[HN Gopher] How AI conquered the US economy: A visual FAQ
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How AI conquered the US economy: A visual FAQ
Author : rbanffy
Score : 149 points
Date : 2025-08-07 10:12 UTC (12 hours ago)
(HTM) web link (www.derekthompson.org)
(TXT) w3m dump (www.derekthompson.org)
| croes wrote:
| I see hardware and AI companies' revenues rise.
|
| Shouldn't the customers' revenue also rise if AI fulfills its
| productivity promises?
|
| Seems like the only ones getting rich in this gold rush are the
| shovel sellers. Business as usual.
| mewpmewp2 wrote:
| If it's automation it could also reduce costs of the customers.
| But that is a very complex question. It could be that there
| isn't enough competition in AI and so the customers are getting
| only marginal gains while AI company gets the most. It could
| also be that for customers the revenue / profits will be
| delayed as implementation will take time, and it could be
| upfront investment.
| thecupisblue wrote:
| The biggest problem is the inability of corporate middle
| management to actually leverage GenAI.
| sofixa wrote:
| > Shouldn't the customers' revenue also rise if AI fulfills its
| productivity promises
|
| Not necessarily, see the Jevons paradox.
| metalliqaz wrote:
| Applying the Jevons paradox to this scenario should still
| result in revenues going up, assuming the employee labor
| being optimized adds value to the company. (they would add
| more)
| croes wrote:
| Jevron is about higher resource consumption and costs but the
| output and therefore the revenue should rise too.
|
| Maybe not the profit but at least the revenue.
| amunozo wrote:
| This is going to end badly, I am afraid.
| m_ke wrote:
| Could all pop today if GPT5 doesn't benchmark hack hard on some
| new made up task.
| mewpmewp2 wrote:
| I don't expect GPT-5 to be anything special, it seems OpenAI
| hasn't been able to keep its lead, but even current level of
| LLMs to me justifies the market valuations. Of course I might
| eat my words saying that OpenAI is behind, but we'll see.
| apwell23 wrote:
| > I don't expect GPT-5 to be anything special
|
| because ?
| input_sh wrote:
| Because everything past GPT 3.5 has been pretty
| unremarkable? Doubt anyone in the world would be able to
| tell a difference in a blind test between 4.0, 4o, 4.5
| and 4.1.
| apwell23 wrote:
| > Doubt anyone in the world would be able to tell a
| difference in a blind test between 4.0, 4o, 4.5 and 4.1.
|
| But this isn't 4.6 . its 5.
|
| I can tell difference between 3 and 4.
| dwater wrote:
| That's a very Spinal Tap argument for why it will be more
| than just an incremental improvement.
| falcor84 wrote:
| I would absolutely take you on a blind test between 4.0
| and 4.5 - the improvement is significant.
|
| And while I do want your money, we can just look at
| LMArena which does blind testing to arrive at an ELO-
| based score and shows 4.0 to have a score of 1318 while
| 4.5 has a 1438 - it's over twice likely to be judged
| better on an arbitrary prompt, and the difference is more
| significant on coding and reasoning tasks.
| Workaccount2 wrote:
| Well word on the street is that the OSS models released
| this week were Meta-Style benchmaxxed and their real
| world performance is incredibly underwhelming.
| falcor84 wrote:
| I don't see how it would "all pop" - same as with the
| internet bubble, even if the massive valuations disappear, it
| seems clear to me that the technology is already massively
| disruptive and will continue growing its impact on the
| economy even if we never reach AGI.
| m_ke wrote:
| Exactly like the internet bubble. I've been working in Deep
| Learning since 2014 and am very bullish on the technology
| but the trillions of dollars required for the next round of
| scaling will not be there if GPT-5 is not on the
| exponential growth curve that sama has been painting for
| the last few years.
|
| Just like the dot com bubble we'll need to wash out a ton
| of "unicorn" companies selling $1s for $0.50 before we see
| the long term gains.
| falcor84 wrote:
| > Exactly like the internet bubble.
|
| So is this just about a bit of investor money lost?
| Because the internet obviously didn't decline at all
| after 2000, and even the investors who lost a lot but
| stayed in the game likely recouped their money relatively
| quickly. As I see it, the lesson from the dot-com bust is
| that we should stay in the game.
|
| And as for GPT-5 being on the exponential growth curve -
| according to METR, it's well above it:
| https://metr.org/blog/2025-03-19-measuring-ai-ability-to-
| com...
| 0xdde wrote:
| I wouldn't say "well above" when the curve falls well
| within the error bars. I wonder how different the plot
| would look if they reported the median as their point
| estimate rather than mean.
| stackbutterflow wrote:
| Predicting the future is always hard.
|
| But the only thing I've seen in my life that most resembles what
| is happening with AI, the hype, its usefulness beyond the hype,
| vapid projects, solid projects, etc, is the rise of the internet.
|
| Based on this I would say we're in the 1999-2000 era. If it's
| true what does it mean for the future?
| baxtr wrote:
| _" It is difficult to make predictions, especially about the
| future"_ - Yogi Berra (?)
|
| But let's assume we can for a moment.
|
| If we're living in a 1999 moment, then we might be on a Gartner
| Hype Cycle like curve. And I assume we're on the first peak.
|
| Which means that the "trough of disillusionment" will follow.
|
| This is a phase in Hype Cycle, following the initial peak of
| inflated expectations, where interest in a technology wanes as
| it fails to deliver on early promises.
| baggachipz wrote:
| Classic repeat of the Gartner Hype Cycle. This bubble pop will
| dwarf the dot-bomb era. There's also no guarantee that the
| "slope of enlightenment" phase will amount to much beyond
| coding assistants. GenAI in its current form will never be
| reliable enough to do so-called "Agentic" tasks in everyday
| lives.
|
| This bubble also seems to combine the worst of the two huge
| previous bubbles; the hype of the dot-com bubble plus the
| housing bubble in the way of massive data center buildout using
| massive debt and security bundling.
| thecupisblue wrote:
| > GenAI in its current form will never be reliable enough to
| do so-called "Agentic" tasks in everyday lives
|
| No, but GenAI in it's current form is insanely useful and is
| already shifting the productivity gears into a higher level.
| Even without 100% reliable "agentic" task execution and AGI,
| this is already some next level stuff, especially for non-
| technical people.
| ducktective wrote:
| Very simple question:
|
| How do people trust the output of LLMs? In the fields I
| know about, _sometimes_ the answers are impressive,
| _sometimes_ totally wrong (hallucinations). When the answer
| is correct, I always feel like I could have simply googled
| the issue and some variation of the answer lies deep in
| some pages of some forum or stack exchange or reddit.
