[HN Gopher] Are we repeating the telecoms crash with AI datacent...
___________________________________________________________________
Are we repeating the telecoms crash with AI datacenters?
Author : davedx
Score : 156 points
Date : 2025-12-03 11:14 UTC (11 hours ago)
(HTM) web link (martinalderson.com)
(TXT) w3m dump (martinalderson.com)
| gizajob wrote:
| Yes
| MarkusQ wrote:
| Holly cow, we've found an exception to Betteridge's Law of
| Headlines! Talk about burying the lede!
| semitones wrote:
| If you read the article, then this is not an exception to the
| law
| MarkusQ wrote:
| If you read the article _and_ agree with the author's
| conclusions. I did the former, but not the later.
| fnord77 wrote:
| > This is the opposite of what happened in telecoms. We're not
| seeing exponential efficiency gains that make existing
| infrastructure obsolete. Instead, we're seeing semiconductor
| physics hitting fundamental limits.
|
| What about the possibility of improvements in training and
| inference algorithms? Or do we know we won't get any better than
| grad descent/hessians/etc ?
| kragen wrote:
| This seems to be either LLM AI slop or a person working very hard
| to imitate LLM writing style:
|
| _The key dynamic: X were Y while A was merely B. While C needed
| to be built, there was enormous overbuilding that D ...
|
| Why Forecasting Is Nearly Impossible
|
| Here's where I think the comparison to telecoms becomes both
| interesting and concerning.
|
| [lists exactly three difficulties with forecasting, the first two
| of which consist of exactly three bullet points]
|
| ...
|
| What About a Short-Term Correction?
|
| Could there still be a short-term crash? Absolutely.
|
| Scenarios that could trigger a correction:
|
| 1. Agent adoption hits a wall ...
|
| [continues to list exactly three "scenarios"]
|
| The Key Difference From S:
|
| Even if there's a correction, the underlying dynamics are
| different. E did F, then watched G. The result: H.
|
| If we do I and only get J, that's not K - that's just L.
|
| A correction might mean M, N, and O as P. But that's
| fundamentally different from Q while R. ...
|
| The key insight people miss ..._
|
| If it's not AI slop, it's a human who doesn't know what they're
| talking about: "enormous strides were made on the optical
| transceivers, allowing the same fibre to carry 100,000x more
| traffic over the following decade. Just one example is WDM
| multiplexing..." when in fact wavelength division multiplexing
| multiplexing is the entirety of those enormous strides.
|
| Although it constantly uses the "rule of three" and the "negative
| parallelisms" I've quoted above, it completely avoids most of the
| overused AI words (other than "key", which occurs six times in
| only 2257 words, all six times as adjectival puffery), and it
| substitutes single hyphens for em dashes even when em dashes were
| obviously meant (in 20 separate places--more often than even _I_
| use em dashes), so I think it 's been run through a simple filter
| to conceal its origin.
| ashtakeaway wrote:
| Remember we have about 20 years of poorly written articles
| along with a few well written ones for the LLM to be trained
| on. I'm confident that attempting to tell LLM from human
| writing is a waste of time now that the year is almost over.
|
| Other than that I'd rather choose a comprehensive article than
| a summary.
| kragen wrote:
| Attempting to tell LLM writing from human writing is
| _usually_ a waste of time, but apparently not in this case.
| alienbaby wrote:
| Did you see the reply from the author to similar
| statements?
| kragen wrote:
| You mean https://news.ycombinator.com/item?id=46138663?
| He said that he mixed up British and American English all
| the time, but didn't try to deny that the article was AI
| slop.
| myrmidon wrote:
| I agree, and it feels like an allergy by now to that style
| specifically. This is doubly annoying because it ruins the
| reading experience and just makes me question myself constantly
| because you often can't be quite certain especially for shorter
| posts/comments.
|
| On topic: It is always quite easy to be the cynical skeptic,
| but a _better_ question in my view: Is the current AI boom
| closer to telecoms in 2000 or to video hosting in 2005? Because
| parallels are strong to both, and the outcomes vastly different
| (Cisco barely recovered by now compared to 1999 while youtube
| is printing money).
| alienbaby wrote:
| You guys make me laugh.
| Havoc wrote:
| Don't think looking at power consumption of b200s is a good
| measure of anything. Could well be an indication of higher
| density rather than hitting limits and cranking voltage to
| compensate
| jsight wrote:
| Yes, one of NVidia's selling points for the b200 is that
| performance per watt is better than before. High power
| consumption without controlling for performance means nothing.
| asplake wrote:
| Yes or no conclusions aside (and despite its title, the article
| deserves better than that), the key point is I think this one:
| "But unlike telecoms, that overcapacity would likely get
| absorbed."
| lazide wrote:
| Telecom (dark fiber) capacity got absorbed too. Eventually.
| After a ton of bankruptcies.
| gmm1990 wrote:
| Some of the utilization comparisons are interesting, but the
| article says 2 trillion was spent on laying fiber but that seems
| suspicious.
| observationist wrote:
| There's an enormous amount of unused, abandoned fiber. All
| sorts of fiber was run to last mile locations, across most
| cities in the US, and a shocking amount effectively got
| abandoned in the frenzy of mergers and acquisitions. 2 trillion
| seems like a reasonable estimate.
|
| Giant telecoms bought big regional telecoms which came about
| from local telecoms merging and acquiring other local telecoms.
| A whole bunch of them were construction companies that rode the
| wave, put in resources to run dark fiber all over the place.
| Local energy companies and the like sometimes participated.
