I've been reading a lot of stories like this lately. I'm no business genius, but you'd assume that investors are. Are they just blind or are they burning cash on purpose. What's the steelman argument here?
Looking at these investments through the lens of traditional businesses (which is the perspective taken by articles like this) won't make sense. It's not until you appreciate the expectation of how disruptive this technology will actually be does any of this make sense.
These people think they're on the verge of creating a technology which, at a minimum, would constitute an unprecedented superweapon (and, at the extreme, would usher in a new era of civilization). Even if you don't buy-in to the take that one of these companies will reach a singularity and create a superintelligence, the cybersecurity implications alone is enough to put these products into a category outside the confines of profitability. We're already starting to see these implications become reality.
If the US NEEDS an advanced AI on an existential level, then it doesn't really matter how much it costs to make or whether or not it can produce a profit. It'll be valuable one a scale where financials like that just don't apply.
> I'm no business genius, but you'd assume that investors are.
Absolutely not a reasonable assumption at all. Most people are not very good at their jobs.
> What's the steelman argument here?
If you're right about your prediction, but wrong about the timing, then you're wrong. The markets can stay irrational longer than you can stay solvent. Meaning, even if you know it's going to crash eventually, you don't know if it's tomorrow or in three years. Betting on stocks going down is extremely risky -- you have to get the timing pretty much exactly right, or you lose everything (potentially much more than you put down, depending on how you do it). Meanwhile, bull positions are basically free money until this point. Getting completely out of the market means you lose to inflation, although many investors have taken this strategy anyway.
These people think they're on the verge of creating a technology which, at a minimum, would constitute an unprecedented superweapon (and, at the extreme, would usher in a new era of civilization). Even if you don't buy-in to the take that one of these companies will reach a singularity and create a superintelligence, the cybersecurity implications alone is enough to put these products into a category outside the confines of profitability. We're already starting to see these implications become reality.
If the US NEEDS an advanced AI on an existential level, then it doesn't really matter how much it costs to make or whether or not it can produce a profit. It'll be valuable one a scale where financials like that just don't apply.