[audunw]

I don’t feel like this article addresses the question of whether we’re seeing an AI bubble or not at all.

To me this is very simple: certain companies have invested billions upon billions in AI data centres that need to see a very high return on investment in the years ahead to avoid a “pop”. I think nvidia is also being valued is if it’s a certainty that we will continue to build many such data centres every year for the foreseeable future.

These expectations are now being faced with the reality that AI isn’t making us that much more productive, and the improvements in LLMs are slowing down, so it’s not clear there will be a continued will to pay expensive subscription for these AIs, and certainly not clear that companies are willing to accept higher prices that may be need to get ROI.

There’s another way this could go down: I have a sneaking suspicion that we can get 90% of the productivity benefits of LLMs with models that can run locally. A combination of an algorithm breakthrough, better tuned models, better software tooling around them, and better hardware in the hands of end users, may get us to that 90%. That could end up making a lot of AI companies redundant.