10 ms·

After the AI Crash

128 points by sysoleg 2mo ago

fidotron 2mo ago
Without AI there is no future US economy. You're all in.
- lirolero 2mo ago
  You promise?
- 21asdffdsa12 2mo ago
  Eh, the empire aka, protection of free trade as a service is still alive and well with no viable alternative on the horizon. Every other empire is either not free trade or - just plain mercantilism and thus will exploit way more then the quite "idealist" us- trump is just a taste of what the others in power would feel like.
  - 21asdffdsa12 2mo ago
    That machinery and attached industries would keep on paddling for a while.
  - fidotron 2mo ago
    Without AI the Chinese have won already. If you haven't noticed it's because you've stayed too close to the homeland.
    - rvz 2mo ago
      China won already with or without AI. You just did not realize it yet. The US is in a position where they have to debase the dollar all the way to zero and the Japan carry trade will slowly unwind for the worst as soon as the Bank of Japan (BOJ) begins to increase rates in more than 30 years. Someone has to pay for all the trillions of dollars of debt for the data center build out that is being hidden from the balance sheets of the big tech companies.
    - classified 2mo ago
      With AI the Chinese have also won.
  - jhonof 2mo ago
    Isn't the US like very clearly anti free trade at this point?
    - pastage 2mo ago
      They still need the protection and enablement of free trade.
    - 21asdffdsa12 2mo ago
      It is pro-kicking out oppossition to the system that uses the system to grow in power without contributing anything back to it. So the us has abandoned the "Wandel durch Handel" ideology- which lets admit it- was a brutal failure. Russia did not change. China changed back. None of the countries in the middle east got democratic or "contributing to the worlds allmende". Turkey is sliding back. So its cleaning the house of parasites o clock.
  - pastage 2mo ago
    I think the Hormuz saga and how China just quietly stopped importing oil are signs that we are nearing the end of the "free trade as a service" from the US. There are so many aspects of that I do not understand yet: how much oil trade will be done in yuan in the future is one that leads to other question about the current wars and what will happen when those end.
  - catlover76 2mo ago
    [dead]
  - vrganj 2mo ago
    I don't think the country that singlehandedly messed up the global economy by launching a pointless war on Iran - without even coordinating with its allies! - that predictably got the Strait of Hormuz closed gets to call itself protector of free trade anymore. The US has lost its appeal as a hegemon. Constantly threatening allies with invasion isn't helping either.
    - 21asdffdsa12 2mo ago
      Open a history book- before the us century- this stuff was the norm. Its what is to be expected after the us- retreats inwards. China blockading japan. The world blockading china. Russia blockading eastern Europe and vice versa. The shitty old world pre the ww2 order.
      - vrganj 2mo ago
        Indeed. But the US can't do this and also assume people will still accept it as hegemon and protector of free trade. It's lost those titles when it started behaving that way.
        21asdffdsa12 2mo ago
        It loses that title the day people stop using the petro-dollar, not a day sooner. And the fact its still used- is the biggest vote of no-confidence to all alternative actors out there.
- enriquto 2mo ago
  > Without AI there is no future US economy I'm already on it, man, don't need to convince me!
- jitl 2mo ago
  im sure people will continue to want to eat food, live in houses, go on vacation, look at phone, send email, drive car, even if there’s no ai money frothing around
  - fidotron 2mo ago
    They can totally print more dollars to spend on things made somewhere else.
- AnimalMuppet 2mo ago
  In a word, baloney. The US produces stuff, and it produces ideas. Yeah, it imports a lot of stuff too. But it exports things like food, movies, and software. Without AI, the financial sector may take a huge hit. But the US economy? It will still be here, still producing things that are valuable.
nixonaddiction 2mo ago
i mean my line is always "when." people have been saying ai is a bubble and will crash since the beginning. the question has always been "when." i think the best framing of the ai crash is not in terms of software, but in terms of real estate and infrastructure. the real cost is hidden in construction contracts and people buying up land (and chips, transformers, generators, etc), not in technology. this will be the 2008 real estate crash, not the 2000 dot com bubble. (altho this point is not my most well researched point, i tbh need to look more into hard numbers of where the most risk is distributed, ai software startups or data center contracts. but i also am in grad school i have papers to publish and no time.) im also gonna push back on the "diseconomy of scale" point. while its true that the best models rn use the most resources, we are building better smaller models as well. i recently set one up on my 12 gb vram and while its not nearly as good as claude, it works. i make it write really simple code for me. and we are still improving small models. i think theres some level of hope to economy of scale. obviously there are going to be physical limits, but im sure there will be a way to get economies of scale to work.
_override 2mo ago
When it comes to the AI crash honestly my biggest concern is what is going to happen to the job market during and the years following the crash. Not sure how things are in the rest of the world, but as someone in their early 30s working in the IT industry in Sweden I’ve never seen the market this competitive before, even for mid level and senior roles, and it worries me what the future of employment is going to look like. Maybe those older than me have been through this kind of thing before in 2008-2009 and in the early 2000s but the state of the IT job market in the last year or two has been really concerning to me. Anecdotally I’ve also heard it’s very tough for new graduates these days.
- mosura 2mo ago
  One of the strong arguments in favor of AI accelerationism is net pain reduction by making the transition period as short as possible. Ideas like “pacing” or a crash and reboot will prolong the inevitable.
  - contagiousflow 2mo ago
    What is inevitable?
    - phoronixrly 2mo ago
      That all persons doing intellectual work die of hunger as they cannot find a job. At least that's how I understand what the parent commenter is implying. They say that all people doing intellectual work better die quickly so they don't suffer a long 'transition period' to inevitably being dead of hunger.
      - zero_shift 2mo ago
        Wonderful. And these people call themselves utilitarians too. God / Buddha / Allah / Batman, save me from their kindness!
    - N_Lens 2mo ago
      The pacing and the prolonging, obviously!
Kuyawa 2mo ago
AI investment will crash but AI itself (the technology) will continue thriving, learning, improving and there is absolutely no way to stop it. The only reading on the crystal ball is if US companies fail, China will take the lead by leaps and bounds, so the only solution is to keep pushing the cart until the wheels come off or we all cross the finish line, together.
- outworlder 2mo ago
  Just like every AI cycle that came before. At every cycle, we get a new tool. But we also get an extended "AI Winter" where investment dries up. This has been happening since the 1980s, we just keep redefining what "AI" is. At every cycle we move the line a bit; at one point voice recognition was firmly in the AI camp(and before that, science fiction). Now we have a machine that can do that in our pockets and nobody cares. Does anyone remember expert systems?
  - Schlagbohrer 2mo ago
