I am not saying this to be sarcastic - the problem is that people from OpenAI/Antrhopic are saying things like superintelligence in 3 years, or boris saying coding is solved and that 100% of his code is written by AI.
It's not good enough to just say oreo ceos say we need to more oreos.
There's a real grey area where these tools are useful in some capacity, and in that confusion we're spending billions. Too may people are saying too conflicting things and chaos is never good for clear long-term growth.
Either that 20 years is completelly inapplicable to AI, or we're in for a world of hurt. There's no in between given the kinds of bets that have been made.
AI companies don’t have 20 years, they have max 5 years where they have to turn to profit.
They don’t have time to wait for all the companies to pick up use of AI tooling in their own pace.
So they lie and try to manufacture demand. Well demand is there but they have to manufacture FOMO so that demand materializes now and not in 20 or 10 years.
This outlook is as short-sighted as the 2000 fiber optic bust. Critics then thought overcapacity meant the end, yet that infrastructure eventually created the modern internet. Capital does not walk away from a fundamental shift just because of one market correction. While specific companies may fail, the long-term value of the technology ensures that investment will continue far beyond a five-year window.
The massive investment in power grids and data centers provides a permanent physical backbone that outlives any specific silicon generation. This infrastructure serves as a durable shell for the model design knowledge and chip architectural IP gained through each iteration. Capital is effectively funding a structural moat built on energy access and engineering mastery.
Seems like there’s a lot of resources being dumped into those data centers that will not be very useful. Saying it will all be worthwhile because we’ll have the buildings and the modest power grid updates (which are largely paid for by tax payers, anyway,) feels like saying a PS5 is a good long-term investment because the cords and box will still be good long ag after the PS5 has outlived its usefulness.
How much capital was wiped out for it to be cheap after the bust? Someone is going to eat the exuberance loss in the near term, even if there is long term value.
It's a "Motte and Bailey" system [0], where the extreme "AI will do everything for you" claim keeps getting thrown around to try to get investors to throw in cash, but then somehow it transmutes into "all technologies took time to mature stop being mean to me."
To be fair, it isn't necessarily the same people doing both at once. Sometimes there are two groups under the same general banner, where one makes the big-claims, and another responds to perceived criticism of their lesser-claim.
> the problem is that people from OpenAI/Antrhopic are saying things like superintelligence in 3 years
An even bigger problem is that people listen to them even after they say rationally implausible things. When even Yann LeCunn is putting his arms up and saying "this approach won't work," it's pretty bad.
Not to mention the investment is on another level. We've got companies with valuations in the hundred-billions talking about raising trillions to buy all of the computers in the world, before establishing whether they can even turn a profit, nevermind upend the economy.
I wonder how many actually beneficial projects will not be financed by investors too scared to try anything risky after the AI buble crashes and burns to the ground. :P
the investments are being made by massively profitable companies (our biggest and brightest ones, the ones that have been carrying the economy for quite some time now, even before "AI"). even just in recent history we have seen companies making large investments and being very unprofitable until they weren't anymore (e.g. Uber). and it is always the same story, everyone is up in arms "this is not sustainable etc..."
whether or not these companies can turn a profit - time will tell. but I am betting that our massively profitable companies (which are biggest spenders of course) perhaps know what they are doing and just maybe they should get the benefit of the doubt until they are proven wrong. but if I had to make a wager and on one side I have google, microsoft, amazon, meta... and on the other side I have bunch of AI bubble people with a bunch of time to predict a "crash" I'd put my money on the former...
The fact that the companies that have already shoveled billions of dollars at this are continuing to do so is equally consistent with AI improvement and adoption stalling as it is with infinite improvement and widespread adoption. Yes, it’s irrational to chase sunk costs - but unlike the VC funds that backed Uber and its competition, may of the players in this game are exposed to public markets, which are not known for being rigorously logical. If you pull back on your AI investments, the markets will punish you - probably vigorously - and if your only concern is the value of your stock options, it is entirely rational for you to act in a way that keeps the market from punishing their value. We’re 3 years in without showing any ROI, and who’s to say we can’t get 3 or 5 or 10 more? Plenty of time to cash out before the eventual reckoning.
There is definitely growing hesitancy in the market, but pulling back at this juncture could set off a full-on race to the bottom, because it would disprove the original point (“all the smart tech companies are all-in, so there must be profit at the end of the tunnel”). Right now, they can point to the skeptics as bears or doomers or whatever. The first big tech company to drop its capex will pierce the aura of invincibility and make the moderate retreat from the exuberant highs of late 2025 look like a blip on the radar.
I'd maybe think twice about assuming Meta knows what they're doing after they just pissed $75 billion up the wall on a Metaverse dream that went nowhere.
Pissed it away, but Zuckerberg is richer than ever and so are his stockholders it seems. I can’t imagine doing it, but also can’t imagine running Meta.
For the U.S. economy, productivity is defined as (output measured in $)/(input measured in $). Typically, new technologies (computers, internet, AI) reduce input costs, and due to competition in the market, companies are required to reduce their prices, thereby having an overall deflationary effect on the economy. It's entirely possible that AI will have a small or no effect on productivity as measured above, but society will benefit by getting access to inexpensive products and services powered by inexpensive AI. Individual companies won't use AI to improve their productivity but will need to use AI just to stay competitive.