|
| However, in the fields I'm not familiar with, I'm clueless
| how much I can trust the answer.
| keiferski wrote:
| I get around this by not valuing the AI for its output,
| but for its process.
|
| Treat it like a brilliant but clumsy assistant that does
| tasks for you without complaint - but whose work needs to
| be double checked.
| likium wrote:
| We place plenty of trust with strangers to do their jobs
| to keep society going. What's their error rate? It all
| ends up with the track record, perception and experience
| of the LLMs. Kinda like self-driving cars.
| morpheos137 wrote:
| Strangers have an economic incentive to perform. AI does
| not. What AI program is currently able to modify its
| behavior autonomously to increase its own profitablity?
| Most if not all current public models are simply chat
| bots trained on old data scraped off the web. Wow we have
| created an economy based on cultivated Wikipedia and
| Reddit content from the 2010s linked together by bots
| that can make grammatical sentences and cogent sounding
| paragraphs. Isn't that great? I don't know, about 10
| years ago before google broke itself, I could find
| information on any topic easily and judge its truth using
| my grounded human intelligence better than any AI today.
|
| For one thing AI can not even count. Ask google's AI to
| draw a woman wearing a straw hat. More often than not the
| woman is wearing a well drawn hat while holding another
| in her hand. Why? Frequently she has three arms. Why?
| Tesla self driving vision can't differentiate between the
| sky and a light colored tractor trailer turning across
| traffic resulting in a fatality in Florida.
|
| For something to be intelligent it needs to be able to
| think and evaluate the correctness of its thinking
| correctly. Not just regurgitate old web scrapings.
|
| It is pathetic realy.
|
| Show me one application where black box LLM ai is
| generating a profit that an effectively trained human or
| rules based system couldn't do better.
|
| Even if AI is able to replace a human in some tasks this
| is not a good thing for a consumption based economy with
| an already low labor force participation rate.
|
| During the first industrial revolution human labor was
| scarce so machines could economically replace and augnent
| labor and raise standards of living. In the present time
| labor is not scarce so automation is a solution in search
| of a problem and a problem itself if it increasingly
| leads to unemployment without universal bssic income to
| support consumption. If your economy produces too much
| with nobody to buy it then economic contraction follows.
| Already young people today struggle to buy a house.
| Instead of investing in chat bots maybe our economy
| should be employing more people in building trades and
| production occupations where they can earn an income to
| support consumption including of durable items like a
| house or a car. Instead because of the fomo and hype
| about AI investors are looking for greater returns by
| directing money toward scifi fantasy and when that
| doesn't materialize an economic contraction will result.
| likium wrote:
| My point is humans make mistakes too, and we trust them,
| not because we inspect everything they say or do, but
| from how society is set up.
|
| I'm not sure how up to date you are but most AIs with
| tool calling can do math. Image generation hasn't been
| generating weird stuff since last year. Waymo sees >82%
| fewer injuries/crashes than human drivers[1].
|
| RL _is_ modifying its behavior to increase its own
| profitability, and companies training these models will
| optimize for revenue when the wallet runs dry.
|
| I do feel the bit about being economically replaced. As a
| frontend-focused dev, nowadays LLMs can run circles
| around me. I'm uncertain where we go, but I would hate
| for people to have to do menial jobs just to make a
| living.
|
| [1]: https://www.theverge.com/news/658952/waymo-injury-
| prevention...
| bluefirebrand wrote:
| > My point is humans make mistakes too, and we trust
| them,
|
| We trust them because they are intrinsically and
| extrinsically motivated not to mess up
|
| AI has no motivation
| rwmj wrote:
| When it really matters, professionals have insurance that
| pays out when they screw up.
| likium wrote:
| I do believe that's where we're heading, people holding
| jobs to hold accountability for AI.
| jcranmer wrote:
| One of the most amusing things to me is the amount of AI
| testimonials that basically go "once I help the AI over
| the things I know that it struggles with, when it gets to
| the things I don't know, wow, it's amazing at how much it
| knows and can do!" It's not so much Gell-Mann amnesia as
| it is Gell-Mann whiplash.
| threetonesun wrote:
| There's a few cases:
|
| 1. For coding, and the reason coders are so excited about
| GenAI is it can often be 90% right, but it's doing all of
| the writing and researching for me. If I can reduce how
| much I need to actually type/write to more
| reviewing/editing, that's a huge improvement day to day.
| And the other 10% can be covered by tests or adding human
| code to verify correctness.
|
| 2. There are cases where 90% right is better than the
| current state. Go look at Amazon product descriptions,
| especially things sold from Asia in the United States.
| They're probably closer to 50% or 70% right. An LLM being
| "less wrong" is actually an improvement, and while you
| might argue a product description should simply be
| correct, the market already disagrees with you.
|
| 3. For something like a medical question, the magic is
| really just taking plain language questions and giving
| concise results. As you said, you can find this in Google
| / other search engines, but they dropped the ball so
| badly on summaries and aggregating content in favor of
| serving ads that people immediately saw the value of AI
| chat interfaces. Should you trust what it tells you?
| Absolutely not! But in terms of "give me a concise answer
| to the question as I asked it" it is a step above
| traditional searches. Is the information wrong? Maybe!
| But I'd argue that if you wanted to ask your doctor about
| something that quick LLM response might be better than
| what you'd find on Internet forums.
| dsign wrote:
| This is true.
|
| But I've seen some harnesses (i.e., whatever Gemini Pro
| uses) do impressive things. The way I model it is like
| this: an LLM, like a person, has a chance to produce
| wrong output. A quorum of people and some
| experiments/study usually arrives to a "less wrong"
| answer. The same can be done with an LLM, and to an
| extent, is being done by things like Gemini Pro and o3
| and their agentic "eyes" and "arms". As the price of
| hardware and compute goes down (if it does, which is a
| big "if"), harnesses will become better by being able to
| deploy more computation, even if the LLM models
| themselves remain at their current level.
|
| Here's an example: there is a certain kind of work we
| haven't quite yet figured how to have LLMs do: creating
| frameworks and sticking to them, e.g. creating and
| structuring a codebase in a consistent way. But, in
| theory, if one could have 10 instances of an LLM
| "discuss" if a function in code conforms to an agreed
| convention, well, that would solve that problem.
|
| There are also avenues of improvement that open with more
| computation. Namely, today we use "one-shot" models...
| you train them, then you use them many times. But the
| structure, the weights of the model aren't being
| retrained on the output of their actions. Doing that in a
| per-model-instance basis is also a matter of having
| sufficient computation at some affordable price. Doing
| that in a per-model basis is practical already today, the
| only limitation are legal terms, NDAs, and regulation.