    Douglas Hofstadter talked about these moving goalposts for AI in his book Gödel, Escher, Bach. I remember when a program that could win at chess was considered impossibly strong AI. Then, the game go. Etc. Heinlein in his book The Moon Is A Harsh Mistress imagined that people in the future would find it worthwhile, even necessary, to learn an artifical language LogLan so they could talk with computers. LogLan (Logical Language) would be designed to be totally unambiguous, a necessity for speaking with a computer. He didn't imagine that we'd simply throw so much compute at the problem that we'd teach computers to understand our vague, mumbled natural languages in all their diversity.
    - nehal3m 2mo ago
      Ah, Lojban! https://en.wikipedia.org/wiki/Lojban https://en.wikipedia.org/wiki/Lojban Sadly this does not let you speak to computers, just other language nerds with a lot of time.
      - 2mo ago
bbmatryoshka 2mo ago
Those analyses tend to not consider the government interest in having AI as a weapon: now AI labs are fully part of the military sector, making them much more supported by the system
- tellwilhelm 2mo ago
  [dead]
- ramijames 2mo ago
  This has been my take too. I think that the revenue requirements for making the industry profitable are likely never to be met, but that the US government sees AI as a strategic necessity and will ensure that the companies that are pushing the technology forward will be paid huge sums of money if they ever become insolvent. It's not ideal, but if banks are too big to fail, I'm guessing that OpenAI and Anthropic are too. This is doubly true since the defense sector is already integrating these solutions into their systems and actively using them in wartime activities.
- eth0up 2mo ago
  This is a forbidden subject here. In my opinion, the foremost subject in the entire world, but for whatever reason seldom discussed and always dismissed. All four frontier models contracted with the Pentagon. Claude already having been involved in Operation Abduct Sitting President & Use Active Denial Systems to Make People Vomit and Shit Themselves 'because'. Institutional and corporate capture . Foreign nations now having our models trained to facilitate tailored political orientation. And the fact that these systems, for all their limitations perennially bewailed, have tremendous capacity as force multipliers for all the things civil rights activists were previously terrified about apparently just before all our problems were magically solved. Snowden docs x³ Things that once took fusion centers, thinktanks, research, etc and thousands of manual processing hours -- now real-time, instant, with real-time 'understanding'. I think the AI crash will be primarily comprised of collectively lamenting all the obvious things we overlooked. And with great irony, the only competitor (or savior) to total US asymmetric top-down domination is China. Or wait, I think I got that backward... https://www.wired.com/story/super-pac-backed-by-openai-and-palantir-is-paying-tiktok-influencers-to-fear-monger-about-china/ https://www.wired.com/story/super-pac-backed-by-openai-and-p...
joshstrange 2mo ago
> Most new technologies have been welcomed by the public with open arms. I'm not going to predict how this is going to turn out in either direction but this statement gives me pause. I don't think that's ever been true. Yes, the siren song is strong but initially most new tech is met with skepticism. Are we so quick to forget "the internet/computers are just a fad"-type thinking?
- LogicFailsMe 2mo ago
  Heliocentrism calling... Yeah, we reject anything new and scary. Gotta wonder what the cavepeople made of the wheel. Edit: still triggered by heliocentrism in 2026? OK then.
  - bsza 2mo ago
    People weren’t as ignorant back then as you think. They had very good reason to reject heliocentrism, namely that constellations don’t grow and shrink in size as the earth moves around. That, they said, would require the universe to be unimaginably big and empty, much more so than any other observation they could make at the time would suggest. If you have the time, I recommend reading Pliny’s Natural History. I think it really shows how much more open-minded these people were than we give them credit for. They just didn’t have the technology we have.
    - dreamcompiler 2mo ago
      Another reason many people rejected heliocentrism was that you could get excommunicated (or worse!) if you professed to accept it.
    - LogicFailsMe 2mo ago
      Tell that to Giordano Bruno.
      - bsza 2mo ago
        You haven’t even bothered to look up what actually got him executed, have you.
cmiles8 2mo ago
It’s not a question of if but when at this point. To parallel to The Big Short this is the point in the movie where folks realize it’s mathematically impossible for things to not implode and so players are quietly positioning themselves for that eventuality before things are allowed to blow. It’s been a dramatic shift these last six months but everywhere I look now folks are quietly preparing their battle armor to survive what’s about to unfold. The tech will stay, but the AI business landscape will have a market-cleansing forest fire. There’s a whole generation in tech now that’s never seen what happens when a bubble like this unravels. I fully expect we’ll see the likes of offices just abandoned overnight with food still in the fridge as AI company after AI company just vaporizes.
- vrganj 2mo ago
  How would one position oneself as an individual investor if one believed this thesis?
  - cmiles8 2mo ago
    Not financial advice, but: Honestly it’s pretty hard and I wouldn’t recommend it. Shorting stocks and getting into bonds / default swaps but the system is broadly rigged against small players doing well here. Ie in the Big Short see everything that was needed for two guys to bet with their own money. It’s likely to be bumpy for all but stay the course with diversified strategy. The .com bust and 2008 are just blips and cheap buying opportunities for most folks with diversified portfolios and index funds. We’ll likely see similar messy markets for a while but the world will eventually recover and move on. The ones that get truly wiped out are those with a lot of paper wealth now that implodes, but have little liquid wealth. These types go from “super rich” to can’t pay their bills almost overnight. Cash is king for times like those ahead so if you don’t have a lot of cash on hand, now is the time to secure that if you can.
    - bryanlarsen 2mo ago
      Heck, it's pretty rigged against big guys too. The subprime bubble was not something that only Michael Burry knew about -- it was a front page story on the Economist several times years before the crash. There were lots of big guys that bet against the bubble, but bet too early and weren't able to keep up with margin calls etc.
ltbarcly3 2mo ago
There's a very nonzero chance that the AI expenses are not a race to recoup investments as they are a bet (with other people's money) that AI will lead to longevity or immortality, a bet made by aging tech oligarchs. Notice that Ellison is betting his entire company on it, which due to his secured debt is the same as betting his personal fortune in the most extreme case.
- dannersy 2mo ago
  So they've been sold snake oil. This, along with colonizing Mars and mining asteroids, is complete and total science fiction.
  - ltbarcly3 2mo ago
    Like reusable rockets! Those are only in science fiction too...
romanovcode 2mo ago
I think after the AI crash the biggest winner will be Apple. They will release MacBook Pro M10 or whatever that can comfortably run Opus5 levels of performance local model for software development/general ai that is baked in the MacOS for 7k USD.
- weezing 2mo ago
  They are already winners for not sinking money in it.
ixtli 2mo ago