I think this paragraph from the wikipedia article captures it nicely:
>Many observers disagree that any meaningful "productivity paradox" exists and others, while acknowledging the disconnect between IT capacity and spending, view it less as a paradox than a series of unwarranted assumptions about the impact of technology on productivity. In the latter view, this disconnect is emblematic of our need to understand and do a better job of deploying the technology that becomes available to us rather than an arcane paradox that by its nature is difficult to unravel.
Yep, and the same with the internet. During the 1990s and 2000s, people kept wondering why the internet wasn't showing up in productivity numbers. Many asked if the internet was therefore just a fad or bubble. Same as some now do with AI.
It takes time for technology to show measurable impact in enormous economies. No reason why AI will be any different.
Sure, but you have to consider Carl Sagan's point, "The fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown." Some truly useful technologies start out slow and the question is asked if they are fads or bubbles even though they end up having huge impact. But plenty of things that at first appeared to be fads or bubbles truly were fads or bubbles.
Personally I think AI is unlikely to go the way of NFTs and it shows actual promise. What I'm much less convinced of is that it will prove valuable in a way that's even remotely within the same order of magnitude as the investments being pumped into it. The Internet didn't begin as a massive black hole sucking all the light out of the room for anything else before it really started showing commensurate ROI.
> What I'm much less convinced of is that it will prove valuable in a way that's even remotely within the same order of magnitude as the investments being pumped into it.
I think there are two layers of uncertainty here. One is, as you say, if the value is worth the investment. The other and possibly bigger issue is who is going to capture the value and how.
Assuming AI turns out to be wildly valuable, I'm not at all convinced that at the end of this money spending race that the companies pouring many billions of dollars into commercial LLMs are going to end up notably ahead of open models that are running the race on the cheap by drafting behind the "frontier" models.
For now the frontier models can stay ahead by burning heaps of money but if/when progress slows toward a limit whatever lead they have is going to quickly evaporate.
At some point I suspect some ugly legal battles as some attempt to construct some sort of moat that doesn't automatically drain after a few months of slowed progress. Google's recent complaining about people distilling gemini could be an early signal of this.
I have no idea how any of that would shake out legally, but I have a hard time sympathizing with commercial LLM providers (who slurped up most existing human knowledge without permission) if/when they start to get upset about people ripping them off.
All those racks of Nvidia machines might not pay off for the companies buying them, but I have a hard time believing that people are still questioning the utility of this stuff. In the last hour, Opus downloaded data for and implemented a couple of APIs that I would’ve otherwise paid hundreds a month for, end to end, from research all the way to testing its implementation. It’s so, incredibly, obviously useful.
That something is useful does not necessarily mean that it will be doable for companies the capture enough of value to make up for the billions in investments they have/will have make in the coming years.
Right now the frontier AI companies are explicitly running a kind of chicken race - increasing the burn rates so much that it gets harder and harder. With the hopes that they (and not their competitor) will be the one left standing. Especially OpenAI and Antropic, but non-AI companies like Oracle have also joined.
If they keep it going, the likely outcome is that one of them folds - and the other(s) reap the rewards.
Utility (per cost) will go up the tougher the competition. Money captured by single entity possibly down with increased competition.
It's only really useful if what you produce with those API's is useful. It's easy to feel productive with AI tho, in a way that doesn't show up in economic statistics, hence the disconnect.
Well, it might actually decrease GDP in this case, because it's making it so I can just quickly make products that I would've otherwise purchased. But it's also made me more productive, and purchasing things isn't good for its own sake. So maybe measuring progress via GDP isn't ideal?
The thing I'm making with the APIs is very helpful to me, maybe it'll be helpful to others, who knows.
I mean, it's an apt comparison, given that the Venn diagram between the pro-NFT hucksters and the pro-AI crowd is a circle. When you listen to people who were so publicly and embarrassingly wrong about the future try to sell you on their next hustle, skepticism is the correct posture.
Columbus was not a genius. He was an idiot who believed the earth was smaller than the scientists of his day, and the scientists were right. Columbus became successful through pure luck, genocide and cruelty.
Also no particular reason to group it in with those two. There are plenty of things that never showed up at all. It's just not a signal It's kind of like "My kid is failing math, but he's just bored. Einstein failed a lot too you know". Regardless of whether Einstein actually failed anything, there are a lot more non-Einsteins that have failed.
That seems a tad reductionist. Why not just say the iPhone was completely inconsequential because afterall it's simply another "computer". Why not go even back further and start the timer at the first physical implementation of a Turing machine?
The iPhone killer UX + App store release can be directly traced to the growth in tech in the subsequent years its release.
I think it would have happened regardless - late Symbian from Nokia was pretty close and Maemo was already a thing with N900 not that far off in the future, not to mention Android.
We might have been possibly better of actually, with the Apple walled garden abominations and user device lockdowns not being dragged into the mainstream.
As someone who worked for Nokia around the iPhone launch (on map search, not phones directly) - I also wanted to believe this at the time. But in retrospect, it feels like what actually mattered was that capacitive multi-touch screens were the only non-garbage interface, and only Apple bought FingerWorks...
Not clear that this is a helpful interpretation, other than "we're in the primordial ooze stage and the thing that matters will be something none of the current players have", but that's hard to take to the bank :-)
It's not good enough to just say oreo ceos say we need to more oreos.
There's a real grey area where these tools are useful in some capacity, and in that confusion we're spending billions. Too may people are saying too conflicting things and chaos is never good for clear long-term growth.
Either that 20 years is completelly inapplicable to AI, or we're in for a world of hurt. There's no in between given the kinds of bets that have been made.