|
| There were no standard ways of documenting runs, and it was
| beneficial to keep things relatively secret, since if you could
| provide fiber capabilities in a key region, but your
| competition was rolling out DSL and investing lots of money,
| you could pounce and make them waste resources, and so on. This
| led to enormous waste and fraud, and we're now on the outer
| edge of usability for most of the fiber that was laid - 29-30
| years after it was run, most of it will never be used, or ever
| have been used.
|
| The 90s and early 2000's were nuts.
| sosodev wrote:
| I so desperately wish it weren't abandoned. I hate that it's
| almost 2026 and I still can't get a fiber connection to my
| apartment in a dense part of San Diego. I've moved several
| times throughout the years and it has _never_ been an option
| despite the fact that it always seems to be "in the
| neighborhood".
| Spooky23 wrote:
| That has nothing to do with fiber, it's all about politics
| and a regulatory environment where nobody is incented to
| act. Basically, the states can't fully regulate internet
| and the Federal government only wants to fund buildouts on
| a pork barrel basis. Most recently rural.
|
| At the local level, there is generally a cable provider
| with existing rights of way. To get a fiber provider,
| there's 4 possible outcomes: universal service with subsidy
| (funded by direct subsidy), cherry-picked service (they
| install where convenient), universal service (capitalized
| by the telco) and "fuck you", where they refuse to operate.
| (ie. Verizon in urban areas)
|
| The private capitalized card was played out by cable
| operators in the 80s (they were innovators then, and AT&T
| was just broken up and in chaos). They have franchise
| agreements whose exclusivity was used as loan collateral.
|
| Forget about San Diego, there are neighborhoods in
| Manhattan with the highest population density in the
| country where Verizon claims it's unprofitable to operate.
|
| I served on a city commission where the mayor and county
| were very interested in getting our city wired, especially
| as legacy telco services are on the way out and cable costs
| are escalating and will accelerate as the merger agreement
| that formed Spectrum expires. The idea was to capitalize
| last mile with public funds and create an authority that
| operated both the urban network and the rural broadband in
| the county funded by the Federal legislation. With the
| capital raised with grants and low cost bonding (public
| authority bonds are cheap and backed by revenue and other
| assets), it would raise a moderate amount of income in <10
| years.
|
| We had the ability to get the financing in place, but we
| would have needed legislation passed to get access to
| rights of way. Utilities have lots of ancient rights and
| laws that make disruption difficult. The politicians behind
| it turned over before that could be changed.
| observationist wrote:
| The worst part is it'd probably cost less than $100 of
| fiber and labor to splice something into your building,
| maybe $200-400 of gear to light it up, and you'd have a 10
| gbps pipe back to some colo. It's more economical to run
| new fiber in most places these days, even if the local ISP
| knows exactly where all the old abandoned legacy lines are
| run, because of subsidization and basically scamming. The
| big companies like Lumen keep their knowledge regionally
| compartmented, legally shielded, and deliberately
| obfuscated, because if it became known that existing fiber
| was already run to a place they claim they can't serve,
| they can't get access to yet more funding for their eternal
| "service for the underserved" government money grift.
|
| I stumbled on old maps that showed a complete coverage of
| fiber in my municipality, paperwork from a company that was
| acquired, and which in turn merged, then was bought out by
| one of the big 5 ISPs. When local officials requested
| information regarding existing fiber, this ISP refused and
| said any such information was proprietary. They later bid
| on and won contracts to run new fiber (parallel to existing
| lines which they owned, which still had more than a decade
| of service life left in them at that point).
|
| I estimated that only around 10-15% of the funding went
| toward actual labor and materials, the remainder was pure
| profit. The local government considered it a major victory,
| money well spent.
| photochemsyn wrote:
| For infrastructure, central planning and state-run systems
| make a lot of sense - this after all is how the USA's
| interstate highway system was built. The important caveat is
| that system components and necessary tools should be provided
| by the competitive private sector through transparent bidding
| processes - eg, you don't have state-run factories for making
| switches, fiber cable, road graders, steel rebar, etc. There
| are all kinds of debatable issues, eg should system
| maintenance be contracted out to specialized providers, or
| kept in-house, etc.
| advisedwang wrote:
| The GDP 1995-2000 (inclusive) was about $52T. So that assertion
| would mean that about %3.8 of the US' economic activity was
| laying fiber. That seems like a lot, but in my ignorance
| doesn't sound totally impossible.
| nuc1e0n wrote:
| The article claims that AI services are currently over-utilised.
| Well isn't that because customers are being undercharged for
| services? A car when in neutral will rev up easily if the
| accelerator pedal is pushed even very slightly, because there's
| no load on the engine. But in gear the same engine will rev up
| much less when the accelerator is pushed the same amount. Will
| there be the same overutilisation occurring if users have to
| financially support the infrastructure, either through
| subscriptions or intrusive advertising?
|
| I doubt it.
|
| And what if the technology to locally run these systems without
| reliance on the cloud becomes commonplace, as it now is with open
| source models? The expensive part is in the training of these
| models more than the inference.
| aitchnyu wrote:
| Will the OpenRouter marketplace of M clouds X N models die if
| the investor money stops? I believe its a free and profitable
| service, offered completely pay as you go.
| an0malous wrote:
| > The article claims that AI services are currently over-
| utilised. Well isn't that because customers are being
| undercharged for services?
|
| Absolutely, not only are most AI services free but even the
| paid portion is coming from executives mandating that their
| employees use AI services. It's a heavily distorted market.
| keeda wrote:
| On the flip side, there are many indications that a huge part
| of corporate AI usage is "Shadow AI", i.e. where workers use
| GenAI without their employer's blessing or knowledge. E.g.
| https://cacm.acm.org/news/the-real-significant-threat-of-
| sha...