I generally like this but I think the diseconomies of scale bit is narrow. Open models are showing us that it’s just the frontier companies in the west which are bloating and ignoring efficiency and that they’re leaving a lot of efficiency on the table.
cyanregiment 2mo ago
Oh no, no one saw it coming. Oh well, anyway. Let’s argue about SQL vs NoSQL again. I miss that.
- Schlagbohrer 2mo ago
  These days we argue whether the version of SQL created by the AI Swarm at Cursor is really SQL, or whether that benchmark is invalid because SQL and its code is already in the model's training data. Does that scratch the itch for you? X-D https://startupfortune.com/cursors-ai-agents-rebuilt-sqlite-from-scratch-and-passed-every-test/ https://startupfortune.com/cursors-ai-agents-rebuilt-sqlite-...
  - cyanregiment 2mo ago
    Functionalists (philosophical) would say yes! And this: https://github.com/swapnil404/mineSQL https://github.com/swapnil404/mineSQL (SQL implemented in a minecraft world).
- timbit42 2mo ago
  Tabs vs. Spaces!!!
seydor 2mo ago
Wars spending will make up for the loss
badrequest 2mo ago
When I joined my first startup, they said if you didn't have a good plan for going public or getting acquired by series C, then the D in series D stood for death. Uber et al raised like a J round. None of the rules around markets or investments are real, it's all vibes-based, and the decision-makers love talking to their ChatGPT mistresses too much to let this all come crashing down.
- gruez 2mo ago
  >Uber et al raised like a J round. None of the rules around markets or investments are real Uber's a poor example because it did IPO in 2019 and its stocks are up around 75% since then.
  - tempfile 2mo ago
    Yeah. Uber's a successful company and they raised a J round. Therefore the rule (D means Death) is not real. I'm not sure what you're implying, or if you just misunderstood the original comment?
    - gruez 2mo ago
      >or if you just misunderstood the original comment? Did you? If you keep on reading, the parent comment further implies that both AI companies and uber are "vibes based". But that's hard to square with the fact that 7 years since IPO the share price is up 75%. Of course, you can argue we're still in the irrational exuberance stage, but that just creates a situation where you can never be called wrong.
      - evanelias 2mo ago
        > But that's hard to square with the fact that 7 years since IPO the share price is up 75% Uber has severely underperformed the market. Passive S&P500 index funds had a total return of more than double that in the same time period, while also having less risk than investing in a single stock. Obviously much worse outcomes are possible than Uber's, but it's far from a massive success, especially after all that hype! This isn't to say the old common wisdom about excessive funding rounds was valid, but it's not completely invalid either.
rswail 2mo ago
[dead]
profsummergig 2mo ago
a contrarian take that's been eating away at my mind lately: - if every autonomous self-driving car is going to need some sort of edge AI data center nearby (for instantaneous exceptional incident handling) - if every household robot is going to need some sort of edge AI data center nearby (for instantaneous exceptional incident handling) - if there are going to be millions of self-driving cars and autonomous robots joining us in the next decade ...then we will need lots more semi-conductor chips, and data centers in lots more places, in the next decade.
- Schlagbohrer 2mo ago
  I think the answer here is that we are NOT going to have the Jetson's future with humanoid robots in many homes nor self driving cars taking over the roads. I am less sure about that second one, though, since people in my family tell me their self driving Tesla's do a great job. But those silver boxes at the side of the road? Might see many more of those, and much larger, maybe red hot on top
joshdavham 2mo ago
What implications might an AI crash have on the software developer job market? It’s likely that many AI software companies would fold and thus have to layoff their employees, but what would be the implications for the rest of the tech job market? I often see developers giddy about the idea of AI being a bubble and waiting for the crash, but I suspect this event could actually be particularly terrible for us.
NiloCK 2mo ago
> Circular Revenues: A small handful of tech firms, chip manufacturers, and AI companies are propping each other up by investing and buying from each other. > Increasing Corporate Skepticism: The news is full of stories of corporations that are throttling the employee use of AI since the costs to use the software are a lot higher than expected. Real AI spend is out of control, with the news is full of stories about corporations trying to keep a lid on it, but also real AI spending is low and concentrated to a few firms. I don't know. This doesn't feel very coherent to me, but rather like a collection of assertions that are adopted because they individually say something bearish about the industry. Certainly some investments will have been overreaches, but I find it pretty unlikely that any of the compute build-out to date is going to be left sitting idle one or two or five years from now.
- ofjcihen 2mo ago
  “Infrastructure spend by providers is high and increasing while customers are actively trying to spend less” It’s not the same people doing both.
skybrian 2mo ago
Maybe it would be good if more electricity generation became available for other purposes like heat pumps and electric cars? Although, perhaps it doesn’t help as much if it’s in the wrong place. Also, cheaper RAM would be nice.
CodeCompost 2mo ago
It won't be the same as 2000 because back then I didn't spend a dime on those ridiculous startups that went bust.
jdw64 2mo ago
These days, I find it hard to predict the future. Things feel too complex, and the times seem different. People say the AI bubble will burst, and I also think it will. But I want to think about how it might differ from other bubbles. One positive factor is that during the internet startup era, there was almost no revenue. But now, big tech companies are generating profits and can absorb AI-scale losses. The dot-com bubble burst, but the internet ended up being far more valuable than the bubble itself. I think the value was priced in early, and AI will be similar. The core issue is always the same: there's a bubble and there are warnings, but you never know when it will collapse. And the people who act first on the warnings have to give up on the upside. The only winners are those who sell everything just before the crash. The problem is knowing when that moment is. One difference from the dot-com bubble is that after it burst, a second wave of entrepreneurs leveraged the cheap telecom infrastructure that was left behind. So after the AI bubble bursts, will OpenAI and Anthropic fall and new companies emerge? I'm skeptical about that. Something feels different this time. My biggest concern, though, is that if I suddenly couldn't use AI anymore, I'm worried about how long it would take to recover the coding skills I've lost after nearly a year of barely hand-coding. AI has become too deeply embedded in my life
- oliculipolicula 2mo ago
  Previous bubbles were characterised by "mass participation in the relevant markets" This hasn't happened yet for AI, and there's a good chance it won't happen. Ie neither OpenAI nor Anthropic go public, or if they go public, the reception is "meh" Nevertheless, independent of wider market sentiment, imho there is still a bubble in "closed models". One could, eg, pay attention to OpenAI/Anthropic/Copilot/Google's monthly new consumer subscriptions (Oversubscribed but in a hyperhyperreal sense lol. It seems that there are too many people queuing for this new restaurant, and those that have tasted the food all think it's ok but not healthy enough ("productivity mirage"). but people on the street can't see it because the bookings are all online. It may be that Gemini pro's subscriptions may be the last one to fall off the cliff. When that happens even the "open cloud models" bubble may pop (after everyone sees Google sunsetting Gemini, or making it exclusive to Apple lol) US, not Korea https://archive.ph/WBSCj https://archive.ph/WBSCj
