[geysersam]

Current AI datacenter/model development investment rate is roughly 1T/year. That's a lot. But the US economy is 33T/year. So the investment pays back (roughly) over ten years if, each year, the AI investments increase overall productivity by 0.6%, assuming the AI companies can capture half of the value of that productivity gain.

> „[AI vendors are] paying for a fixed cost with a depreciating commodity“

That's just a confusing way to say you don't think future models will be worth the development costs. Because if future models are significantly better, why would the price of tokens to access those models deprecate?

[timacles]

I'm surprised people think LLMs, a thing which mainly excels at advertising, spam and writing code is going to generate that much economic activity.

[ashdksnndck]

Companies whose main core competency is writing code were already making up a big chunk of the economy before AI. Also, less wealthy companies were constrained in their use of software by the inability to afford the salaries of talented programmers (and ripoff practices from software consulting companies who in theory could help). Lowering the cost of building software systems ought to unblock a good amount of economic activity as the technology diffuses.

[bunderbunder]

Those companies are certainly writing more code. But It isn’t clear that they are increasing their economic productivity. It could even conceivably have the opposite effect by fueling a race to the bottom.

e.g. an interesting possible canary in this coal mine is that there’s been a 200% increase in the rate of new apps appearing on Apple’s App Store, but it has not been accompanied by a 200% increase in the rate at which people are buying apps.

[andwur]

The AI pundits often seem to apply the logic that code output is directly proportional to revenue and/or profit, and as such it follows that an AI usage increase leads to more code which leads to more revenue.

I don't believe this aligns with the reality of any major company, unless your business is in the literal sense "selling code" your revenue and profit is tangential to the quantity of code you produce. Google is a good example of this: most of their revenue and profit comes from their ad network, which is disconnected from their development productivity and instead heavily reliant on network effects and time in market. If I was a new competitor with infinite AI funds to throw at whatever problem I choose, I can't simply capture their market by developing an exact copy of Google's ad platform. In the same way, Google can't substantially grow their ad network by coding "more" or "better", they still need more customers and consumers to interact with their network to see any increase in revenue.

So it doesn't directly follow that a productivity increase will inherently follow an AI usage increase.

[bunderbunder]

Agreed. I think it’s more likely to expect that most of it is pure waste.

My impression is that most software development work is not profitable. Either the project is abandoned, or it fails, or it gets shipped but doesn’t generate positive ROI. But, like how venture capital works, the minority of projects that are successful make enough money to cover the rest.

Some portion of this is because demand for software projects in general is less than perfectly elastic. So more software does not automatically mean more software sales.

It also seems plausible that, in general, companies tend to fund the projects that are most likely to be profitable. They aren’t perfect at it, but I doubt they’re just rolling dice.

Which would imply that the new work companies can take on thanks to developer productivity gains will tend to be ones that are less likely to generate positive ROI.

meaning AI may only produce a net increase in waste, which only serves to erode profits.

Add to that that it’s been years now and we still don’t have an example of someone army-of-oneing a killer app or anything like that. It’s beginning to feel like another iteration of the amazing blockchain revolution that was always & forever just around the corner.

[ashdksnndck]

The unlocked economic activity won’t come from a Google competitor writing code faster. A lot of it will come from “boring” businesses who could benefit from custom software but haven’t had the means to create it themselves. In some cases they may not even know their problem can be solved by software, but some AI they are using for repetitive tasks will notice and offer to build an app for them.

[timacles]

I would go as far as to say writing more Code has almost no impact on their economic productivity. What drives those companies is infrastructure and networks

[nobleach]

So far the place where I've seen "more code being written" having a postive effect, has been in paying down tech debt and reduction of overhead. We've rewritten services (bringing multiple microservices back under moduliths) and cut costs. But I'm talking about net-negative code. That's not the point you're making. I agree that puking out 20 new features likely wouldn't gain us more revenue.

[therealdrag0]

That’s great for consumers.

[lelanthran]

A lower signal/noise ratio is never better for consumers.

[bryanrasmussen]

If the quality of all apps remains high, but if there is an increase of low quality apps it may not necessarily be great for consumers as it becomes difficult to distinguish which are the good and bad quality apps, making it risky to purchase apps.

[bandrami]

Not necessarily. European grocery shoppers report higher satisfaction with the shopping experience than American grocery shoppers do.

[samat]

I am yet to see that ‘companies with great ideas which simply cannot afford those very expensive developers’. For the most, issue is not programmer costs. Mostly it’s inability to formulate the MVP which makes sense.

‘uber for my industry’ is not a sensible business strategy

Honestly, if you know guys whose bottleneck is pure software dev — please let me know, I have a good, experienced team in Eastern Europe, we can do wonders in product development. But coming up with sensible business ideas and executing on them in the real world is crazy hard and extremely rare.