|
| And a majority of those workers do not reveal their AI usage,
| so they either take credit for the faster work or use the
| extra time for other activities, which further confounds the
| impact of AI.
|
| This is also distorting the market, but in other ways.
| treis wrote:
| We're talking miraculous level of improvement for a SOA LLM to
| run on a phone without crushing battery life this decade.
|
| People are missing the forest for the trees here. Being the go
| to consumer Gen AI is a trillion+ dollar business. How many 10s
| of billions you waste on building unnecessary data centers is a
| rounding error. The important number is your odds of becoming
| that default provider in the minds of consumers.
| nuc1e0n wrote:
| How big does an LLM need to be to support natural language
| queries with RAG?
| mattnewton wrote:
| My hot (maybe just warm these days) take is, the problem
| with voice assistants on phones is they have to be able to
| have reasonable responses to a long tail or users will
| learn not to use them, since the use cases aren't
| discoverable and the primarily value is talking to it like
| a person.
|
| So voice assistants backed by very large LLMs over the
| network are going to win even if we solve the (substantial)
| battery usage issue.
| nuc1e0n wrote:
| Why even bother with the text generation then? You could
| just make a phone call to an LLM with a TTS frontend.
| Like with directory enquiries back in the day. Which can
| be set up as easily as a BBS if you have a home server
| rack like Jeff Geerling makes youtube videos about.
| bayarearefugee wrote:
| > The important number is your odds of becoming that default
| provider in the minds of consumers.
|
| I haven't seen any evidence that any Gen AI provider will be
| able to build a moat that allows for this.
|
| Some are better than others at certain things over certain
| time periods, but they are all relatively interchangeable for
| most practical uses and the small differences are becoming
| less pronounced, not more.
|
| I use LLMs fairly frequently now and I just bounce around
| between them to stay within their free tiers. Short of some
| actual large breakthrough I never need to commit to one, and
| I can take advantage of their own massive spends and wait it
| out a couple of years until I'm running a local model self-
| hosted with a cloudflare tunnel if I need to access it on my
| phone.
|
| And yes, most people won't do that, but there will be a lot
| of opportunity for cheap providers to offer that as a service
| with some data center spend, but nowhere near the massive
| amounts OpenAI, Google, Meta, et al are burning now.
| treis wrote:
| The moat is the chat history and the flywheel of user
| feedback improving the product.
| tux3 wrote:
| Given how often smaller LLM companies train on the output
| of bigger LLM companies, it's not much of a moat.
|
| LLMs complete text. Every query they answer is giving
| away the secret ingredient in the shape of tokens.
| m4rtink wrote:
| Just build more tulip fields/railways/websites no matter the
| cost - the golden age is inevitable! ;-)
| serial_dev wrote:
| It's extremely easy to switch.
|
| I used ChatGPT for every day stuff, but in my experience
| their responses got worse and I had to wait much longer to
| get them. I switched to Gemini and their answers were better
| and were much faster.
|
| I don't have any loyalty to Gemini though. If it gets slow or
| another provider gives better answers, I'll change. They all
| have the same UI and they all work the same (from a user's
| perspective).
|
| There is no moat for consumer genAI. And did I mention I'm
| not paying for any of it?
|
| It's like quick commerce, sure it's easy to get users by
| offering them something expensive off of VC money. The second
| they raise prices or offer degraded experience to make the
| service profitable, the users will leave for another
| alternative.
| socialcommenter wrote:
| In fact it's apparently $5.2 trillion by 2030 [0] (out of
| $6.7T total data center spend; meaning all of "traditional IT
| needs" are less than a quarter of the total). That's the
| total if you add up all of the firms chasing this
| opportunity.
|
| I do wonder, if you (and the commenter you replied to) think
| this is a good thing, will you be OK with a data center
| springing up in your neighbourhood, driving up water or power
| prices, emitting CO2? Then if SOTA LLMs become efficient
| enough to run on a smartphone will you be OK with a data
| center bailout coming from your tax dollars?
|
| [0]: https://www.mckinsey.com/industries/technology-media-
| and-tel...
| mNovak wrote:
| Of all the players, I'd argue Google certainly knows how to
| give away a product for free and still make money.
|
| The local open source argument doesn't hold water for me -- why
| does anyone buy Windows, Dropbox, etc when there's free
| alternatives?
| steveBK123 wrote:
| Yes, it seems to me their strategy is to watch the OpenAI,
| Anthropics, etc of the world bleed themselves to death.
| bee_rider wrote:
| Not many people buy Windows, they buy laptops that happen to
| have Windows installed. IMO this is a worthwhile distinction
| because most people don't really care about operating systems
| anyway, and would happily (I suspect, at least) use an Open
| Source one if it came installed and configured on a device
| that they got in a store.
|
| Installing an OS is seen as a hard/technical task still.
| Installing a local program, not so much. I suspect people
| install LLM programs from app stores without knowing if they
| are calling out to the internet or running locally.
| Anon1096 wrote:
| Besides the fact that this article is obviously AI generated
| (and not even well, why is there mismatches in british/american
| english? I can only assume that the few parts in british
| english are the human author's writing or edits), yes
| "overutilization" is not a real thing. There is a level of
| utilization at every price point. If something is
| "overutilizated" that actually means it's just being offered at
| a low price, which is good for consumers. It's a nice scare
| word though and there's endless appetite at the moment for ai-
| doomer articles.
| bobmcnamara wrote:
| > why is there mismatches in british/american english
|
| You sometimes see this with real live humans who have lived
| in multiple counties.
| delusional wrote:
| I do this because I'm a non-native english speaker. My
| preference varies from word to word. I write color, but i
| also write aliminium.
