[cmiles8]

Four things are currently correct:

1. There is a huge demand for compute, specifically GPU compute

2. Infrastructure providers are building like crazy, including taking on massive debt to fund this because their own cash flow can’t cover the bills

3. The demand for that compute is broadly being paid for with investor dollars pumping up the valuation of AI companies, not cash flow from said companies. If those subsidies go away these companies can’t pay for the compute they’re buying.

4. Those that own a lot of compute are starting to offload it, looking for interested buyers (e.g., Meta looking to build a cloud biz or SpaceX selling its excess compute to others).

All while advances in open weight models are making it appear that the major labs truly have no model moat.

Put together those 4 things paint a very ugly business and financial picture that seems unlikely to just correct itself naturally. History tells us, very clearly, that “the way out” of such a scenario is a series of events that is likely to leave some of the current players severely damaged if not simply out of business.

[user43928]

About 4:

Does it not make sense to rent out your compute if competitors have a better model and demand at higher prices?

About the moat, Mythos was first made available to customers at the beginning of April. Kimi K3 is still behind this.

Both OpenAI and Anthropic are expected to deploy significant upgrades in August.

[cmiles8]

Being first rarely matters in tech. Fast follow that’s “good enough” and cheaper eats “first” for lunch all day long, and that’s the pattern starting to play out.

[user43928]

They are not good enough.

Anecdotally, I was wrangling GPT 5.5 at work today, trying to get it to implement tests in the same style as a reference project.

I could hardly believe just how dumb GPT 5.5 Medium acted. It took around five turns to iron out the obvious errors and idiotic inventions.

I am curious to evaluate the same use case with Fable or 5.6 Sol, but my 'AI-first' employer only offers access to outdated models at a laughable budget.

[senordevnyc]

Eh, I don’t think there’s any reason to think #3 is true, and the whole thing being a house of cards is predicated on that one.

If the massive demand is still present for compute at market rates (which I believe it is), then your second point is just investors spending cap ex to build out valuable and profitable assets, no problem there.

Time will tell.

[cmiles8]

What evidence says otherwise? OpenAI is projected to have massive losses for years to come and all indications are that’s driven by the cost of compute being far higher than the revenue generated by said compute.