|
| I say all of this objectively. I don't like where this is
| going; I think this is going to take us to a wild world
| where most things are gonna be way tougher for us humans.
| But I don't want to (be forced to) enter that world
| wearing rosy lenses.
| svara wrote:
| This is really strange to me...
|
| Of course you don't trust the answer.
|
| That doesn't mean you can't work with it.
|
| One of the key use cases for me other than coding is as a
| much better search engine.
|
| You can ask a really detailed and specific question that
| would be really hard to Google, and o3 or whatever high
| end model will know a lot about exactly this question.
|
| It's up to you as a thinking human to decide what to do
| with that. You can use that as a starting point for in
| depth literature research, think through the arguments it
| makes from first principles, follow it up with Google
| searches for key terms it surfaces...
|
| There's a whole class of searches I would never have done
| on Google because they would have taken half a day to do
| properly that you can do in fifteen minutes like this.
| dfedbeef wrote:
| Such as
| svara wrote:
| I went through my ChatGPT history to pick a few examples
| that I'm both comfortable sharing and that illustrate the
| use-case well:
|
| > There are some classic supply chain challenges such as
| the bullwhip effect. How come modern supply chains seem
| so resilient? Such effects don't really seem to occur
| anymore, at least not in big volume products.
|
| > When the US used nuclear weapons against Japan, did
| Japan know what it was? That is, did they understood the
| possibility in principle of a weapon based on a nuclear
| chain reaction?
|
| > As of July 2025, equities have shown a remarkable
| resilience since the great financial crisis. Even COVID
| was only a temporary issue in equity prices. What are the
| main macroeconomic reasons behind this strength of
| equities.
|
| > If I have two consecutive legs of my air trip booked on
| separate tickets, but it's the same airline (also answer
| this for same alliance), will they allow me to check my
| baggage to the final destination across the two tickets?
|
| > what would be the primary naics code for the business
| with website at [redacted]
|
| I probably wouldn't have bothered to search any of these
| on Google because it would just have been too tedious.
|
| With the airline one, for example, the goal is to get a
| number of relevant links directly to various airline's
| official regulations, which o3 did successfully (along
| with some IATA regulations).
|
| For something like the first or second, the goal is to
| surface the names of the relevant people / theories
| involved, so that you know where to dig if you wish.
| thecupisblue wrote:
| If you are a subject matter expert, as is expected to be
| of the person working on the task, then you will
| recognise the issue.
|
| Otherwise, common sense, quick google search or let
| another LLM evaluate it.
| simianwords wrote:
| Your internal verifier model in your head is actually
| good enough and not random. It knows how the world works
| and subconsciously applies a lot of sniff tests it has
| learned over the years.
|
| Sure a lot of answers from llms may be inaccurate - but
| you mostly identify them as such because your ability to
| verify (using various heuristics) is good too.
|
| Do you learn from asking people advice? Do you learn from
| reading comments on Reddit? You still do without trusting
| them fully because you have sniff tests.
| bluefirebrand wrote:
| > You still do without trusting them fully because you
| have sniff tests
|
| LLMs produce way too much noise and way too inconsistent
| quality for a sniff test to be terribly valuable in my
| opinion
| lm28469 wrote:
| > especially for non-technical people.
|
| The people who use llms to write reports for other people
| who use llms to read said reports ? It may alleviate a few
| pain points but it generates an insane amount of useless
| noise
| thecupisblue wrote:
| Considering they were already creating useless noise,
| they can create it faster now.
|
| But once you get out of the tech circles and bullshit
| jobs, there is a lot of quality usage, as much as there
| is shit usage. I've met everyone from lawyers and doctors
| to architects and accountants who are using some form of
| GenAI actively in their work.
|
| Yes, it makes mistakes, yes, it hallucinates, but it gets
| a lot of fluff work out of the way, letting people deal
| with actual problems.
| brookst wrote:
| The Internet in its 1999 form was never going to be fast
| enough or secure enough to support commerce, banking, or
| business operations.
| falcor84 wrote:
| Exactly, it took an evolution, but there was no
| discontinuity. At some point, things evolved enough for
| people like Tim O'Reilly to say that we know have "Web
| 2.0", but it was all just small steps by people like those
| of us here on this thread, gradually making things better
| and more reliable.
| ben_w wrote:
| Mm. Partial agree, partial disagree.
|
| These things, as they are right now, are essentially at the
| performance level of an intern or recent graduate in
| approximately all academic topics (but not necessarily
| practical topics), that can run on high-end consumer
| hardware. The learning curves suggest to me limited
| opportunities for further quality improvements within the
| foreseeable future... though "foreseeable future" here means
| "18 months".
|
| I definitely agree it's a bubble. Many of these companies are
| priced with the assumption that they get most of the market;
| they obviously can't _all_ get most of the market, and
| because these models are accessible to the upper end of
| consumer hardware, there 's a reasonable chance _none_ of
| them will be able to capture any of the market because open
| models will be zero cost and the inference hardware is
| something you had anyway so it 's all running locally.
|
| Other than that, to the extent that I agree with you that:
|
| > GenAI in its current form will never be reliable enough to
| do so-called "Agentic" tasks in everyday lives
|
| I do so only in that not everyone wants (or would even
| benefit from) a book-smart-no-practical-experience intern,
| and not all economic tasks are such that book-smarts count
| for much anyway. This set of AI advancements didn't suddenly
| cause all cars manufacturers to suddenly agree that this was
| the one weird trick holding back level 5 self driving, for
| example.
|
| But for those of us who can make use of them, these models
| are already useful (and, like all power tools, dangerous when
| used incautiously) beyond merely being coding assistants.
| Traubenfuchs wrote:
| I fully agree that there will be a pop, there must be.
| Current evaluations and investments are based on monumentally
| society destroying assumptions. But with every disappointing,
| incremental and non evolutionary model generation the chance
| increases that the world at large realizes that those
| assumptions are wrong.
|
| What should I do with my ETF? Sell now, wait for the
| inevitable crash? Be all modern long term investment style:
| "just keep invested what you don't need in the next 10 years
| bro"?
|
| This really keeps me up at night.
| keiferski wrote:
| Well, there's a fundamental difference: the Internet blew up
| because it enabled people to connect with each other more
| easily: culturally, economically, politically.
|
| AI is more-or-less replacing people, not connecting them. In
| many cases this is economically valuable, but in others I think
| it just pushes the human connection into another venue. I
| wouldn't be surprised if in-person meetup groups really make a
| comeback, for example.