| SJC_Hacker wrote:
| > multiple counties
|
| Pay no attention to those fopheads from Kent. We speak
| proper British English here in Essex
| martinald wrote:
| Author here, I mix up American and British English all the
| time. It's pretty common for us Brits to do that imo.
|
| See also how all (?) Brits pronounce Gen Z in the American
| way (ie zee, not zed).
| youngtaff wrote:
| Brit here... I say Gen Zed!
| Anon1096 wrote:
| Sorry but it's highly suspect to be spelling the same word
| multiple different ways across paragraphs. You switch
| between using centre/center or utilization/utilisation? It
| is a very weird mistake to make for a human.
| heliumtera wrote:
| To be honest it doesn't feel manually edited.
|
| Bullet points hell, a table that feels it came straight out
| of grok.
| knollimar wrote:
| By this logic loss leaders to drive out competition are good
| gor the consumer, no?
| Hikikomori wrote:
| > why is there mismatches in british/american english
|
| Some people are not from usa or England.
| btilly wrote:
| Yes, over-utilization is a natural response to being
| undercharged. And being undercharged is a natural result when
| investors are throwing money at you. During bubbles, Silicon
| Valley often goes to "lose money, make it up with scale". With
| the vague idea that after you get to scale, THEN you can figure
| out how to make money. And fairly consistently, their idea for
| how to make money is "sell ads".
|
| Past successes like Google encourage hope in this strategy.
| Sure, it mostly doesn't work. Most of of everything that VCs do
| doesn't work. Returns follow a power law, and a handful of
| successes in the tail drive the whole portfolio.
|
| The key problem here doesn't lie in the fact that this strategy
| is being pursued. The key problem is that it is rare for first
| mover advantages to last with new technologies. That's why
| Netscape and Yahoo! aren't among the FAANGs today. The long-
| term wins go to whoever successfully create a sufficient moat
| for themselves to protect lasting excess returns. And the
| capabilities of each generation of AI leapfrogs the last so
| well that nobody has figured out how to create such a moat.
|
| Today, 3 years after launching the first LLM chatbot, OpenAI is
| nowhere near as dominant as Netscape was in late 1997, 3 years
| after launching Netscape Navigator. I see no reason to expect
| that 30 years from now OpenAI will be any more dominant than
| Netscape is today.
|
| Right now companies are pouring money into their candidates to
| win the AI race. But if the history of browsers repeats itself,
| the company that wins in the long-term would launch in about a
| year from now, focused on applications on top of AI. And its
| entrant into the AI wars wouldn't get launched until a decade
| after that! (Yes, that is the right timeline for the launch of
| Google, and Google's launch of Chrome.)
|
| Investing in silicon valley is like buying a positive EV
| lottery ticket. An awful lot of people are going to be reminded
| the hard way that it is wiser to buy a lot of lottery tickets,
| than it is to sink a fortune into a single big one.
| signatoremo wrote:
| > Today, 3 years after launching the first LLM chatbot,
| OpenAI is nowhere near as dominant as Netscape was in late
| 1997.
|
| Incorrect. There were about 150 millions Internet users in
| 1998, or 3.5% of total population. The number grew 10 times
| by 2008 [0]. Netwcape had about 50% of the browser market at
| the time [1]. In other words, Netscape dominated a small base
| and couldn't keep it up.
|
| ChatGPT has about 800 millions monthly users, or already 10%
| of total current population. Granted, not exclusively.
| ChatGPT is already a household name. Outside of early
| internet adopters, very few people knew who Netscape or what
| Navigator was.
|
| [0] https://archive.globalpolicy.org/component/content/articl
| e/1...
|
| [1] https://www.wired.com/1999/06/microsoft-leading-browser-
| war/...
| btilly wrote:
| I was not addressing the size of the market. But the share.
|
| According to
| https://en.wikipedia.org/wiki/Usage_share_of_web_browsers,
| Netscape had 60-70% market share. According to
| https://firstpagesage.com/reports/top-generative-ai-
| chatbots..., ChatGPT currently has a 60% market share.
|
| But I consider the enterprise market a better indicator of
| where things are going. As
| https://menlovc.com/perspective/2025-mid-year-llm-market-
| upd... shows, OpenAI is one of a pack of significant
| competitors - and Anthropic is leading the pack.
|
| Furthermore my point that the early market leaders are
| seldom the lasting winners is something that you can see
| across a large number of past financial bubbles through
| history. You'll find the same thing in, for example,
| trains, automobiles, planes, and semiconductors. The planes
| example is particularly interesting. Airline companies not
| only don't have a good competitive moat, but the mechanics
| of chapter 11 mean that they keep driving each other
| bankrupt. It is a successful industry, and yet it has
| destroyed tons of investment capital!
|
| Despite your quibbles over the early browser market, my
| broader point stands. It's early days. AI companies do not
| have a competitive moat. And it is way to premature to
| reliably pick a winner.
| burnte wrote:
| > Will there be the same overutilisation occurring if users
| have to financially support the infrastructure, either through
| subscriptions or intrusive advertising? > I doubt it.
|
| I agree. Right now a lot of AI tools are underpriced to get
| customers hooked, then they'll jack up the prices later. The
| flaw is that AI does not have the ubiquitous utility internet
| access has, and a lot of people are not happy with the
| performance per dollar TODAY, much less when prices rise 80%.
| We already see companies like Google raising prices stating
| it's for "AI" and we customers can't opt out of AI and not pay
| the fee.
|
| At my company we've already decided to leave Google Workspace
| in the spring. GW is a terrible product with no advanced
| features, garbage admin tools, uncompetitive pricing, and now
| AI shoved in everywhere and no way to granularly opt out of a
| lot of it. Want spell check? Guess what, you need to leave
| Gemini enabled! Shove off, Google.
