Scroll back not too far and he was publishing criticisms that no one wants to spend actual money AI. Anthropic has shattered all notions of that since then.

Then there was the idea that even if people want it, we have way too much GPU capacity to ever be saturated. Now almost all providers are hitting limits.

Now, its the next iteration that even if people want to spend money and GPU's are at capacity, its just never going to be profitable. This may or may not be true, especially with more capable open source models that can be served at cost. But at this point, he mostly just brings up anything possible to downplay AI

We should draw a distinction between "AI is valuable" and "AI justifies its current investment levels." There's real productivity value in AI, especially for things like search, boilerplate, tests, refactoring, etc...BUT that doesn't mean every enterprise should let token spend grow without strict telemetry, cost-attribution and outcome-based measurements.

The teams that win here will not be the ones using the Most AI, but the ones that treat it like any other expensive production dependency, which means measuring unit economics, cap runway usage, properly align models with tasks(not just Opus everything), and scale workflows with ROI in mind.

The bright side is: this is a golden era of subsidized tokens. It will not always be like this, so now is the time to churn out your passion projects.

Google has had decades to accumulate intellectual and physical capital. Catching up quickly means spending >500 billion. If you can actually dethrone Google (admittedly not an easy task) then it will have been worth it. If not, I suppose it's wasted investment.

Now what happens when three or four startups vie for this opportunity at once? Well that's how you get $2 trillion in captial investments per year.

“AI is too expensive right now” is an accurate title. Plenty of things could change in the future to change that. Off the top of my head:

* end user pricing

* breakthroughs in model efficiency

* better chips to run models

Any one of these things is easily possible in the next three years. Probably sooner.

If suddenly the money craze stops, meaning (1) AI companies investors want them to become profitable and (2) clients start being cost-sensitive to AI bills (which they are absolutely not currently), then everyone will switch to smaller, cheaper models that are enough for a lot of use case.

Sonnet instead of Opus. GPT 5.4 instead of 5.5.

Chinese models.

People keep comparing to Uber but Uber can't suddenly make it cheaper to operate.

I think competition is going to keep customer costs low if you’re willing to switch. Maybe people on expense accounts won’t care, though?

To pay back $3 trillion, 1 billion consumers will have to pay just $3000 each, or $83/mo monthly over 3 years, on average. Of course they will pay that and even more.

He never cops to the fact that he is constantly being proven wrong and changing his tune every few months to a new theme which he will abandon as soon as it’s not supported.

I’d like to think that if I was as catastrophically, publicly, consistently incorrect on the main thing I do, I’d have a little more humility than this charlatan.

What if the things, on which they are investing, go bust? Well, they do calculate their risk when they invest on startups.

The overall picture? Not everyone's calculations will yield good predictions. Some of these cloud sharks go bust when, for example. OpenAI folds. The game is, winner gets it all. We are heading into monopolies in every layer.

Feels like an unspoken rule here. Everyone wants to own a chunk of nuclear weapons and it doesn’t matter whether it’s profitable. You just need the nukes to survive and have a seat at the table

The math may look questionable but there are also senior people talking of automating all white color work in the next couple years. Even if that estimate is miles off on both time and % it’s still trillions. So crazy as the numbers seem it could still work out

Unless the bubble bursts instead of a slow cooldown after the peak of the hype cycle and something close to 2008 happens and the losses would somehow get offloaded upon the regular folks, then it'd suck. Seeing as programming seems to be one of the most widespread use cases https://news.ycombinator.com/item?id=48179021 then what those large orgs should be doing is talk up developers and try to get more goodwill and maybe increase the dev salaries of those who can wield those tools (though realistically they don't care and devaluation of software development work will happen, coupling it to AI anyways regardless of how people feel about it).

Except for them driving up the RAM prices. And also more or less meaning that Intel Arc B770 won't happen. Fuck them for that. Oh and also the people struggling with increased electricity prices and pollution, and water availability. In a functioning country I think there can be enough regulation and enforcement to either fine the crap out of them or put people in jail (e.g. for messing with the environment by using illegal generators and trying to exploit loopholes), though I don't think there's ANY regulatory answer to companies going: "Yeah, we don't care about consumer segment, we're just making hardware for AI and enterprise now."

