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by throwaway5752 14 days ago
There is a shortage, they are short lived assets. It's a blip and unrelated to their long term profitability and valuation. They can't make a long lived business of building and renting out compute at those margins.

It was definitely a smart business move. It should be troubling to any shareholder than xAI is unable to utilize this infrastructure as renting it out to competitors.
1 comments
gunapologist99 14 days ago
Better not mention your theory to all the other Tier 1 data centers. Or maybe you're saying that it's only AI that's short-lived.
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chris_money202 14 days ago
T1 companies have longer depreciation cycles, they have customers that will use the dated hw for non-frontier work. They can make the capex more justifiable and have flexibility to be more creative about its use. A frontier lab really needs the best hw available at full capacity.
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throwaway5752 14 days ago
Respectfully, I tend to think of tier 1 data centers as someone I'm paying for colocation services and the value they provide is power infrastructure and redundancy, network infrastructure and redundancy, cooling, and physical security.

The shortage I referred to is in GPUs, that's what really being rented here.

Even if GPUs lasted forever, they're are a depreciating asset because they become obsolete with improvements over generations.

GPUs do not last forever, either. I've read here, and heard from others, that they aren't even living up to their 5 year depreciation schedules under production load, closer to 2-3 years.

I use AI all the time. I hope AI isn't short lived. It might be if they can't figure this shit out, or if IPOs like spacex poison public opinion against them first.

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phil21 14 days ago
> GPUs do not last forever, either. I've read here, and heard from others, that they aren't even living up to their 5 year depreciation schedules under production load, closer to 2-3 years

People said this about GPUs during the crypto mining craze and were wrong back then too. While I can’t speak for the entire industry I can say my personal experience follows any normal intuition over solid state electronics.

Some early failures in the bathtub curve, and then you start seeing fans, heat paste, and board capacitors fail far before you start seeing any chip failures at scale.

Sure you can abuse anything you want to burn it out, but I doubt that’s what’s happening inside these facilities.

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