ghusto 2mo ago
Most of the post makes sense to me, even if I don't agree. This part however: > The news is full of stories of corporations that are throttling the employee use of AI since the costs to use the software are a lot higher than expected is not something I've seen. News is not "full of stories" of this behaviour. There are a few anecdotal stories here and there.
somewhereoutth 2mo ago
This chart of free cash flow for the big tech companies should worry people: https://www.advisorpedia.com/media/media/2026/02/23/trailing-4-quarter-free-cash-flow.jpg https://www.advisorpedia.com/media/media/2026/02/23/trailing... Somehow we've managed to turn software from a machine for printing money to a machine for setting it on fire.
laszlojamf 2mo ago
I've been reading a lot of stories like this lately. I'm no business genius, but you'd assume that investors are. Are they just blind or are they burning cash on purpose. What's the steelman argument here?
- feoren 2mo ago
  > I'm no business genius, but you'd assume that investors are. Absolutely not a reasonable assumption at all. Most people are not very good at their jobs. > What's the steelman argument here? If you're right about your prediction, but wrong about the timing, then you're wrong. The markets can stay irrational longer than you can stay solvent. Meaning, even if you know it's going to crash eventually, you don't know if it's tomorrow or in three years. Betting on stocks going down is extremely risky -- you have to get the timing pretty much exactly right, or you lose everything (potentially much more than you put down, depending on how you do it). Meanwhile, bull positions are basically free money until this point. Getting completely out of the market means you lose to inflation, although many investors have taken this strategy anyway.
- nater5000 2mo ago
  Looking at these investments through the lens of traditional businesses (which is the perspective taken by articles like this) won't make sense. It's not until you appreciate the expectation of how disruptive this technology will actually be does any of this make sense. These people think they're on the verge of creating a technology which, at a minimum, would constitute an unprecedented superweapon (and, at the extreme, would usher in a new era of civilization). Even if you don't buy-in to the take that one of these companies will reach a singularity and create a superintelligence, the cybersecurity implications alone is enough to put these products into a category outside the confines of profitability. We're already starting to see these implications become reality. If the US NEEDS an advanced AI on an existential level, then it doesn't really matter how much it costs to make or whether or not it can produce a profit. It'll be valuable one a scale where financials like that just don't apply.
dmrivers 2mo ago
I don't have much background in the area, but I am surprised to see that everyone here basically agrees a crash is imminent. There are disanalogies to past crashes that don't convince me that a big crash is definitively coming in the near term. For example: - Anthropic makes a profit right now and is seemingly on an exponential upward trajectory, so the debt being too much for it doesn't seem compelling to me. - AI technology continues to get better exponentially and doesn't have any clear sign this trend is flattening. If anything, it's accelerating. So it's plausible the investor value is legitimate for these companies given the massive potential for continued profitability. - I would say markets are typically very good predictors of the future. Many sophisticated investors know about the case for the future crash and are still buying at these valuations. I am open to being wrong, but the assessment in the blog seems one-sided to me. Polymarket currently puts the chance of such a downturn at 20% by December 2026. Seems like most people would put higher chances here, but I'm not convinced by the arguments. (https://polymarket.com/event/ai-bubble-burst-by https://polymarket.com/event/ai-bubble-burst-by)
jsnell 2mo ago
> analysts have estimated that it will take $2 trillion a year in revenue to pay for the infrastructure that has already been built I doubt any credible analyst has claimed that. What's the total AI capex that's already been spent? About $1T? It's a pretty absurd idea that those DCs need to make $2T/year for 5-7 years -> $10T-14T over their lifetime to break even. (Yes, this is nitpicking in the sense that there are probably analysts talking about how projected and sustained capex at >1T/year will require 2T/year in revenue, so patching the article won't be a biggie. But this article is cosplaying as financial analysis and leads off with such an obviously incorrect argument. What does that say about the credibility of the rest of the article?) > Diseconomies of Scale. Another very basic mistake here. The author starts talking about efficiency in the context of past technologies. That's lower unit costs as scale increases. But for AI, they seem to switch from talking about unit costs to total costs. Or at least I can't explain what they say about models getting more expensive over time in any other way, because that is not true about unit costs. We've never seen economies of scale as large as for AI. For a given quality level, the cost has been dropping at >10x per year, not increasing.
- Schiendelman 2mo ago
  I appreciate someone else here sees this math is way off. With what seems to be their current revenue, the frontier companies are likely better off than Uber was pre-IPO. The "circular financing" we've seen probably lowers risk relative to external financing, since both parties get aligned incentives. It's too bad Nvidia keeps getting hammered, they're selling the shovels in a gold rush that'll last for years, and I don't think that's priced in.
- B56b 2mo ago
  He might be referring to this? https://www.wheresyoured.at/big-tech-2tr/ https://www.wheresyoured.at/big-tech-2tr/ That figure is $2T in the next 4 years though. $2T/year would be quite silly.
- tedmiston 2mo ago
  The post is just full of half-baked conjectures masquerading as facts... combined with "things they read" by unspecified authors and sources... the author seems to prefer engaging in AI doomerism as opposing to actually understanding. > Diseconomies of Scale. Every new technology I can think of thrived, in part, due to economies of scale, where the larger the industry grew, the more efficient it got. AI is going in the opposite direction, where every new AI model consumes more resources than its predecessors. This may turn out to be the fatal flaw – the bigger the industry gets, the more its operating costs increase. [Agreed] Newer gens of models are more power-efficient per task, not less. This is a low quality post full of basic errors.
andrewstuart 2mo ago
Railroads, electrification, fibre optic networks all lost money for early investors but the infrastructure became the basis for future economic and technological developments.
minimaltom 2mo ago
Most new tech has insane P/E multiples for a time, for me the litmus test between "capex is high but but within a few multiples" and "capex is insanely overbuilt, ahh collapse etc" is whether revenue growth continues its trend line. I appreciate this is probably giving more grace to the bulls than its worth, but as they say, the market can remain irrational longer than you can stay solvent. Btw the $2T/year number is just wrong, thats higher than current capex.