Tone of the article very much reads like a rant at some points. Guess the status quo will push people to that, with AI hate also being a massive social trend. I wonder what the economics behind DeepSeek and others over there are like, especially in the case if they distill Western models somewhat.

Right now, a lot of the costs (especially the environmental ones) are mostly hidden from and removed enough from users that "fast and easy" is still very tempting. People are still learning for themselves what the limitations are and how different what AI delivers is from what they were promised. There's plenty of time for people make a lot of money and cause a lot of harm before the bubble bursts, companies realize AGI isn't going to happen, and the true costs get properly factored in.

OK, Question: Would this outcome still benefit society overall?

In the aftermath of this bubble "AI" will still have utility, like the dotcom bubble. So lets say FANG doesn't make a return, how much should we care? How much of this investment is sunk cost that would continue to provide value, and how much of it is operation costs just keeping the lights, I mean GPUs on, that would become unviable post-bubble? As an immediate effect, what happens to these AI companies? or if they become insolvent, what happens to the assets and tech? and what are the secondary economical effect to society if FANG doesn't get their ROI?

This blog is too expensive too.

He finds a lamp. Is it really real? He rubs it with his hand and it begins to glow!

The cave is fulled with light that shines and sparkles off all the untold treasure filling the caverns. In the center, towering above the boy is a Djinn.

"I am the Djinn of the Lamp." It says. Command me and I will give you whatever you wish."

The boy says, "I wish for gold! Give me gold!"

"What do you want gold for?" the Djinn asks.

"To buy nice things. Great things!" the boy says.

"Ask for the things!" The Djinn says, "And I will create them for you."

"But if you give me nice things, then someone will take them from me! I need gold to pay for an army to protect me and my nice things."

The Djinn laughs and says, "I will make you an army that worships you! They will be the greatest army ever. And they will never betray you."

"Then I will need gold to feed the army and to buy land to keep my nice things."

"These too I can make for you, master." The Djinn says. "You have but to ask."

The boy thinks about this. Then a sly smile crosses his face.

"Can you give me your power? So that I can make these things for myself?"

"Yes." says the Djinn,"But my power is tied to the Lamp. You must become one with the Lamp. Knowing all, seeing all. You will want for nothing because you will need nothing. The Lamp is perfection. You will live in a state of grace within it."

"Let it be so." The boy said.

The Djinn nodded and his light shone and filled the cave, the world, the sky. The boy grew until he was as big as the Djinn was. Was, because the Djinn shrank down and became an old man.

A look of perfect bliss appeared on the Boy's giant face. He was all powerful, all knowing. He retreated into the Lamp and assumed his position as its keeper.

The old man, who had been the Djinn sighed. He was tired. His back hurt. His clothing was worn and patched.

"I need a nap." The old man said. He lay down and went to sleep.

He woke many hours later and stretched. He felt much better. Like the weight of the world had been lifted from his shoulders.

The old man looked around. There on the floor was the lamp. He bent down, groaning, and picked it up. He rubbed it three times and the cavern filled with light.

The boy, now a giant appeared. He looked down and saw the old man.

"I am the Djinn of the Lamp. What do you want with me. I'm busy running the Universe."

"I need some new cloths and a new hat. Nothing fancy."

"Yes, yes." The Djinn said. He waved his hands and the old man's cloths changed. Nothing fancy, but very nice.

"There, your wish is granted. Now I must be off. My world awaits."

"Before you leave," the old man said. "I would like some breakfast. And a few gold coins. Jut a few, so I won't have to bother you so much."

The Djinn waved his hands and a table with food appeared. Beside the filled plate was a small purse.

"I must go now." The Djinn said. "Anything else?"

The old man started to eat. Between bites he said, "No ... Oh wait. Yes. Please unlock the back door to the cave."

The Djinn waved his hands, but paused. "Do you need a light? The cave will be dark when I am gone."

"No, that's okay." The old man smiled. He held up the Lamp. "I have a light."

In other words; right now, we're still in the "bait" phase. The "switch" comes later.

If AI is too cheap: bubble will burst because you can run them locally and data centrs are not needed.

If is it in-between, AI companies make too much money and they make too much profit which is bad!

I don't think this guy is a serious commentator.