|
| So if a prediction about AI involves it replacing human
| cultural activities (say, the idea that YouTube will just be
| replaced by AI videos and real people will be left out of a
| job), then I'm quite bearish. People will find other ways to
| connect with each other instead.
| dfedbeef wrote:
| There's also the difference that the internet worked.
| justonceokay wrote:
| In a classically disruptive way, the internet provided an
| existing service (information exchange) in a way that was
| in many ways far less pleasant than existing channels
| (newspapers, libraries, phone). Remember that the early
| Internet was mostly text, very low resolution, un
| credentialed, flaky, expensive, and too technical for most
| people.
|
| The only reason that we can have such nice things today
| like retina display screens and live video and secure
| payment processing is because the original Internet
| provided enough value without these things.
|
| In my first and maybe only ever comment on this website
| defending AI, I do believe that in 30 or 40 years we might
| see this first wave of generative AI in a similar way to
| the early Internet.
| LinuxAmbulance wrote:
| Businesses are overly optimistic about AI replacing people.
|
| For very simple jobs, like working in a call center? Sure.
|
| But the vast majority of all jobs aren't ones that AI can
| replace. Anything that requires any amount of context
| sensitive human decision making, for example.
|
| There's no way that AI can deliver on the hype we have now,
| and it's going to crash. The only question is how hard - a
| whimper or a bang?
| api wrote:
| I too lived through the dot.com bubble and AI feels _identical_
| in so many ways.
|
| AI is real just like the net was real, but the current
| environment is very bubbly and will probably crash.
| thewebguyd wrote:
| It definitely feels identical. We had companies that never
| had any hope of being profitable (or even doing anything
| related to the early internet to begin with), but put .com in
| your name and suddenly you are flooded with hype and cash.
|
| Same thing now with AI. The capital is going to dry up
| eventually, no one is profitable right now and its
| questionable whether or not they can be at a price consumers
| would be willing or able to pay.
|
| Models are going to become a commodity, just being an "AI
| Company" isn't a moat and yet every one of the big names are
| being invested in as if they are going to capture the entire
| market, or if there even will be a market in the first place.
|
| Investors are going to get nervous, eventually, and start
| expecting a return, just like .com. Once everyone realizes
| AGI isn't going to happen, and realize you aren't going to
| meet the expected return running a $200/month chatbot, it'll
| be game over.
| hnhg wrote:
| I found this the most interesting part of the whole essay - "the
| ten largest companies in the S&P 500 have so dominated net income
| growth in the last six years that it's becoming more useful to
| think about an S&P 10 vs an S&P 490" - which then took me here:
| https://insight-public.sgmarkets.com/quant-motion-pictures/o...
|
| Can anyone shed light on what is going on between these two
| groups. I wasn't convinced by the rest of the argument in the
| article, and I would like something that didn't just rely on "AI"
| as an explanation.
| rogerkirkness wrote:
| Winner takes most is now true at the global economy level.
| moi2388 wrote:
| They are 40% of the S&P 500, so it makes sense that they are
| primary drivers of its growth.
|
| They are also all tech companies, which had a really amazing
| run during Covid.
|
| They also resemble companies with growth potential, whereas
| other companies such as P&G or Walmart might've saturated their
| market already
| andsoitis wrote:
| > They are also all tech companies, which had a really
| amazing run during Covid.
|
| Only 8 out of the 10 are. Berkshire and JP Morgan are not. It
| is also arguable whether Tesla is a tech company or whether
| it is a car company.
| ahmeneeroe-v2 wrote:
| Berkshire holds ~$60B+ of Apple and is also exposed to AI
| through its power-utility arm, Berkshire Hathaway Energy.
| andsoitis wrote:
| > Berkshire holds ~$60B+ of Apple and is also exposed to
| AI through its power-utility arm, Berkshire Hathaway
| Energy.
|
| Apple is 22% of BRK's holdings. The next biggest of their
| investments are Amex, BoA, Coke, Chevron.
|
| They are not a tech company.
| ahmeneeroe-v2 wrote:
| BRK has significant AI exposure through both Apple and
| Berkshire Hathaway Energy. So while they are _not_ a tech
| company, they have more exposure to the AI boom than
| basically any other non-tech company.
| nowayno583 wrote:
| It is a very complex phenomenon, with no single driving force.
| The usual culprit is uncertainty, which itself can have a ton
| of root causes (say, tariffs changing every few weeks, or
| higher inflation due to government subsidies).
|
| In more uncertain scenarios small companies can't take risks as
| well as big companies. The last 2 years have seen AI, which is
| a large risk these big companies invested in, pay off. But due
| to uncertainty smallish companies couldn't capitalize.
|
| But that's only one possible explanation!
| automatic6131 wrote:
| > The last 2 years have seen AI, which is a large risk these
| big companies invested in, pay off
|
| LOL. It's paying off right now, because There Is No
| Alternative. But at some point, the companies and investors
| are going to want to make back these hundreds of billions.
| And the only people making money are Nvidia, and sort-of
| Microsoft through selling more Azure.
|
| Once it becomes clear that there's no trillion dollar
| industry in cheating-at-homework-for-schoolkids, and nvidia
| stop selling more in year X than X-1, very quickly will
| people realize that the last 2 years have been a massive
| bubble.
| nowayno583 wrote:
| That's a very out of the money view! If you are right you
| could make some very good money!
| automatic6131 wrote:
| No as you and I both know - I can't. Because it's a
| qualitative view, and not a quantitative one. I would
| need to know _when_, quite precisely, I will turn out to
| be right.
|
| And I don't know, because I have about 60 minutes a week
| to think about this, and also good quantitative market
| analysis is really hard.
|
| So whilst it may sound like a good reposte to go "wow, I
| bet you make so much money shorting!" knowing that I
| don't and can't, it's also facile. Because I don't mind
| if I'm right in 12, 24 or 60 months. Fwiw, I thought I'd
| be right in 12 months, 12 months ago. Oops. Good thing I
| didn't attempt to "make money" in an endeavor where the
| upside is 100% of your wager, and the downside
| theoretically infinite.
| nowayno583 wrote:
| Your reasoning is correct if you think about negotiating
| options, or going all in on a trade, but its not quite
| right for stocks. The borrowing rates for MSFT and NVDA -
| even for a retail investor - are less than 1% yearly. So
| if your view is right you could hold a short on them for
| years. The market cap for these companies has already
| incorporated a large capex investment for AI DCs. As long
| as you use a reasonable rebalancing strategy, and you are
| right that their current investment in AI will not pay
| off, you will make money.
|
| Mind you, this is a view that exists - a few large hedge
| funds and sell side firms currently hold negative
| positions/views on these companies.