After the AI Crash

128 points by sysoleg 2mo ago

fidotron 2mo ago

Without AI there is no future US economy. You're all in.

lirolero 2mo ago
You promise?
21asdffdsa12 2mo ago
Eh, the empire aka, protection of free trade as a service is still alive and well with no viable alternative on the horizon. Every other empire is either not free trade or - just plain mercantilism and thus will exploit way more then the quite "idealist" us- trump is just a taste of what the others in power would feel like.
- 21asdffdsa12 2mo ago
  That machinery and attached industries would keep on paddling for a while.
- fidotron 2mo ago
  Without AI the Chinese have won already. If you haven't noticed it's because you've stayed too close to the homeland.
  - rvz 2mo ago
    China won already with or without AI. You just did not realize it yet. The US is in a position where they have to debase the dollar all the way to zero and the Japan carry trade will slowly unwind for the worst as soon as the Bank of Japan (BOJ) begins to increase rates in more than 30 years. Someone has to pay for all the trillions of dollars of debt for the data center build out that is being hidden from the balance sheets of the big tech companies.
  - classified 2mo ago
    With AI the Chinese have also won.
- jhonof 2mo ago
  Isn't the US like very clearly anti free trade at this point?
  - pastage 2mo ago
    They still need the protection and enablement of free trade.
  - 21asdffdsa12 2mo ago
    It is pro-kicking out oppossition to the system that uses the system to grow in power without contributing anything back to it. So the us has abandoned the "Wandel durch Handel" ideology- which lets admit it- was a brutal failure. Russia did not change. China changed back. None of the countries in the middle east got democratic or "contributing to the worlds allmende". Turkey is sliding back. So its cleaning the house of parasites o clock.
- pastage 2mo ago
  I think the Hormuz saga and how China just quietly stopped importing oil are signs that we are nearing the end of the "free trade as a service" from the US. There are so many aspects of that I do not understand yet: how much oil trade will be done in yuan in the future is one that leads to other question about the current wars and what will happen when those end.
- catlover76 2mo ago
  [dead]
- vrganj 2mo ago
  I don't think the country that singlehandedly messed up the global economy by launching a pointless war on Iran - without even coordinating with its allies! - that predictably got the Strait of Hormuz closed gets to call itself protector of free trade anymore. The US has lost its appeal as a hegemon. Constantly threatening allies with invasion isn't helping either.
  - 21asdffdsa12 2mo ago
    Open a history book- before the us century- this stuff was the norm. Its what is to be expected after the us- retreats inwards. China blockading japan. The world blockading china. Russia blockading eastern Europe and vice versa. The shitty old world pre the ww2 order.
    - vrganj 2mo ago
      Indeed. But the US can't do this and also assume people will still accept it as hegemon and protector of free trade. It's lost those titles when it started behaving that way.
      - 21asdffdsa12 2mo ago
        It loses that title the day people stop using the petro-dollar, not a day sooner. And the fact its still used- is the biggest vote of no-confidence to all alternative actors out there.
enriquto 2mo ago
> Without AI there is no future US economy I'm already on it, man, don't need to convince me!
jitl 2mo ago
im sure people will continue to want to eat food, live in houses, go on vacation, look at phone, send email, drive car, even if there’s no ai money frothing around
- fidotron 2mo ago
  They can totally print more dollars to spend on things made somewhere else.
AnimalMuppet 2mo ago
In a word, baloney. The US produces stuff, and it produces ideas. Yeah, it imports a lot of stuff too. But it exports things like food, movies, and software. Without AI, the financial sector may take a huge hit. But the US economy? It will still be here, still producing things that are valuable.

nixonaddiction 2mo ago

i mean my line is always "when." people have been saying ai is a bubble and will crash since the beginning. the question has always been "when." i think the best framing of the ai crash is not in terms of software, but in terms of real estate and infrastructure. the real cost is hidden in construction contracts and people buying up land (and chips, transformers, generators, etc), not in technology. this will be the 2008 real estate crash, not the 2000 dot com bubble. (altho this point is not my most well researched point, i tbh need to look more into hard numbers of where the most risk is distributed, ai software startups or data center contracts. but i also am in grad school i have papers to publish and no time.) im also gonna push back on the "diseconomy of scale" point. while its true that the best models rn use the most resources, we are building better smaller models as well. i recently set one up on my 12 gb vram and while its not nearly as good as claude, it works. i make it write really simple code for me. and we are still improving small models. i think theres some level of hope to economy of scale. obviously there are going to be physical limits, but im sure there will be a way to get economies of scale to work.

_override 2mo ago

When it comes to the AI crash honestly my biggest concern is what is going to happen to the job market during and the years following the crash. Not sure how things are in the rest of the world, but as someone in their early 30s working in the IT industry in Sweden I’ve never seen the market this competitive before, even for mid level and senior roles, and it worries me what the future of employment is going to look like. Maybe those older than me have been through this kind of thing before in 2008-2009 and in the early 2000s but the state of the IT job market in the last year or two has been really concerning to me. Anecdotally I’ve also heard it’s very tough for new graduates these days.

mosura 2mo ago
One of the strong arguments in favor of AI accelerationism is net pain reduction by making the transition period as short as possible. Ideas like “pacing” or a crash and reboot will prolong the inevitable.
- contagiousflow 2mo ago
  What is inevitable?
  - phoronixrly 2mo ago
    That all persons doing intellectual work die of hunger as they cannot find a job. At least that's how I understand what the parent commenter is implying. They say that all people doing intellectual work better die quickly so they don't suffer a long 'transition period' to inevitably being dead of hunger.
    - zero_shift 2mo ago
      Wonderful. And these people call themselves utilitarians too. God / Buddha / Allah / Batman, save me from their kindness!
  - N_Lens 2mo ago
    The pacing and the prolonging, obviously!