[ashdksnndck]

Can you believe that the barrier to entry on a $20 Claude subscription is lower than emailing a guy to hire a team for a project you haven’t even thought of yet? Regular people who are using AI to assist with their daily work will find the chatbot offering to build software tools to automate the work for them.

[timacles]

You are wrong, sir. Their core competency is building out infrastructure and networks to support their software and user base. software is by far the least complicated thing they do.

what makes YouTube YouTube is not the video player it’s the servers that can handle petabytes of uploads a day and billions of views. YouTube software wise, is no different from the 100s of porn websites that are coded by small European teams

[IsTom]

If we talking about Meta, Google, etc. code is only incidental to them earning money.

[lesostep]

But what if it kills current ad-tech as we know it (paying to show ads on random sites without any way to verify that the site is legit), and the flow of ad money for legitimate goods turns back to journalism, magazines and other publications?

That would be half a trillion[1] redirected to regular people just from Google Ads.

[1] snatched my number from here: https://pixis.ai/blog/2025-google-advertising-benchmarks-for...

[ZeroGravitas]

The other day I watched a YouTube video on a work machine with no history and got 2 AI generated video ads for scam products before the video played.

An AI generated man talking about his product building journey to make a pressure washer hose that didn't need power (in the AI video it didn't even have a water supply connected!) that was going to be banned in a week because it was too powerful so buy now.

I've seen AI slop before and scam ads before but the combination of the two gave me some real tingly spider-sense that things are going to get worse and that some unethical people will make a lot of money from it so be in no hurry to stop it.

[phillipcarter]

Two of the things you’ve listed are some of the most profitable activities in our economy.

[timacles]

I mean, that says a lot about the kind of crisis out current economy is in. How much longer can the United States Be a world leader when it’s primary function is social media and advertising

[phillipcarter]

Advertising is huge because it's backed by a ton of very real products that people go and buy. It matters because people don't automatically have awareness of things they could find useful.

And writing code is one of the most economically productive activities you can do. Why is it controversial that a technology is good at this?

[hakfoo]

That value for advertising goes negative on a marginal basis.

The first time (or few times) you saw an advert, you were informed of the product's existence. I now know the Hyundai Elantra exists and could potentially be suitable for my vehicle needs. Mission accomplished.

The next 10,000 times it's just fighting over share of a finite market. I am not expecting to buy another car for another few years, so reminding me that I can choose an Elantra instead of a Corolla at all times is just vapourising cash. In fact, there's a chance that you do something obnoxious in your ad and actively burn brand reputation.

You could argue it's a take on the "everyone uses a different 5% of the features" problem-- that advertisement is going to be within the first "informational" window for someone, but maybe there are more efficient ways to not blast it at uninterested audiences.

One other angle might be asking if we still need some markets to be competitive in the first place. You don't need ads if it's a "when you need X, you'll know where to find it" sort of product. If we nationalized the insurance industry alone, we'd probably eliminate a detectable percentage of ad volume.

[PunchyHamster]

The cost of power cost increase alone on industry gonna erase all gains from it.

You can't consider it in vacuum. AI takes limited resources. So far it winded up cost on near every consumer electronics that runs an OS, and it winded up cost of energy that is used by the entire industry and every single customer

It's not just the cost of datacenters, it's cost of infrastructure (that given current direction of US govt will just be paid from people's fucking taxes and bills..) and cost of other industries turning outright unprofitable "thanks" to demands of AI

[jiggawatts]

The $1T number seems more promises than reality, which is closer to the $300B to $500B level. Still a big number, but between a third and a half of the value used in the popular media.

[flextheruler]

These are similar numbers to the dotcom bubble. With GDP growth and the percentage of productivity AI contributes staying the same in this scenario this requires regular gains in revenue or growth. If things just stumble, like with most datacenters going unbuilt the bubble will pop.

[dgellow]

A few things, I think you’re missing the point here

- most tasks do not require the latest frontier models, even if they are a magnitude more intelligent (we don’t actually know if that will be the case). Current Gemini flash is cheap, fast, and pretty capable with good guidance for most tasks

- now that companies pay API costs instead of a subscription they will be setting restrictions on token use to not have their budget explode (like Uber in this submission), that’s a strong incentive to NOT use expensive models, and limit their thinking budget

- there is competitive pressure from China and others who can offer very decent performances at a fraction of the token price

- the price of tokens for the frontier models is likely to go up, but the price to access older models is what depreciates! The overall price per token is going down now that we are in a new world where companies understand that token maxing is one of the stupidest concept ever created by humankind.