| gboss wrote:
| Where are you moving to?
| hotpaper75 wrote:
| Best Comment
| LMSolar wrote:
| Yes, where are you moving to from GW? We're looking for
| options...
| keeda wrote:
| _> I doubt it._
|
| I don't. This is simply the "drug dealer" model where the first
| hit is free. They know that once people are addicted, they will
| keep coming back.
|
| The question of course is, will they keep coming back? I think
| they very much will. There are indications that GenAI adoption
| is already increasing labor producitivity labor improvements at
| a _national scale_ , which is quite astounding for a technology
| just 3 years old: https://news.ycombinator.com/item?id=46061369
|
| Imagine a magic box where you put in some money and get more
| productivity back. There is no chance Capitalism (with a
| capital "C") is going to let such a powerful growth machine
| wither on the vine. This mad AI rush is all about that.
| kqr wrote:
| Is there a way in which this is good for a segment of consumers?
| When the current gen of GPUs are too old, will the market be
| flooded with cheap GPUs that benefit researchers and hobbyists
| who therwis would not afford them?
| wmf wrote:
| Many researchers and hobbyists cannot even plug in a 10 KW 8
| GPU DGX server.
| CamperBob2 wrote:
| That doesn't exactly bode well for the EV revolution, then,
| does it?
| tekno45 wrote:
| wut?
| LogicFailsMe wrote:
| The average commute in the United States is about 24 miles
| a day round trip. That's about 10 kWH. That's enough to
| charge overnight on a 15A circuit.
| CamperBob2 wrote:
| _You_ can drive around with 24 miles of charge, but ... I
| 'll pass, thanks.
|
| In reality, if you have a dryer outlet, you have a good
| fraction of 10 kW available.
| LogicFailsMe wrote:
| I just put in a dedicated 50 amp circuit myself and my
| car charges from ~25% to full in about 6-7 hours. But I
| wanted to present the lazy worst case scenario. The
| warrior's FUD here is that there isn't enough easily
| available lithium for everyone in just California alone
| to have one.
| BuffaloEric33 wrote:
| Almost all home EV charging is <=10kW.
| quickthrowman wrote:
| Why not? It's 40A at 240V, or 25% of the continuous load
| rating of a 200A 240V single-phase service.
|
| If someone can afford an 8 GPU server, they should be able to
| afford some #6 wire, a 50A 2P breaker, and a 50A receptacle.
| It has the same exact power requirements as an L2 EV charger.
| knollimar wrote:
| You probably run a bigger (perhaps double) neutral and care
| about a stronger ground. But yeah, the $12 is rounding
| error at this scale
| quickthrowman wrote:
| In the US, you don't need a neutral for a 240V 50A
| circuit on a residential single-phase service, there are
| two line conductors (120V to ground) both connected to a
| 2-pole single-phase breaker, line-to-line between the two
| is 240V.
|
| You would need a neutral if it was a 208/120V three-phase
| service.
|
| Neutrals and grounds are sized per the NEC, neutrals are
| the same size as the line conductors and equipment
| grounds are sized off of a table.
|
| #6 conductors and #10 ground is what the NEC calls for.
| knollimar wrote:
| I just haven't seen server rooms that don't demand a
| doubly sized neutral when one is required.
|
| I live the NYC 208V life doing mostly resi, though.
|
| Quick search of the spec for that is 6 power supplies, 2
| of which are redundant. Looks to use a neutral to me.
| Says it uses C19/C20 connectors
|
| edit: wait most ranges use 14-50R outlets and need a
| neutral ran. I am calling your statement into question.
| Surely harmonics and 120V internal draws cause non-zero
| neutral current. And I'm sure GPUs have harmonics being
| semiconductor flavored.
| ares623 wrote:
| Some of them will probably be starving, homeless, or bedridden
| by the time that happens but yes they can get cheap GPUs
| stego-tech wrote:
| Unlikely, for a few reasons:
|
| * The GPUs in use in data centers typically aren't built for
| consumer workloads, power systems, or enclosures.
|
| * Data Centers often _shred_ their hardware for security
| purposes, to ensure any residual data is definitively destroyed
|
| * Tax incentives and corporate structures make it cheaper/more
| profitable to write-off the kit entirely via disposal than
| attempt to sell it after the fact or run it at a discount to
| recoup some costs
|
| * The Hyperscalers will have use for the kit inside even if AI
| goes bust, especially the CPUs, memory, and storage for added
| capacity
|
| That's my read, anyway. They learned a lot from the telecoms
| crash and adjusted business models accordingly to protect
| themselves in the event of a bubble crash.
|
| We will not benefit from this failure, but they will benefit
| regardless of its success.
| LogicFailsMe wrote:
| GPUs age surprisingly gracefully. If a GPU isn't cutting edge,
| you just tie two or more of them together for a bit more power
| consumption to get more or less the same result as the next
| generation GPU.
|
| if there's ever a glut in GPUs that formula might change but it
| sure hasn't happened yet. Also, people deeply underestimate how
| long it would take a competing technology to displace them. It
| took GPUs nearly a decade and the fortunate occurrence of the
| AI boom to displace CPUs in the first place despite bountiful
| evidence in HPC that they were already a big deal.
| ggerni wrote:
| >GPUs age surprisingly gracefully. source: it was revealed to
| me in a dream
| LogicFailsMe wrote:
| source: Nvidia Shields still shipping with Maxwell GPUs
| from 2014 and many university labs still running on Pascal
| GPUs from 2016. But stupid facts don't matter, this one hit
| you wrong in the feels, amIRight?