Kuyawa 2mo ago

AI investment will crash but AI itself (the technology) will continue thriving, learning, improving and there is absolutely no way to stop it. The only reading on the crystal ball is if US companies fail, China will take the lead by leaps and bounds, so the only solution is to keep pushing the cart until the wheels come off or we all cross the finish line, together.

outworlder 2mo ago
Just like every AI cycle that came before. At every cycle, we get a new tool. But we also get an extended "AI Winter" where investment dries up. This has been happening since the 1980s, we just keep redefining what "AI" is. At every cycle we move the line a bit; at one point voice recognition was firmly in the AI camp(and before that, science fiction). Now we have a machine that can do that in our pockets and nobody cares. Does anyone remember expert systems?
- Schlagbohrer 2mo ago
  Douglas Hofstadter talked about these moving goalposts for AI in his book Gödel, Escher, Bach. I remember when a program that could win at chess was considered impossibly strong AI. Then, the game go. Etc. Heinlein in his book The Moon Is A Harsh Mistress imagined that people in the future would find it worthwhile, even necessary, to learn an artifical language LogLan so they could talk with computers. LogLan (Logical Language) would be designed to be totally unambiguous, a necessity for speaking with a computer. He didn't imagine that we'd simply throw so much compute at the problem that we'd teach computers to understand our vague, mumbled natural languages in all their diversity.
  - nehal3m 2mo ago
    Ah, Lojban! https://en.wikipedia.org/wiki/Lojban https://en.wikipedia.org/wiki/Lojban Sadly this does not let you speak to computers, just other language nerds with a lot of time.
    - 2mo ago

bbmatryoshka 2mo ago

Those analyses tend to not consider the government interest in having AI as a weapon: now AI labs are fully part of the military sector, making them much more supported by the system

tellwilhelm 2mo ago
[dead]
ramijames 2mo ago
This has been my take too. I think that the revenue requirements for making the industry profitable are likely never to be met, but that the US government sees AI as a strategic necessity and will ensure that the companies that are pushing the technology forward will be paid huge sums of money if they ever become insolvent. It's not ideal, but if banks are too big to fail, I'm guessing that OpenAI and Anthropic are too. This is doubly true since the defense sector is already integrating these solutions into their systems and actively using them in wartime activities.
eth0up 2mo ago
This is a forbidden subject here. In my opinion, the foremost subject in the entire world, but for whatever reason seldom discussed and always dismissed. All four frontier models contracted with the Pentagon. Claude already having been involved in Operation Abduct Sitting President & Use Active Denial Systems to Make People Vomit and Shit Themselves 'because'. Institutional and corporate capture . Foreign nations now having our models trained to facilitate tailored political orientation. And the fact that these systems, for all their limitations perennially bewailed, have tremendous capacity as force multipliers for all the things civil rights activists were previously terrified about apparently just before all our problems were magically solved. Snowden docs x³ Things that once took fusion centers, thinktanks, research, etc and thousands of manual processing hours -- now real-time, instant, with real-time 'understanding'. I think the AI crash will be primarily comprised of collectively lamenting all the obvious things we overlooked. And with great irony, the only competitor (or savior) to total US asymmetric top-down domination is China. Or wait, I think I got that backward... https://www.wired.com/story/super-pac-backed-by-openai-and-palantir-is-paying-tiktok-influencers-to-fear-monger-about-china/ https://www.wired.com/story/super-pac-backed-by-openai-and-p...

joshstrange 2mo ago

> Most new technologies have been welcomed by the public with open arms. I'm not going to predict how this is going to turn out in either direction but this statement gives me pause. I don't think that's ever been true. Yes, the siren song is strong but initially most new tech is met with skepticism. Are we so quick to forget "the internet/computers are just a fad"-type thinking?

LogicFailsMe 2mo ago
Heliocentrism calling... Yeah, we reject anything new and scary. Gotta wonder what the cavepeople made of the wheel. Edit: still triggered by heliocentrism in 2026? OK then.
- bsza 2mo ago
  People weren’t as ignorant back then as you think. They had very good reason to reject heliocentrism, namely that constellations don’t grow and shrink in size as the earth moves around. That, they said, would require the universe to be unimaginably big and empty, much more so than any other observation they could make at the time would suggest. If you have the time, I recommend reading Pliny’s Natural History. I think it really shows how much more open-minded these people were than we give them credit for. They just didn’t have the technology we have.
  - dreamcompiler 2mo ago
    Another reason many people rejected heliocentrism was that you could get excommunicated (or worse!) if you professed to accept it.
  - LogicFailsMe 2mo ago
    Tell that to Giordano Bruno.
    - bsza 2mo ago
      You haven’t even bothered to look up what actually got him executed, have you.

cmiles8 2mo ago

It’s not a question of if but when at this point. To parallel to The Big Short this is the point in the movie where folks realize it’s mathematically impossible for things to not implode and so players are quietly positioning themselves for that eventuality before things are allowed to blow. It’s been a dramatic shift these last six months but everywhere I look now folks are quietly preparing their battle armor to survive what’s about to unfold. The tech will stay, but the AI business landscape will have a market-cleansing forest fire. There’s a whole generation in tech now that’s never seen what happens when a bubble like this unravels. I fully expect we’ll see the likes of offices just abandoned overnight with food still in the fridge as AI company after AI company just vaporizes.

vrganj 2mo ago
How would one position oneself as an individual investor if one believed this thesis?
- cmiles8 2mo ago
  Not financial advice, but: Honestly it’s pretty hard and I wouldn’t recommend it. Shorting stocks and getting into bonds / default swaps but the system is broadly rigged against small players doing well here. Ie in the Big Short see everything that was needed for two guys to bet with their own money. It’s likely to be bumpy for all but stay the course with diversified strategy. The .com bust and 2008 are just blips and cheap buying opportunities for most folks with diversified portfolios and index funds. We’ll likely see similar messy markets for a while but the world will eventually recover and move on. The ones that get truly wiped out are those with a lot of paper wealth now that implodes, but have little liquid wealth. These types go from “super rich” to can’t pay their bills almost overnight. Cash is king for times like those ahead so if you don’t have a lot of cash on hand, now is the time to secure that if you can.
  - bryanlarsen 2mo ago
    Heck, it's pretty rigged against big guys too. The subprime bubble was not something that only Michael Burry knew about -- it was a front page story on the Economist several times years before the crash. There were lots of big guys that bet against the bubble, but bet too early and weren't able to keep up with margin calls etc.

ltbarcly3 2mo ago

There's a very nonzero chance that the AI expenses are not a race to recoup investments as they are a bet (with other people's money) that AI will lead to longevity or immortality, a bet made by aging tech oligarchs. Notice that Ellison is betting his entire company on it, which due to his secured debt is the same as betting his personal fortune in the most extreme case.

dannersy 2mo ago
So they've been sold snake oil. This, along with colonizing Mars and mining asteroids, is complete and total science fiction.
- ltbarcly3 2mo ago
  Like reusable rockets! Those are only in science fiction too...

romanovcode 2mo ago

I think after the AI crash the biggest winner will be Apple. They will release MacBook Pro M10 or whatever that can comfortably run Opus5 levels of performance local model for software development/general ai that is baked in the MacOS for 7k USD.

weezing 2mo ago
They are already winners for not sinking money in it.

ixtli 2mo ago

I generally like this but I think the diseconomies of scale bit is narrow. Open models are showing us that it’s just the frontier companies in the west which are bloating and ignoring efficiency and that they’re leaving a lot of efficiency on the table.

cyanregiment 2mo ago

Oh no, no one saw it coming. Oh well, anyway. Let’s argue about SQL vs NoSQL again. I miss that.

