[rfv6723]

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.

[afavour]

But fiber optic created in 2000 is still very usable in 2026. AI hardware purchases in 2026 is going to out of date very quickly by comparison.

[rfv6723]

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.

[DrewADesign]

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.

[rfv6723]

The "PS5" analogy fails to account for how "useless" hardware often triggers the next paradigm shift. For decades, traditionalists dismissed high-end GPUs as expensive toys for gamers, yet that specific architecture became the accidental engine of the AI revolution.

[DrewADesign]

And you imagine these incredibly expensive-to-operate, environmentally damaging, highly specialized, years-outdated GPUs will trigger some sort of technological revolution that won’t be infinitely better served by the shiny new GPUs of the day that will not only be dramatically more powerful, but offer a ton more compute for the amount of electricity used?

The AI use of GPUs didn’t stem from a glut of outdated, discarded units with nearly no market value. All of those old discarded GPUs were, and still are, worthless digital refuse.

The closest analog i can think of to what you’re referring to is cluster computing with old commodity PCs that got companies like Google and Hotmail off the ground… for a few years until they could afford big boy servers and now all of those, and most current PCs on the verge of obsolescence, are also worthless digital refuse.

The big difference is that Google et al chose those PC clusters because they were cheap, commodity pieces right off-the-bat, not because they were narrowly scoped specialty hardware pieces that collectively cost hundreds of billions of dollars.

Your supposition fails to account for our history with hardware in any reasonable way.

[rfv6723]

Focusing exclusively on the physical decay and replacement cycle of hardware is a classic case of tunnel vision. It ignores the fact that the semiconductor industry’s true value lies in the evolution of manufacturing processes and architectural design rather than the lifespan of a specific unit. While individual chips eventually become obsolete, the compounding breakthroughs in logic and efficiency are what actually drive the technological revolution you are discounting.

[toomuchtodo]

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.