| recursive4 wrote:
| Stylistically, this smells like it was copy and pasted from
| straight out Deep Research. Substantively, I could use additional
| emphasis on the mismatch between expectations and reality with
| regards to telco debt-repayment schedule.
| positron26 wrote:
| Hardware growth is slow and predictable, but one breakthrough
| algorithm completely undercuts any finance hypothesis premised on
| compute not flowing out of the cloud and back to the edges and
| into the phones.
|
| This is a kind of risk that finance people are completely blind
| to. Open AI won't tell them because it keeps capital cheap.
| Startups that must take a chance on hardware capability remaining
| centralized won't even bother analyzing the possibility. With so
| many actors incentivized to not know or not bother asking the
| question, there's the biggest systematic risk.
|
| The real whiplash will come from extrapolation. If an algorithm
| advance shows up promising to halve hardware requirements,
| finance heads will reason that we haven't hit the floor yet. A
| lot of capital will eventually re-deploy, but in the meantime, a
| great deal of it will slow down, stop, or reverse gears and get
| un-deployed.
| sdenton4 wrote:
| AI had a kind of Jevons paradox approach to efficiency
| improvements, unfortunately - if you halve the compute
| requirements with an algorithmic advance, you can run a model
| twice as big.
| layer8 wrote:
| The large SOTA models have hit very diminishing returns on
| further scaling, I think. So you'd rather double the number
| of models you can run in parallel.
| imvetri wrote:
| No. AI data center, or any data center is designed with incorrect
| data structure resulting in over utilisation of computing
| resource.
| iambateman wrote:
| The thing that makes AI investment hard to reason about for
| individuals is that our expectations are mostly driven by a
| single person's usage, just like many of the numbers reported in
| the article.
|
| But the AI providers are betting, correctly in my opinion, that
| many companies will find uses for LLM's which are in the
| trillions of tokens per day.
|
| Think less of "a bunch of people want to get recipe ideas."
|
| Think more of "a pharma lab wants to explore all possible
| interactions for a particular drug" or "an airline wants its
| front-line customer service fully managed by LLM."
|
| It's unusual that individuals and industry get access to
| basically similar tools at the same time, but we should think of
| tools like ChatGPT and similar as "foot in the door" products
| which create appetite and room to explore exponentially larger
| token use in industry.
| gradus_ad wrote:
| When I'm building out a new feature, I can churn through
| millions of tokens in Claude code. And that's just me... Now
| think about Claude code but integrated with Excel or datadog,
| or whatever app could be improved through LLM integration.
| Think about the millions of office workers, beyond just
| software engineers, who will be running hundreds of thousands
| or millions of tokens per day through these tools.
|
| Let's estimate 200 million office workers globally as TAM
| running an average of 250k tokens. That's 50 trillion tokens
| DAILY. Not sure what model provider profit per token is, but
| let's say it's .001 cents.
|
| Thats $500M per day in profit.
| not_the_fda wrote:
| Currently there is no profit per token, quite a bit of loss
| per token, that's the problem. Your not going to make it up
| in volume.
| danielbln wrote:
| Do you have a source for that? I'm especially interested in
| a source for Anthropic.
| iambateman wrote:
| https://www.wsj.com/tech/ai/openai-anthropic-
| profitability-e...
|
| Anthropic expects to break even in 2028. They're all
| unprofitable now.
| iambateman wrote:
| I'm with you on the Claude Code example --- it matches my
| experience.
|
| But I do think the important thing to look forward to is AI
| work which is totally detached from human intervention.
| watwut wrote:
| I find it absurd to pay for tokens I cant control, predict or
| even check in any reasonable way. It is literally amounts to
| "pay whatever random money the company asks you to pay" kind
| of contract.
| epistasis wrote:
| > Think more of "a pharma lab wants to explore all possible
| interactions for a particular drug"
|
| Pharma does not trust OpenAI with their data, and they don't
| work on tokens for any of the protein or chemical modeling.
|
| There will undoubtedly be tons of deep nets used by pharma,
| with many $1-10k buys replacing more expensive physical assays,
| but it won't be through OpenAI, and it won't be as big as a
| consumer business.
|
| Of course there may be other new markets opened up but current
| pharma is not big enough to move the needle in a major way for
| a company with an OpenAI valuation.
| iambateman wrote:
| My claim is that there will exist some company which pharma
| is willing to trust for AI research...they presumably trust
| Microsoft with their email today.
|
| But my bigger claim is that ~half the Fortune 500 will be
| able to profitably deploy AI with spends in the tens or
| hundreds of millions per year quite soon. Not that pharma
| itself is a major contributor to that effect.
| nickff wrote:
| But for 'AI' to be a winner-take-all market, it seems that
| the winner would have to be using customer data to improve
| the 'AI'. Not only do you have to believe that one of these
| (relatively) under-capitalized upstarts can corral the
| money, but also that they can convince (enterprise)
| customers to 'fork over' their proprietary data to only one
| provider, and also that the provider can then charge a
| monopoly rent.
|
| Those all seem possible, but I wouldn't assign greater than
| a 50% probability to any of them, and the valuations seem
| to imply near-certainty.
| s_ting765 wrote:
| > "an airline wants its front-line customer service fully
| managed by LLM."
|
| This has been experimented on before by many companies over the
| recent years, most notably Klarna which was among the earliest
| guinea pigs for it and had to later on backtrack on this
| "novel" idea when the results came out.
| danielbln wrote:
| Does neither mean it can't work nor that it can't work with
| LLMs. Just that hacking together some RAG chatbot is probably
| not it.