|
| However, the fact of the matter is, fewer people are
| willing to take that bet than the opposite view. So it is
| reasonable to state that view with care.
|
| You might be right at the end of the day, but it is very
| much not obvious that this bet has not (or will not) pay
| off.
| foolswisdom wrote:
| The primary goal of big companies is (/has become) maintaining
| market dominance, but this doesn't always translate to a well
| run business with great profits, it depends on internal and
| external factors. Maybe profits should have actually gone down
| due to tarrifs and uncertainty but the big companies have kept
| profit stable.
| andsoitis wrote:
| > Maybe profits should have actually gone down due to tarrifs
| and uncertainty but the big companies have kept profit
| stable.
|
| If you're referencing Trump's tariffs, they have only come
| into effect now, so the economic effects will be felt in the
| months and years ahead.
| whitej125 wrote:
| That which might be of additional interest... look at how the
| top 10 of the S&P 500 has changed over the decades[1].
|
| At any point in time the world thinks that those top 10 are
| unstoppable. In the 90's and early 00's... GE was unstoppable
| and the executive world was filled with acolytes of Jack Welch.
| Yet here we are.
|
| Five years ago I think a lot of us saw Apple and Google and
| Microsoft as unstoppable. But 5-10 years from now I bet you
| we'll see new logos in the top 10. NVDA is already there. Is
| Apple going to continue dominance or go the way of Sony? Is the
| business model of the internet changing such that Google can't
| react quick enough. Will OpenAI go public (or any foundational
| model player).
|
| I don't know what the future will be but I'm pretty sure it
| will be different.
|
| [1] https://www.visualcapitalist.com/ranked-the-largest-
| sp-500-c...
| onlyrealcuzzo wrote:
| There was always some subset of the S&P that mattered way
| more than the rest, just like the S&P matters way more than
| the Russel.
|
| Typically, you probably need to go down to the S&P 25 rather
| than the S&P 10.
| k-i-r-t-h-i wrote:
| power law explains the distribution, but the distribution is
| getting more extreme over the years, likely due to (market
| structure, macro conditions, tech economics, etc)
| snitzr wrote:
| Billion-dollar Clippy.
| PessimalDecimal wrote:
| Trillions, right?
| freetonik wrote:
| Interesting that the profits of those bottom 490 companies of S&P
| 500 do not rise with the help of AI technology, which is
| supposedly sold to them at a reduced rate as AI vendors are
| bleeding money.
| roncesvalles wrote:
| Other than NVIDIA, the profits of the S&P 10 haven't risen
| either. It's just that the market is pricing them very
| optimistically.
|
| IMO this is an extremely scary situation in the stock market.
| The AI bubble burst is going to be more painful than the Dotcom
| bubble burst. Note that an "AI bubble burst" doesn't
| necessitate a belief that AI is "useless" -- the Internet
| wasn't useless and the Dotcom burst still happened. The market
| can crash when it froths up too early even though the
| optimistic hypotheses driving the froth actually do come true
| eventually.
| Workaccount2 wrote:
| We are still in the "land grab" phase where companies are
| offering generous AI plans to capture users.
|
| Once users get hooked on AI and it becomes an indispensable
| companion for doing whatever, these companies will start
| charging the true cost of using these models.
|
| It would not be surprising if the $20 plans of today are
| actually just introductory rate $70 plans.
| esafak wrote:
| I'd be surprised because (free) open source are continually
| closing the gap, exerting downward pressure on the price.
| Workaccount2 wrote:
| I don't think it will be much of an issue for large
| providers, anymore than open source software has ever
| been a concern for Microsoft. The AI market is the
| entirety of the population, not just the small sliver who
| knows what "VRAM" means and is willing to spend thousands
| on hardware.
| esafak wrote:
| You can get open source models hosted for cheap too;
| e.g., through OpenRouter, AWS Bedrock, etc. You do not
| have to run it yourself.
| jayd16 wrote:
| > anymore than open source software has ever been a
| concern for Microsoft.
|
| So a big concern then? (Although not a death sentence)
| jononor wrote:
| The modern Microsoft with Azure, Office360, etc is not
| much threatened by open source software. Especially with
| Azure, open source is a fantastic compliment which they
| would like the world to produce as much of as possible.
| The same with AI models. They would look at charge for AI
| hosting and services, at premium due to already being
| integrated in businesses. They are going to bundle it
| with all their existing moneymakers, and then just jack
| up the price. No sale needed, just a bump in the invoices
| that are flowing anyway.
| const_cast wrote:
| They're definitely very threatened by open source - a lot
| of software infrastructure these days is built off of
| open source software. In the 2000s, it wasn't. It was
| Microsoft, MSS, COM, Windows server, etc all the way
| down. Microsoft has basically been earned alive by open
| source software, it's just hard to tell because they were
| so huge that, even taken down a few pegs, they're still
| big.
|
| Even today, Azure and AWS are not really cheaper or
| better - for most situations, they're more expensive, and
| less flexible than what can be done with OS
| infrastructure. For companies who are successful making
| software, Azure is more of a kneecap and a regret. Many
| switch away from cloud, despite that process being
| deliberately painful - a shocking mirror of how it was
| switching away from Microsoft infrastructure of the past.
| cg5280 wrote:
| Hopefully we see enough efficiency gains over time that
| this is true. The models I can run on my (expensive)
| local hardware are pretty terrible compared to the free
| models provided by Big LLM. I would hate to be chained to
| hardware I can't afford forever.
| aDyslecticCrow wrote:
| The breakthrough of diffusion for tolken generation
| bumped down compute alot. But there are no local open
| sources versions yet.
|
| Distillation for specialisation can also raise the
| capacity of the local models if we need it for specific
| things.
|
| So its chugging along nicely.
| pegasus wrote:
| They're not really free, someone still has to pay for the
| compute cost.
| andsoitis wrote:
| > Other than NVIDIA, the profits of the S&P 10 haven't risen
| either.
|
| That's not correct. Did you mean something else?
| jayd16 wrote:
| I'm curious to see the bubble burst. I personally don't think
| it will be anything like the dotcom era.
|
| The benefits have just not been that wide ranging to the
| average person. Maybe I'm wrong but, I don't AI hype as a
| cornerstone of US jobs, so there's no jobs to suddenly dry
| up. The big companies are still flush with cash on hand,
| aren't they?
|
| If/when the fad dies I'd think it would die with a wimper.
| aDyslecticCrow wrote:
| I think AI has great potential to change as much as the
| internet. But i dont consider LLMs to be the right type to
| do that.
|
| Self driving cars and intelligent robotics is the real
| goldmine. But we still don't seem to have the right
| architecture or methods.
