specific models, what am I missing?
I worked on something for far too long and even submitted to YC but the ultimate idea ended up a way to coordinate human teams (both on-shore and off-shore), human-AI teams, and while I didn’t know if it could ever be possible, strictly AI teams. I built the whole thing by hand in 2023 but even then I didn’t see AI agents being able to be first class members of a team, only being guided by humans. Think I ought to dust that work off and get some more feedback from people. Also try cleaning it up with AI.
reply