| malfist wrote:
| But if I'm a pharma lab, I don't want to rely on a statistical
| engine that makes mistakes to answer those questions, I want to
| query a database that is deterministic.
| hn_acc1 wrote:
| This. LLM is NOT the tool for a pharma lab - properly trained
| ML is the right tool. Heck, English is probably not even the
| right LANGUAGE to use for discussing chemical interactions.
| lenerdenator wrote:
| Would the proper language be math, or another human
| language?
|
| I could see things like "nitrate" and "nitrite" possibly
| being a stumbling block for an LLM.
| iambateman wrote:
| Sam Altman says that he thinks scientific research is a huge
| opportunity for AI to contribute as it more fully develops
| and I think he's right.
|
| Since I'm not a scientific researcher, I have no idea if he's
| just blowing smoke but I think it's reasonable to think of a
| purpose-built system which has an LLM component being used by
| a team to do something useful.
| mNovak wrote:
| Nice article; far from bullet-proof, but it brings up some
| interesting points. HN comments are vicious on the topic of AI
| non-bubbles.
| dust42 wrote:
| OpenAI has 800,000,000 weekly users but only 20,000,000 are
| paying while 780,000,000 are free riding. Should they by accident
| under provision then they could simply remove the freebee and
| raise the prices for the paying clients. But that is not what
| they want.
|
| IMHO the investors are betting on a winner-takes-it-all market
| and that some magic AGI will be coming out of OpenAI or
| Anthropic.
|
| The questions are:
|
| How much money can they make by integrating advertising and/or
| selling user profiles?
|
| What is the model competition going to be?
|
| What is the future AI hardware going to be - TPUs, ASICs?
|
| Will more people have powerful laptops/desktops to run a mid-
| sized models locally and be happy with it?
|
| The internet didn't stop after the dotcom crash and the AI wont
| stop either should there be a market correction.
| alex_c wrote:
| >OpenAI has 800,000,000 weekly users but only 20,000,000 are
| paying while 780,000,000 are free riding.
|
| By itself, this doesn't tell us much.
|
| The more interesting metric would be token use comparison
| across free users, paid users, API use, and Azure/Bedrock.
|
| I'm not sure if these numbers are available anywhere. It's very
| possible B2B use could be a much bigger market than direct B2C
| (and the free users are currently providing value in terms of
| training data).
| greekrich92 wrote:
| 800M people are not using chatGPT every week. Be a little less
| credulous.
| tokioyoyo wrote:
| I just thought about it, and honestly, from my surroundings
| of people aged 12-70s, across multiple continents, I can't
| think of anyone who isn't using some sort of LLM once a week.
| paulorlando wrote:
| The 2001 telecoms crash drove benefits for companies that came
| later in the availability of inexpensive dark fiber after the
| bubble popped. WorldCom, ICG, Williams sold off to Verizon, Level
| 3, Teleglobe, and others. That in turn helped future Internet
| companies gain access to plentiful and inexpensive bandwidth.
| Cable telephony companies such as Cablevision Systems, Comcast,
| Cox Communications, and Time Warner, used the existing coaxial
| connections into the home to launch voice services.
| epistasis wrote:
| This is indeed true, but doesn't fiber have a far longer
| lifetime than GPU heavy data centers? The major cost center is
| the hardware, which has a fairly short shelf life.
| gretch wrote:
| Well you still get the establishment of 1) large industrial
| buildings 2) water/electricity distribution 3) trained
| employees who know how to manage a data center
|
| Even if all of the GPUs inside burn out and you want to put
| something else entirely inside of the building, that's all
| still ready to go.
|
| Although there is the possibility they all become dilapidated
| buildings, like abandoned factories
| epistasis wrote:
| The building and electrical infrastructure are far cheaper
| than the hardware. So much so that the electricity is a
| small cost of the data center build out, but a major cost
| for the grid.
|
| Of the most valuable part is quickly depreciating and goes
| unused within the first few years, it won't have a chance
| for long term value like fiber. If data centers become, I
| don't know, battery grid storage, it will be very very
| expensive grid storage.
|
| Which is to say that while there was an early salivation
| for fiber that was eventually useful, overallocation of
| capital to GPUs goes to pure waste.
| maxglute wrote:
| Rail and fiber deprecates on multiple decade timescales. AI
| data centers close to tulips. Even assuming we manage to make
| data center stretch to 10 years, these assets won't be around
| long enough to support ecosystem of new companies if the
| economics stops making sense. Ultimately the only durable thing
| is any power infra that gets built, vs rail and fiber where
| inheritance isn't just rail networks or fiber but like 1000s of
| kilometers of earthwork projects to build out massive physical
| networks.
| signatoremo wrote:
| Data centers last decades. Many or the current AI hosting
| vendors such as Coreweave have crypto origin. Their data
| centers were built out in 2010s, early 2020s.
|
| Many of legacy systems still running today are IBM or Solaris
| servers at 20, 30 year old. No reason to believe GPU won't
| still be in use in some capacity (e.g. interference) a decade
| from now.
| codr7 wrote:
| Used to last decades, the world didn't move at this speed
| before.
| lordnacho wrote:
| Is this a question of the GPU chips dying due to be being
| warm semiconductors, or of them becoming outdated in relation
| to new chips?
| avazhi wrote:
| No, because the datacenters will get used. The demand side
| exists, whether it's LLM AIs or something completely different
| that isn't AI related. That's very different from a crash where
| there is absolutely nothing valuable/useable/demanded underneath
| the bubble.
| turtlesdown11 wrote:
| > The demand side exists, whether it's LLM AIs or something
| completely different that isn't AI related.
|
| What do you think LLM tuned GPUs or TPUs are going to be used
| for that is completely different and not AI related?