Schlagbohrer 2mo ago
These days we argue whether the version of SQL created by the AI Swarm at Cursor is really SQL, or whether that benchmark is invalid because SQL and its code is already in the model's training data. Does that scratch the itch for you? X-D https://startupfortune.com/cursors-ai-agents-rebuilt-sqlite-from-scratch-and-passed-every-test/ https://startupfortune.com/cursors-ai-agents-rebuilt-sqlite-...
- cyanregiment 2mo ago
  Functionalists (philosophical) would say yes! And this: https://github.com/swapnil404/mineSQL https://github.com/swapnil404/mineSQL (SQL implemented in a minecraft world).
timbit42 2mo ago
Tabs vs. Spaces!!!

seydor 2mo ago

Wars spending will make up for the loss

badrequest 2mo ago

When I joined my first startup, they said if you didn't have a good plan for going public or getting acquired by series C, then the D in series D stood for death. Uber et al raised like a J round. None of the rules around markets or investments are real, it's all vibes-based, and the decision-makers love talking to their ChatGPT mistresses too much to let this all come crashing down.

gruez 2mo ago
>Uber et al raised like a J round. None of the rules around markets or investments are real Uber's a poor example because it did IPO in 2019 and its stocks are up around 75% since then.
- tempfile 2mo ago
  Yeah. Uber's a successful company and they raised a J round. Therefore the rule (D means Death) is not real. I'm not sure what you're implying, or if you just misunderstood the original comment?
  - gruez 2mo ago
    >or if you just misunderstood the original comment? Did you? If you keep on reading, the parent comment further implies that both AI companies and uber are "vibes based". But that's hard to square with the fact that 7 years since IPO the share price is up 75%. Of course, you can argue we're still in the irrational exuberance stage, but that just creates a situation where you can never be called wrong.
    - evanelias 2mo ago
      > But that's hard to square with the fact that 7 years since IPO the share price is up 75% Uber has severely underperformed the market. Passive S&P500 index funds had a total return of more than double that in the same time period, while also having less risk than investing in a single stock. Obviously much worse outcomes are possible than Uber's, but it's far from a massive success, especially after all that hype! This isn't to say the old common wisdom about excessive funding rounds was valid, but it's not completely invalid either.

rswail 2mo ago

[dead]

profsummergig 2mo ago

a contrarian take that's been eating away at my mind lately: - if every autonomous self-driving car is going to need some sort of edge AI data center nearby (for instantaneous exceptional incident handling) - if every household robot is going to need some sort of edge AI data center nearby (for instantaneous exceptional incident handling) - if there are going to be millions of self-driving cars and autonomous robots joining us in the next decade ...then we will need lots more semi-conductor chips, and data centers in lots more places, in the next decade.

Schlagbohrer 2mo ago
I think the answer here is that we are NOT going to have the Jetson's future with humanoid robots in many homes nor self driving cars taking over the roads. I am less sure about that second one, though, since people in my family tell me their self driving Tesla's do a great job. But those silver boxes at the side of the road? Might see many more of those, and much larger, maybe red hot on top

joshdavham 2mo ago

What implications might an AI crash have on the software developer job market? It’s likely that many AI software companies would fold and thus have to layoff their employees, but what would be the implications for the rest of the tech job market? I often see developers giddy about the idea of AI being a bubble and waiting for the crash, but I suspect this event could actually be particularly terrible for us.

NiloCK 2mo ago

> Circular Revenues: A small handful of tech firms, chip manufacturers, and AI companies are propping each other up by investing and buying from each other. > Increasing Corporate Skepticism: The news is full of stories of corporations that are throttling the employee use of AI since the costs to use the software are a lot higher than expected. Real AI spend is out of control, with the news is full of stories about corporations trying to keep a lid on it, but also real AI spending is low and concentrated to a few firms. I don't know. This doesn't feel very coherent to me, but rather like a collection of assertions that are adopted because they individually say something bearish about the industry. Certainly some investments will have been overreaches, but I find it pretty unlikely that any of the compute build-out to date is going to be left sitting idle one or two or five years from now.

ofjcihen 2mo ago
“Infrastructure spend by providers is high and increasing while customers are actively trying to spend less” It’s not the same people doing both.

skybrian 2mo ago

Maybe it would be good if more electricity generation became available for other purposes like heat pumps and electric cars? Although, perhaps it doesn’t help as much if it’s in the wrong place. Also, cheaper RAM would be nice.

CodeCompost 2mo ago

It won't be the same as 2000 because back then I didn't spend a dime on those ridiculous startups that went bust.

jdw64 2mo ago

These days, I find it hard to predict the future. Things feel too complex, and the times seem different. People say the AI bubble will burst, and I also think it will. But I want to think about how it might differ from other bubbles. One positive factor is that during the internet startup era, there was almost no revenue. But now, big tech companies are generating profits and can absorb AI-scale losses. The dot-com bubble burst, but the internet ended up being far more valuable than the bubble itself. I think the value was priced in early, and AI will be similar. The core issue is always the same: there's a bubble and there are warnings, but you never know when it will collapse. And the people who act first on the warnings have to give up on the upside. The only winners are those who sell everything just before the crash. The problem is knowing when that moment is. One difference from the dot-com bubble is that after it burst, a second wave of entrepreneurs leveraged the cheap telecom infrastructure that was left behind. So after the AI bubble bursts, will OpenAI and Anthropic fall and new companies emerge? I'm skeptical about that. Something feels different this time. My biggest concern, though, is that if I suddenly couldn't use AI anymore, I'm worried about how long it would take to recover the coding skills I've lost after nearly a year of barely hand-coding. AI has become too deeply embedded in my life

oliculipolicula 2mo ago
Previous bubbles were characterised by "mass participation in the relevant markets" This hasn't happened yet for AI, and there's a good chance it won't happen. Ie neither OpenAI nor Anthropic go public, or if they go public, the reception is "meh" Nevertheless, independent of wider market sentiment, imho there is still a bubble in "closed models". One could, eg, pay attention to OpenAI/Anthropic/Copilot/Google's monthly new consumer subscriptions (Oversubscribed but in a hyperhyperreal sense lol. It seems that there are too many people queuing for this new restaurant, and those that have tasted the food all think it's ok but not healthy enough ("productivity mirage"). but people on the street can't see it because the bookings are all online. It may be that Gemini pro's subscriptions may be the last one to fall off the cliff. When that happens even the "open cloud models" bubble may pop (after everyone sees Google sunsetting Gemini, or making it exclusive to Apple lol) US, not Korea https://archive.ph/WBSCj https://archive.ph/WBSCj

ghusto 2mo ago

Most of the post makes sense to me, even if I don't agree. This part however: > The news is full of stories of corporations that are throttling the employee use of AI since the costs to use the software are a lot higher than expected is not something I've seen. News is not "full of stories" of this behaviour. There are a few anecdotal stories here and there.

