[aogaili]

Some people seem to see the world only through bubbles. But if you look at human history, despite the ups and downs, we have a trajectory; generally speaking, human-created systems evolve toward ever-increasing complexity, impact, and efficiency.

The current wave of AI unlocked language - the tools are now speaking and understanding. This, on its own, is astonishing progress. Language is the foundation of our culture and society; it is the very technology that got us, as a species, to where we are today. To have tools that can understand, manipulate, and produce it is a massive leap forward.

Once you see things that way, it is clear that we are not in a bubble; we are in a transition. Yes, there is tons of hype and over-investment, but the demand is real, and so is the impact. Unless you are deep in the tech and have that structural depth, it is easy to dismiss. This is like the invention of the personal computer, but with 100x the impact and speed.

[partiallypro]

The only "bubble" with AI is that the initial build out is cyclical, and many of the high flying chip stocks with no software arms (ala Nvidia's CUDA) will come back to Earth. I think anyone that thinks AI is going away or won't have massive impact (though maybe not in the doomsday scenario) are in complete denial.

[hungryhobbit]

RTFA; it's not about AI's massive impact or lack thereof ... it's about these businesses not having a viable business model that will sustain them (beyond the next couple years).

[cogman10]

I think Zitron's problem is he's equating AI to OpenAI and Anthropic. I'd agree with him that both those businesses are in a dangerous position given how fast they've burnt through cash. However, that's not the entirety of the industry and there are a lot smaller labs doing more for a lot less capital.

The business model does appear to be viable for these labs. But that viability comes because they aren't wasting a bunch of R&D money developing worthless products like AI video production.

[partiallypro]

I did. So, I'm confused how does that negate my comment exactly? Your second complete sentence totally is in conflict with your first btw.

[aogaili]

I admit, I didn't read the whole article; I read a few paragraphs and extrapolated the mindset from which the author operates.

Regarding your comment about the business model—the people in Silicon Valley are not stupid. They know the playbook; we've seen it with social networks. The issue isn't the business model itself; it's that these companies need to dominate the market, and the big players are competing for that on a global scale. It's the exact same playbook that played out in financial systems and social networks, and now it's happening with AI. Once these technologies are deeply integrated into enterprises and the global economy, these players will dominate the market for decades to come.

I can assure you, the people running those companies are smarter than you, me, and the author of this article."

[cogman10]

What I suspect isn't that AI goes somewhere, but I do think that the cutting edge companies like Anthropic and OpenAI are in a very precarious position. They don't have very much of a moat and the competition has been catching up quick while spending a lot less doing so. IMO, the main thing keeping them alive right now is name recognition.

If I were to make a prediction, it's that ultimately these cheaper models are going end up eating their lunch. I don't think they'll make back the money they've invested and once that reality hits investors, those two companies are sunk.

That, however, is not the end of AI. Nor will it be the end of Nvidia/micron/etc. It will more just be a localized bubble pop that doesn't eliminate the product from the market.

[aogaili]

It is not just about cheaper models; it is about integration with the economy.

These models are building deep integrations into companies and the entire economy. Once that stabilizes, it will be like the electricity grid—pumping tokens to fuel decision-making across the entire global society. Good luck unplugging from that.

Furthermore, there is a massive geopolitical aspect to it: those who are already on the Western financial and technical stack will get integrated even deeper now.

[cogman10]

> These models are building deep integrations into companies and the entire economy. Once that stabilizes, it will be like the electricity grid—pumping tokens to fuel decision-making across the entire global society. Good luck unplugging from that.

Much like the electric grid, what we are seeing is a convergence on standard APIs. For example, most of these cheaper models are hosted using APIs compatible with OpenAI. It's not a matter of rewiring your electric plug to work with a different socket standard, instead it's just the process of plugging it into a new socket.

> Furthermore, there is a massive geopolitical aspect to it: those who are already on the Western financial and technical stack will get integrated even deeper now.

Certainly the Chinese models appear to be some of the best when it comes to competition, but they aren't the only ones. There are European models and other US based models which all run for cheaper.

[aogaili]

I see your point, but having worked as a consultant for a few years, I think most companies will opt to stay once things are stable. Once these systems are functional, nobody wants to touch them.

I remember one government project where we wanted to migrate a system from COBOL to a modern stack. The requirement was for the UI to stay exactly the same as the old green terminal; the evaluation criterion was pixel-perfect proximity to the original. We literally had to build terminals using web tech.

These models are not the same as each other. Once they are integrated and working, the incentive to change them is incredibly low. So really, the race is about who can integrate deeper, wider, and faster over the next couple of years—that is what will determine the long-term winners.

This is the exact same playbook we saw with social networks. There is a reason why we have only a handful of them dominating globally, and guess what? It's not because of the tech.

[cogman10]

> the incentive to change them is incredibly low

There is no incentive to rewrite working software in COBOL to something else. You don't really change the people cost of maintaining that code all that much and you incur a huge rewrite cost.

AI is different, it's an ongoing cost to the company. If that cost raises aggressively, you can bet companies will race to eliminate it, no matter how integrated it is. Companies can and do do this all the time.

And the models are close, not the same, but close. That's what matters in LLM stuff in general. If a model is capable of doing the same work for less, it will be chosen. Especially since the switch over cost is often on the level of "point the tool at this URL instead of that URL".

I get what you are saying if this were a more sticky concrete tech that is harder to move away from. But that's simply not the case for these LLMs. A big selling point they have is that they are super flexible.

[partiallypro]

The moat is the infrastructure and lock-in. Similar to AWS or anything else. Small data centers can't compete, and similarly people without massive compute won't be able to either (at least not on the enterprise level.) You might get a few edge models, but for huge businesses they will be using OpenAI and Anthropic (and Google/Microsoft/Amazon, etc).

The biggest competitors aren't small models, they are just the traditional players that already have an "in" with enterprises. That I think will start to show its face once this initial round of buildout is complete, which may not be for another 5+ years.

[cogman10]

> The biggest competitors aren't small models

I disagree. Mainly because those small models are exactly what erode away the moat of needing a giant data center. Those smaller models have been proving themselves to not be far of from the SOTA models.

As OpenAI and Anthropic look to raise their prices, businesses will be much more compelled to looking at cheaper models. And if the narrative is "do the same as you did with OpenAI at 1/20th the cost" that's going to sell to a lot of businesses.

It certainly cuts into what exactly these companies can sell in general. For example, if I wanted to integrate AI into a product I'd almost certainly not chose OpenAI or Anthropic. That's because they are simply way too expensive and what they'd give me is a lot less. We've actually ran into just this. We needed a classifier for a lot of records, we picked a free model because, as you can imagine, we didn't need something as good as what OpenAI and Anthopic offered and free works.

[aogaili]

I share the same perspective.

[throw4847285]

Uhh, citations for all of these claims please.

[aogaili]

Download the tools and use them along with your head? I mean a lot of what I stated there is the obvious.

[aogaili]

You need citations for humanity shared history?

[nozzlegear]

> The current wave of AI unlocked language - the tools are now speaking and understanding. This, on its own, is astonishing progress. Language is the foundation of our culture and society; it is the very technology that got us, as a species, to where we are today.

This is fire erasure

/s

[aogaili]

Agreed haha! our beloved fire.