|
| I say that because self driving cars are entirely stagnant
| despite the boom AI interest and resources.
|
| Personally i think we need a major breakthrough in
| reinforcement learning, computer vision (which are still
| mostly stuck at feed forward CNNs) and few shot learning.
| The tranformer is a major leap, but its not enough on its
| own.
| onlyrealcuzzo wrote:
| We'll never know what would've happened without AI.
|
| 1. There profits could otherwise be down.
|
| 2. The plan might be to invest a bunch up front in severance
| and AI Integration that is _supposed_ to pay off in the future.
|
| 3. In the future that may or may not happen, and it'll be hard
| to tell, because it may pay off at the same time an otherwise
| recession is hitting, which smoothes it out.
|
| It's almost as if it's not that simple.
| andsoitis wrote:
| > Artificial intelligence has a few simple ingredients: computer
| chips, racks of servers in data centers, huge amounts of
| electricity, and networking and cooling systems that keep
| everything running without overheating.
|
| What about the software? What about the data? What about the
| models?
| dsign wrote:
| I don't think AI is having much impact on the bits of the economy
| that have to do with labor and consumption. Folk who are getting
| displaced by AI are, for now, probably being re-hired to fix AI
| mess-ups later.
|
| But if, or when AI gets a little better, then we will start to
| see a much more pronounced impact. The thing competent AIs will
| do is to super-charge the rate at which profits don't go to labor
| nor to social security, and this time they will have a legit
| reason: "you really didn't use any humans to pave the roads that
| my autonomous trucks use. Why should I pay for medical expenses
| for the humans, and generally for the well-being of their pesky
| flesh? You want to shutdown our digital CEO? You first need to
| break through our lines of (digital) lawyers and ChatGPT-
| dependent bought politicians."
| tehjoker wrote:
| Well, if you don't use humans, then you're using machine labor
| that will drive prices down to at-cost in a competitive
| environment and strip profits in the end. Profits come from
| underpaying labor.
| OtherShrezzing wrote:
| >Without AI, US economic growth would be meager.
|
| The assumption here is that, without AI, none of that capital
| would have been deployed anywhere. That intuitively doesn't sound
| realistic. The article follows on with:
|
| >In the last two years, about 60 percent of the stock market's
| growth has come from AI-related companies, such as Microsoft,
| Nvidia, and Meta.
|
| Which is a statement that's been broadly true since 2020, long
| before ChatGPT started the current boom. We had the Magnificent
| Seven, and before that the FAANG group. The US stock market has
| been tightly concentrated around a few small groups for a decades
| now.
|
| >You see it in the business data. According to Stripe, firms that
| self-describe as "AI companies" are dominating revenue growth on
| the platform, and they're far surpassing the growth rate of any
| other group.
|
| The current Venn Diagram of "startups" and "AI companies" is two
| mostly concentric circles. Again, you could have written the
| following statement at any time in the last four decades:
|
| > According to [datasource], firms that self-describe as
| "startups" are dominating revenue growth on the platform, and
| they're far surpassing the growth rate of any other group.
| biophysboy wrote:
| Its also not fair to compare AI firms with others using growth
| because AI is a novel technology. Why would there be explosive
| growth in rideshare apps when its a mature niche with
| established incumbents?
| dragontamer wrote:
| I think the explosive growth that people want is in
| manufacturing. Ex: US screws, bolts, rivets, dies, pcbs,
| assembly and such.
|
| The dollars are being diverted elsewhere.
|
| Intel a chip maker who can directly serve the AI boom, has
| failed to deploy its 2nm or 1.8nm fabs and instead written
| them off. The next generation fabs are failing. So even as AI
| gets a lot of dollars it doesn't seem to be going to the
| correct places.
| biophysboy wrote:
| They're not going to get it. The political economy of East
| Asia is simply better suited for advanced manufacturing.
| The US wants the manufacturing of East Asia without its
| politics. Sometimes for good reason - being an export
| economy has its downsides!
| dragontamer wrote:
| Taiwan isn't some backwater island making low skilled
| items.
|
| USA lost mass manufacturing (screws and rivets and
| zippers), but now we are losing cream of the crop world
| class manufacturing (Intel vs TSMC).
|
| If we cannot manufacture then we likely cannot win the
| next war. That's the politics at play. The last major war
| between industrialized nations shows that technology and
| manufacturing was the key to success. Now I don't think
| USA has to manufacture all by itself, but it needs a
| reasonable plan to get every critical component in our
| supply chain.
|
| In WW2, that pretty much all came down to ball bearings.
| The future is hard to predict but maybe it's chips next
| time.
|
| Maybe we give up on the cheapest of screws or nails. But
| we need to hold onto elite status on some item.
| biophysboy wrote:
| > Taiwan isn't some backwater island making low skilled
| items.
|
| Definitely not! Wasn't trying to imply this.
|
| > If we cannot manufacture then we likely cannot win the
| next war.
|
| If you think a war is imminent (a big claim!), then our
| only chance is to partner with specialized allies that
| set up shop here (e.g. Taiwan, Japan, South Korea).
| Trying to resurrect Intel's vertically integrated
| business model to compete with TSMC's contractor model is
| a mistake, IMO.
| dangus wrote:
| I think this is a gross oversimplification and an
| incorrect assessment of the US' economic manufacturing
| capabilities.
|
| The US completely controls critical steps of the chip
| making process as well as the production of the
| intellectual property needed to produce competitive
| chips, and the lithography machines are controlled by a
| close ally that would abide by US sanctions.
|
| The actual war planes and ships and missiles are of
| course still built in the USA. Modern warfare with stuff
| that China makes like drones and batteries only gets you
| so far. They can't make a commercially competitive
| aviation jet engine without US and Western European
| suppliers.
|
| And the US/NAFTA has a ton of existing manufacturing
| capability in a lot of the "screws and rivets"
| categories. For example, there are lots of automotive
| parts and assembly companies in the US. The industry
| isn't as big as it used to be but it's still significant.
| The US is the largest manufacturing exporter besides
| China.
| geodel wrote:
| Indeed. Just now our kid's therapist told us they are
| moving out from current school district because some
| chemical plant is coming up near by. More than pollution
| it is the attitude that any kind physical product factory
| is blight on Disney-fied suburbia and its white collar
| folks.
| thrance wrote:
| > > Without AI, US economic growth would be meager.
|
| > The assumption here is that, without AI, none of that capital
| would have been deployed anywhere. That intuitively doesn't
| sound realistic.