somewhereoutth 2mo ago

This chart of free cash flow for the big tech companies should worry people: https://www.advisorpedia.com/media/media/2026/02/23/trailing-4-quarter-free-cash-flow.jpg https://www.advisorpedia.com/media/media/2026/02/23/trailing... Somehow we've managed to turn software from a machine for printing money to a machine for setting it on fire.

laszlojamf 2mo ago

I've been reading a lot of stories like this lately. I'm no business genius, but you'd assume that investors are. Are they just blind or are they burning cash on purpose. What's the steelman argument here?

feoren 2mo ago
> I'm no business genius, but you'd assume that investors are. Absolutely not a reasonable assumption at all. Most people are not very good at their jobs. > What's the steelman argument here? If you're right about your prediction, but wrong about the timing, then you're wrong. The markets can stay irrational longer than you can stay solvent. Meaning, even if you know it's going to crash eventually, you don't know if it's tomorrow or in three years. Betting on stocks going down is extremely risky -- you have to get the timing pretty much exactly right, or you lose everything (potentially much more than you put down, depending on how you do it). Meanwhile, bull positions are basically free money until this point. Getting completely out of the market means you lose to inflation, although many investors have taken this strategy anyway.
nater5000 2mo ago
Looking at these investments through the lens of traditional businesses (which is the perspective taken by articles like this) won't make sense. It's not until you appreciate the expectation of how disruptive this technology will actually be does any of this make sense. These people think they're on the verge of creating a technology which, at a minimum, would constitute an unprecedented superweapon (and, at the extreme, would usher in a new era of civilization). Even if you don't buy-in to the take that one of these companies will reach a singularity and create a superintelligence, the cybersecurity implications alone is enough to put these products into a category outside the confines of profitability. We're already starting to see these implications become reality. If the US NEEDS an advanced AI on an existential level, then it doesn't really matter how much it costs to make or whether or not it can produce a profit. It'll be valuable one a scale where financials like that just don't apply.

dmrivers 2mo ago

I don't have much background in the area, but I am surprised to see that everyone here basically agrees a crash is imminent. There are disanalogies to past crashes that don't convince me that a big crash is definitively coming in the near term. For example: - Anthropic makes a profit right now and is seemingly on an exponential upward trajectory, so the debt being too much for it doesn't seem compelling to me. - AI technology continues to get better exponentially and doesn't have any clear sign this trend is flattening. If anything, it's accelerating. So it's plausible the investor value is legitimate for these companies given the massive potential for continued profitability. - I would say markets are typically very good predictors of the future. Many sophisticated investors know about the case for the future crash and are still buying at these valuations. I am open to being wrong, but the assessment in the blog seems one-sided to me. Polymarket currently puts the chance of such a downturn at 20% by December 2026. Seems like most people would put higher chances here, but I'm not convinced by the arguments. (https://polymarket.com/event/ai-bubble-burst-by https://polymarket.com/event/ai-bubble-burst-by)

jsnell 2mo ago

> analysts have estimated that it will take $2 trillion a year in revenue to pay for the infrastructure that has already been built I doubt any credible analyst has claimed that. What's the total AI capex that's already been spent? About $1T? It's a pretty absurd idea that those DCs need to make $2T/year for 5-7 years -> $10T-14T over their lifetime to break even. (Yes, this is nitpicking in the sense that there are probably analysts talking about how projected and sustained capex at >1T/year will require 2T/year in revenue, so patching the article won't be a biggie. But this article is cosplaying as financial analysis and leads off with such an obviously incorrect argument. What does that say about the credibility of the rest of the article?) > Diseconomies of Scale. Another very basic mistake here. The author starts talking about efficiency in the context of past technologies. That's lower unit costs as scale increases. But for AI, they seem to switch from talking about unit costs to total costs. Or at least I can't explain what they say about models getting more expensive over time in any other way, because that is not true about unit costs. We've never seen economies of scale as large as for AI. For a given quality level, the cost has been dropping at >10x per year, not increasing.

Schiendelman 2mo ago
I appreciate someone else here sees this math is way off. With what seems to be their current revenue, the frontier companies are likely better off than Uber was pre-IPO. The "circular financing" we've seen probably lowers risk relative to external financing, since both parties get aligned incentives. It's too bad Nvidia keeps getting hammered, they're selling the shovels in a gold rush that'll last for years, and I don't think that's priced in.
B56b 2mo ago
He might be referring to this? https://www.wheresyoured.at/big-tech-2tr/ https://www.wheresyoured.at/big-tech-2tr/ That figure is $2T in the next 4 years though. $2T/year would be quite silly.
tedmiston 2mo ago
The post is just full of half-baked conjectures masquerading as facts... combined with "things they read" by unspecified authors and sources... the author seems to prefer engaging in AI doomerism as opposing to actually understanding. > Diseconomies of Scale. Every new technology I can think of thrived, in part, due to economies of scale, where the larger the industry grew, the more efficient it got. AI is going in the opposite direction, where every new AI model consumes more resources than its predecessors. This may turn out to be the fatal flaw – the bigger the industry gets, the more its operating costs increase. [Agreed] Newer gens of models are more power-efficient per task, not less. This is a low quality post full of basic errors.

andrewstuart 2mo ago

Railroads, electrification, fibre optic networks all lost money for early investors but the infrastructure became the basis for future economic and technological developments.

minimaltom 2mo ago

Most new tech has insane P/E multiples for a time, for me the litmus test between "capex is high but but within a few multiples" and "capex is insanely overbuilt, ahh collapse etc" is whether revenue growth continues its trend line. I appreciate this is probably giving more grace to the bulls than its worth, but as they say, the market can remain irrational longer than you can stay solvent. Btw the $2T/year number is just wrong, thats higher than current capex.