There is this insane amount of investment in AI built around LLMs that threatens the entire world. People worry about the bubble bursting but think AI is the ant’s pants without considering that the LLM is a dead end. None of the AI companies are going to achieve Artificial Intelligence. That’s why they will actually implode, their systems aren’t intelligent.
We’ve basically got to wait for Anthropic and OpenAI to actually IPO before any of this can get started properly. Once there’s a public expectation for profit from the two biggest AI labs, then the market will start acting against them. We can hope, at least.
The funniest part is that the thing that could actually make AI useful at scale might be what wrecks the investment thesis: cheap, local, open weight models. Wall Street funded a trillion dollar server farm to discover that sometimes the answer is a smaller model running on your laptop. The technology might win while the investors lose. Nevertheless, companies such as Google, Amazon, and Microsoft – as well as Nvidia and AMD – are a very long way from simply going under.
Google, Amazon and Microsoft will be fine.
Oracle, though. It’s possible they’ll actually die. And wouldn’t that be tragic.
I doubt it. Government would step in and bail them out.
I think NVIDIA has a higher chance of survival because they’re the ones actually producing something tangible (GPUs) that is still needed even if openweight models prevail.
And whoever scavenges their corpse will milk their
customersprisoners even harder!
Why do you think they are starving consumer market for computer parts?
I think we are talking about the same thing. AI companies spend billions to monopolize compute, causing consumer hardware prices to go up.
lol you’re kidding, right? Have you looked at component prices lately? Have you missed the part about how basically all consumer electronics that use LPDDR are getting price hikes, because the demand for high performance memory has skyrocketed by an order of magnitude in the last few years?
Nevertheless, companies such as Google, Amazon, and Microsoft – as well as Nvidia and AMD – are a very long way from simply going under.
Not really, once you look at the startups like OpenAI they have enormous expenses that depend on constant debt and investment funding, and the cost and risk of sustaining that debt can easily reach a point where they struggle to get new investors to foot the bill.
The whole market is based on a belief in a huge pot of gold some time in the future, and it is driven by unfathomable amounts of debt to keep the machinery running towards that goal. Once the belief in the goal getting reached gets broken, the change in momentum breaks the whole system.
That includes the big players, huge amounts of their balance sheets, including claims of revenue, are circular trades between themselves. Even google claims revenue from asset price growth in their AI subsidiaries.
Once it shifts from investment to repaying bad debts the numbers will look completely different for all the big companies involved. We’re talking potentially bail outs basically across the board
Too big to fail? I think I heard that once.
I just can’t see things continuing like this, there has to be a plateau reached at some point. Higher or lower. Exponential growth isn’t sustainable in anything.
As a financial analyst, Klement’s take on the AI economy has been notably grim — back in May, he penned an article in Reuters arguing that institutional investors shouldn’t be asking “whether the AI boom will end, but what will happen to markets when it does.” Now, his live interview on Bloomberg‘s flagship news channel underscores the degree to which the AI bubble is becoming impossible for mainstream commentators to ignore […]
What’s interesting to me is that people who run Bloomberg have a huge advantage in manipulating the market.
In fact, the story behind the AI boom really has to be how the business press operates, always enabling the upper class to be richer.
Of course, if the Iraq war is any example, there will be a few confessions and nothing will change.
investing in the wrong future
I’m assuming they mean “future” in the same way the stock market (ab)uses the word, because AI had its lower ribs removed on day one. There’s no future there.
I truly can’t see the bubble bursting at this point. They’ve won their race and built a technology so impressive it cannot be ignored or dropped. AI dominance is now a matter of nations (cyber) security. As soon as they’re any real chance of these labs failing they’ll be a tax payer bailout. I just hope it also results in nationalizing the leading AI labs so the models build on public knowledge can be forced into the public domain where they belong
AI will live on but maybe as open weight models running on your laptop. There is no reason to believe that the cloud model is the only possible way for this to work. And there’s only so long that any company can lose billions of dollars a year.