|
| That's the really damning thing about all of this, maybe all
| this capital could have been invested into actually growing the
| economy instead of fueling this speculation bubble that will
| burst sooner or later, bringing along any illusion of growth
| into its demise.
| ryandrake wrote:
| Or all that money might have been churning around chasing
| other speculative technologies. Or it might have been sitting
| in US Treasuries making 5% waiting for something promising.
| Who knows what is happening in the parallel alternate
| universe? Right now, it feels like everyone is just spamming
| dollars and hoping that AI actually becomes a big industry,
| to justify all of this economic activity. I'm reminded of
| Danny DeVito's character's speech in the movie _Other People
| 's Money_, after the company's president made an impassioned
| speech about why its investors should keep investing:
|
| "Amen. And amen. And amen. You have to forgive me. I'm not
| familiar with the local custom. Where I come from, you always
| say "Amen" after you hear a prayer. Because that's what you
| just heard - a prayer."
|
| At this point, everyone is just praying that AI ends up a net
| positive, rather than bursting and plunging the world into a
| 5+ year recession.
| justonceokay wrote:
| If the economy in my life has taught me anything, it's that
| there will always be another bubble. The Innovators Dilemma
| mentions that bubbles aren't even a bad thing in the sense
| that useful technologies are often made during them, it's
| just that the market is messy and lots of people end up
| invested in the bubble. It's the "throw spaghetti at the
| wall" approach to market growth. Not too different than
| evolution, in which most mutations are useless but all
| mutations have the potential to be transformative.
| onlyrealcuzzo wrote:
| 1. People aren't going to take on risk and deploy capital if
| they can't get a return.
|
| 2. If people _think_ they can get an abnormally high return,
| they will invest more than otherwise.
|
| 3. Whatever other money would've got invested would've gone
| wherever it could've gotten the highest returns, which is
| unlikely to have the same ratio as US AI investments - the big
| tech companies did share repurchases for a decade because they
| didn't have any more R&D to invest in (according to their
| shareholders).
|
| So while it's unlikely the US would've had $0 investment if not
| for AI, it's probably even less likely we would've had just as
| much investment.
| jayd16 wrote:
| Why is it "unlikely" that the alternative is not US
| investment by these US companies?
|
| The big US software firms have the cash and they would invest
| in whatever the market fad is, and thus, bring it into the US
| economy.
| onlyrealcuzzo wrote:
| No - traditionally they return it as share buybacks,
| because they don't have any good investments.
| jlarocco wrote:
| > it's probably even less likely we would've had just as much
| investment.
|
| I doubt it. Investors aren't going to just sit on money and
| let it lose value to inflation.
|
| On the other hand, you could claim non-AI companies wouldn't
| start a new bubble, so there'd be fewer returns to reinvest,
| and that might be true, but it's kind of circular.
| onlyrealcuzzo wrote:
| Correct - that's why you'd put it in Treasuries which have
| a positive real return for the first time in ~25 years -
| or, as I mentioned elsewhere - invest it somewhere else if
| you see a better option.
| monocasa wrote:
| From a certain macro perspective, of no one is going to
| beat the Treasury, where is the Treasury going to get
| that money?
| BobbyJo wrote:
| Which is an even better argument when you look at how
| yields have been behaving. AI is sucking the air out of
| the room.
| metalliqaz wrote:
| > 1. People aren't going to take on risk and deploy capital
| if they can't get a return.
|
| This doesn't seem to align with the behavior I've observed in
| modern VCs. It truly amazes me the kind of money that gets
| deployed into silly things that are long shots _at best_.
| disgruntledphd2 wrote:
| When you think about all of VC being like 1% of a mostly
| boring portfolio it makes more sense (from the perspective
| of the people putting the money in).
| bayarearefugee wrote:
| > 1. People aren't going to take on risk and deploy capital
| if they can't get a return.
|
| > 2. If people think they can get an abnormally high return,
| they will invest more than otherwise.
|
| Sounds like a good argument for wealth taxes to limit this
| natural hoarding of wealth absent unreasonably good returns.
| thiago_fm wrote:
| I agree, in any time in US history there has always been those
| 5-10 companies leading the economic progress.
|
| This is very common, and this happens in literally every
| country.
|
| But their CAPEX would be much smaller, as if you look at
| current CAPEX from Big Tech, most of it are from NVidia GPUs.
|
| If a Bubble is happening, when it pops, the depreciation
| applied to all that NVidia hardware will absolute melt the
| balance sheet and earnings of all Cloud companies, or companies
| building their own Data centers like Meta and X.ai
| rsanek wrote:
| >assumption here is that, without AI, none of that capital
| would have been deployed anywhere. That intuitively doesn't
| sound realistic
|
| For the longest time, capex at FAANG was quite low. These
| companies are clearly responding specifically to AI. I don't
| think it's realistic to expect that they would raise capex for
| no reason.
|
| >a statement that's been broadly true since 2020, long before
| ChatGPT started the current boom
|
| I guess it depends on your definition of "long before," but the
| ChatGPT release is about mid-way between now and 2020.
|
| As for the startup vs. AI company point, have you read Stripe's
| whitepaper on this? They go into detail on how it seems like AI
| companies are indeed a different breed. https://stripe.com/en-
| br/lp/indexingai
| trod1234 wrote:
| The sunsetting of research tax breaks would explain why they
| threw everything into this.
|
| They also view labor as a replaceable cost, as most
| accountant based companies that no longer innovate act. They
| forget that if you don't hire people, and pay people, you
| don't have any sales demand and this grows worse as the
| overall concentration or intensity of money in few hands
| grows. Most AI companies are funded on extreme leverage from
| banks that are money-printing and this coincided with 2020
| where the deposit requirements were set to 0% effectively
| removing fractional banking as a system.
| conductr wrote:
| I think the money is chasing growth in a market that is mostly
| mature. Tech is really the only hope in that situation, so
| that's where the dollars land.
| camgunz wrote:
| I think it's more likely the assumption is you'd expect a far
| more diversified market. If we're really in a situation where
| the rational, good reasons move is to effectively ignore 98% of
| companies, that doesn't say good things about our economy
| (verging on some kind of technostate). You get into weird
| effects like "why invest in other companies" leading to "why
| start a company that will just get ignored" leading to even
| more consolidation and less dynamism.
| vannevar wrote:
| >Nobody can say for sure whether the AI boom is evidence of the
| next Industrial Revolution or the next big bubble.
|
| Like the Internet boom, it's both. The rosy predictions of the
| dotcom era eventually came true. But they did not come true fast
| enough to avoid the dotcom bust. And so it will be with AI.