| avazhi wrote:
| 'LLM tuned GPUs' are just GPUs. The tuning refers to the
| models and how they use something like CUDA or whatever.
| There was a GPU shortage even before LLMs properly burst onto
| the scene, back with crypto mining. Now, it's possible TPUs
| might add a wrinkle to later demand side issues when there is
| a crash but that will depend on how useful TPUs actually end
| up being to those outside Google. But GPUs will remain
| useful, whether it's for gaming, machine learning (not the AI
| slop variety of this, but more categorising like for self-
| driving cars or medical imaging etc), or for the next crypto
| scam. Surely you agree that powerful computing capacity,
| independent of AI scams, is here to stay, right?
|
| My main point in arguing that now isn't like 2000 is that
| unlike in 2000 we have actual hardware and physical assets
| underpinning this bubble. In 2000 the assets were literally
| just imaginary. Yes there is speculation now but it is
| underpinned by silicon that will still be worth decent money
| even after LLMs are exposed as a hallucinatory mirage.
| turtlesdown11 wrote:
| Amazing article, I found it fascinating.
|
| > You can already use Claude Code for non engineering tasks in
| professional services and get very impressive results without any
| industry specific modifications
|
| After clicking on the link, and finding that Claude Code failed
| to accurately answer the single example tax question given, very
| impressive results! After all, why pay a professional to get
| something right when you can use Claude Code to get it wrong?
| venturecruelty wrote:
| No, because at least dark fiber is useful. AI GPUs will be
| shipped off to developing nations to be dissolved for rare earth
| metals once the third act of this clown show is over.
| mwkaufma wrote:
| Simultaneous claims that 'agentic' models are dramatically less
| efficient, but also forecasts efficiency improvements? We're in
| full-on tea-leaves-reading mode.
| jfalcon wrote:
| After reading the article and the comments, here are a few points
| people are missing from their analysis:
|
| - OverUtilized/UnderCharged: doesn't matter because...
|
| - Lead Time vs. TCO vs. IRS Asset Deprecation: The moment you get
| it fully built, it's already obsolete. Thus from a CapEx point of
| view, if you can lease your compute (including GPU) and optimize
| the rest of the inputs for similar then your CapEx overall is
| much lower and tied to the real estate - not the technology. The
| rest is cost of doing business and deductible in and of itself.
|
| - The "X" factor: Someone mentioned TPU/ASIC but then there is
| the DeepSeek factor - what if we figure out a better way of doing
| the work that can shortcut the workflow?
|
| - AGI partnerships: Right now, you see a lot of Mega X giving
| billions to Mega Y because all of them are trying to get their
| version of Linux or Apache or whatever at parity with the rest.
| Once AGI is settled and confirmed, then most all of these
| partnerships will be severed because it then becomes which
| company is going to get their AI model into that high prestige
| Montessori school and into the right ivy league schools - like
| any other rich parent would for their "bot" offspring.
|
| So what will it look like when it crashes? A bunch of bland empty
| "warehouses" with mobile PDU's once filling all their parking lot
| space gone. Whatever "paradise" that was there may come back...
| once you bulldoze all that concrete and steel. The money will do
| something else like a Don McLean song.
| nuc1e0n wrote:
| >once you bulldoze all that concrete and steel
|
| You're not quite thinking things through there man. Once the
| elites who built these follies have gone, the mob will go
| shopping for building materials. I wouldn't be surprised even
| if people end up living in these datacentres once they become
| derelict. They have AC after all.
| kd913 wrote:
| I am still a little skeptical about utilisation rates. If demand
| is so extreme, wouldn't we see rental prices for H100/A100 prices
| go up or maintain? Wouldn't the cost for such a gpu still be high
| (you can get em 3k used).
| michaelt wrote:
| On "runpod community cloud" renting a 5090 costs $0.69/hour [1]
| and it consumes about $0.10/hour electricity, if running at
| full power and paying $0.20/kWh.
|
| On Amazon, buying a 5090 costs $3000 [2]
|
| That's a payback time of 212 days. And Runpod is one of the
| cheaper cloud providers; for the GPUs I compared, EC2 was twice
| the price for an on-demand instance.
|
| Rental prices for GPUs are pretty darn high.
|
| [1] https://www.runpod.io/pricing [2]
| https://www.amazon.com/GIGABYTE-Graphics-WINDFORCE-GV-N5090G...
| kd913 wrote:
| A 5090 gaming card is a different beast to the 80gb ai cards.
| That one was 40k usd so for renting that to hit 1.50 dollar
| per hour is interesting.
| ruralfam wrote:
| Welp Gemini got me. Using G3 to improve what I write, generate
| specific images, and use NotebookLM to dive into some research
| materials. Tried to do a bit each day with my free credits, but
| hit the limit too often. G2.5 was not nearly as useful. So I
| upgraded my baselevel Google workspace plan. Recently spoke to
| someone who is also using G3 a lot with good results. YMMV re:
| G3, but Google hooked me, and now I pay more. However I think it
| is worth it for what I do. G3 is my helpful, nerdy work mate. I
| never plan to use agenic AI. Not using ChatGPT much if any at all
| anymore. Sorry Sam.
| lordnacho wrote:
| I'm curious about the telecom collapse. How was it not in the
| pipeline that much better use of the fibres was around the
| corner? Surely they would have known that people were looking
| into it with some promise?
| IshKebab wrote:
| It's human nature not to admit the obvious until it is way way
| way too late.
| xorcist wrote:
| Telco capex was $100 billion at the peak of the IT bubble, give
| or take. There's going to be $400 billion investments in AI in
| 2025. Just saying.
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