| GoatInGrey wrote:
| My suspicion is that there's a there there, but it doesn't
| align with the _predictions_. This is supported by the tension
| between AI doom articles and the leading models experiencing
| diminishing performance gains while remaining error-prone. This
| is to speak nothing of the apparent LLM convergence limit of a
| ketamine-addled junior developer. Which is a boundary the
| models seem destined to approach indefinitely without ever
| breaching.
|
| The "bust" in this scenario would hit the valuations (P/E
| ratio) of both the labs and their enterprise customers, and AI
| businesses dependant on exponential cost/performance growth
| curves with the models. The correction would shake the dummies
| (poorly capitalized or scoped businesses) out of the tree,
| leaving only the viable business and pricing models still
| standing.
|
| That's my personal prediction as of writing.
| bravetraveler wrote:
| They mention rate of adoption, compared to the internet. Consider
| the barriers to entry. Before we all got sick of receiving AOL
| CDs, the prospect of _' going online'_ was incredibly expensive
| and sometimes laborious.
|
| More people subscribe to/play with a $20/m service than own/admin
| state-of-the-art machines?! _Say it ain 't so_ /s
| thewebguyd wrote:
| > More people subscribe to/play with a $20/m service than
| own/admin state-of-the-art machines?! Say it ain't so /s
|
| The problem is, $20/m isn't going to be profitable without
| better hardware, or more optimized models. Even the $200/month
| plan isn't making money for OpenAI. These companies are still
| in the "sell at a loss to capture marketshare" stage.
|
| We don't even know if being an "AI Company" is viable in the
| first place - just developing models and selling access. Models
| will become a commodity, and if hardware costs ever come down,
| open models will win.
|
| What happens when OpenAI, Anthropic, etc. can't be profitable
| without charging a price that consumers won't/can't afford to
| pay?
| hackable_sand wrote:
| What about food and housing? Why can't America invest in food and
| housing instead?
| margalabargala wrote:
| America has spent a century investing in food. We invested in
| food so hard we now have to pay farmers not to grow things,
| because otherwise the price crash would cause problems. Food in
| America is very cheap.
| hackable_sand wrote:
| It's reassuring to be reminded that every child in America
| _must_ justify their existence or starve to death.
| margalabargala wrote:
| Okay, that's too far. That's not true at all.
|
| Children in America do not starve to death. There is no
| famine, economically manmade or otherwise.
|
| This is America. We will _happily_ allow and encourage your
| child to go into arbitrary amounts of debt from a young age
| to be fed at school.
| righthand wrote:
| Is anyone starving in America? Why would there need to be focus
| on food production? We have huge food commodities.
| vdupras wrote:
| Let them eat cake, right?
|
| https://www.ers.usda.gov/topics/food-nutrition-
| assistance/fo...
| GoatInGrey wrote:
| Because investing in housing means actually changing things.
| There's a "Don't just do something, stand there!" strategy of
| maximizing comfort and minimizing effort, that must be
| overcome.
| daedrdev wrote:
| the US systematically taxes and forbids new housing in many
| ways as local voters desire. Setback requirements, 100K+ hookup
| costs, stairway standards, density limits, parking minimums and
| regulations, community input, allowing rejection of new housing
| despite it following all rules, abuse of environmental
| regulations (which ends up hurting the environment by blocking
| density), affordable housing requirements (a tax on each new
| housing block to fund affordable units on the side) all prevent
| new housing form being built.
| biophysboy wrote:
| >"The top 100 AI companies on Stripe achieved annualized revenues
| of $1 million in a median period of just 11.5 months--four months
| ahead of the fastest-growing SaaS companies."
|
| This chart is extremely sparse and very confusing. Why not just
| plot a random sample of firms from both industries?
|
| I'd be curious to see the shape of the annualized revenue
| distribution after a fixed time duration for SaaS and AI firms.
| Then I could judge whether its fair to filter by the top 100.
| Maybe AI has a rapid decay rate at low annualized revenue values
| but a slower decay rate at higher values, when compared to SaaS.
| Considering that AI has higher marginal costs and thus a larger
| price of entry, this seems plausible to me. If this is the case,
| this chart is cherry picking.
| doyouevensunbro wrote:
| > because the oligarchs demanded it
|
| There, summed it up for you.
| ChrisArchitect wrote:
| Related:
|
| _AI is propping up the US economy_
|
| https://news.ycombinator.com/item?id=44802916
| GoatInGrey wrote:
| I'm noticing how that article is myopically discussing equity
| valuations rather than actual economic output and worker
| productivity.
| krunck wrote:
| Please stop using stacked bar charts where individual lines(plus
| a Total) line would help the poor reader comprehend the data
| better.
| GolfPopper wrote:
| Remember, the appropriate way to parse use of "the economy" in
| popular press is to read it as "rich peoples' yatch money".
| csours wrote:
| > Nobody can say for sure whether the AI boom is evidence of the
| next Industrial Revolution or the next big bubble. All we know is
| that it's happening.
|
| In hindsight, it will be clear, and future generations (if any
| exist) will ask: "Why didn't you understand what was happening at
| the time"
|
| My answer: Noise. Just because you can find someone who wrote
| down the answer at the time, doesn't mean that they really
| understood the answer, at least not to the extent that we will
| understand with hindsight.
|
| Future history is contingent.
| jimmydoe wrote:
| This matches the tech job market: if you are not in top corp or
| labs, your hard work is most likely subsidizing the $ 1.5M
| paycheck for OpenAI employees.
| maerF0x0 wrote:
| > "They're generating unprecedented amounts of free cash flow,"
| Cembalest told me. "They make oodles and oodles of money, which
| is why they can afford to be pouring hundreds of billions of
| dollars of capital spending each year into AI-related R&D and
| infrastructure."
|
| IMO this should be a trigger for investors that they have not
| been receiving their profits, and instead the profits are being
| dumped into CEOs next big bets that will fuel their stockbased
| compensation gains. Also to blame is the government's culpability
| here for creating both tax incentives and a lack of laws that say
| profits must be returned as dividends (they can always be DRIP'd
| back into the company as new shares if desired, it's absurd to
| say its better for investors, when the alternative actually gives
| more choice).
| jameslk wrote:
| I found this analysis insightful:
|
| https://x.com/dampedspring/status/1953070287093731685
|
| > However, this pace is likely unsustainable going forward. The
| sharp acceleration in capex is likely behind us, and the recent
| growth rate may not be maintained. Any sustained weakness in
| final demand will almost certainly affect future investment, as
| AI demand ultimately depends on business revenues and profits,
| which are tied to nominal GDP. Realized and forecasted capex
| remain elevated, while free cash flow and cash and cash
| equivalents are declining for hyperscalers.
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