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Investors are suddenly getting concerned that AI isn't making any serious money

57 points by gusgus01 2y ago

dhj9817 2y ago
AI made a huge debut. Now it needs to flourish over the 10-15 years just like how .com did
- onetokeoverthe 2y ago
  [dead]
- borggambit 2y ago
  exactly, dotcom is fueling this bubble. The huge difference is we didnt have a previous bubble to compare dotcom to at the time. Dotcom is one justification for the current bubble because everything worked out. All that needed to happen for dotcom to workout though was high speed internet that business had come to people's homes. For this bubble to workout we need to come up with artificial beings on the level of humans from limited use case LLMs. It is completely delusional.
  - ben_w 2y ago
    > For this bubble to workout we need to come up with artificial beings on the level of humans from limited use case LLMs. Robots? We've got loads of those already. Ones with super-human speed, super-human dexterity, super-human senses. Even got some cute tech demos where they get controlled by the OpenAI API. I'm not sure why you think that's delusional. But I'm also not sure why you think that's necessary, given that not only "all things which can be expressed in written form" can be used by an LLM, but also that the same architecture is fine with anything that can be tokenised which includes visual and audio tasks — i.e. most office jobs. No, what's necessary for this to not be a bubble is for someone to figure out how to turn what exists into an actual business model. "Business" is much less flashy, less cool, less exciting than tech demos filled with androids doing housework, parkour, or acting as a tour guide.
cratermoon 2y ago
When the AI bubble pops it will leave behind a grimy residue. https://buttondown.email/maiht3k/archive/the-grimy-residue-of-the-ai-bubble/ https://buttondown.email/maiht3k/archive/the-grimy-residue-o...
- zitrussaft 2y ago
  I never thought about how in some areas AI has removed creative expression. Kinda bleak, but on the other hand it allowed some fucking great generations
- kenmacd 2y ago
  Bit of a strange article. It seems to be trying to claim AI is 'hype' while at the same time claiming it "has the potential to ruin what were stable [hand weaver] careers".
ggm 2y ago
Waking up to the bubble predicted by many, observed by many, ongoing as we speak.
- malux85 2y ago
  Yep, so profit off it then? (The following is a general comment not directed at you OP) The human trait of disconnected intellect always fascinates me. People will predict something very publicly, never shut up about it, and then loudly proclaim “I told you so” when it happens, and then I say “well, how did you act on this knowledge to benefit yourself” and I always get crickets. It’s like people are too afraid to actually commit because if they are wrong it would imply their world view is wrong (and the intellectual gap between them and their couch is narrowing) but if they are right they can ignore that little inconvenient thing about their predictions having survivable bias and walk around with a smug sense of satisfaction. I have always thought it extremely odd how someone can proudly exclaim their predictions and then have nothing to show for them, humans confuse me a lot.
  - esperent 2y ago
    I assume you're talking about investing? In which case, you need a sizeable amount of surplus capital, which most people don't have, and an interest in investing, which most people don't have. Only a small fraction of people have both of those. But supposing that you are one of the lucky few, how would you propose to go about profiting from a bubble like this?
    - piaste 2y ago
      > But supposing that you are one of the lucky few, how would you propose to go about profiting from a bubble like this? Buying put options on NVidia & co.
      - deleted 2y ago
        [deleted]
      - ryandrake 2y ago
JSDevOps 2y ago
Who would have thought no one needs 1000 AI tools which are just really at best automation tools
- martindbp 2y ago
  ? Why wouldn't you want to automate tasks? Current level AI will be able to automate quite a bit, it just takes time to proliferate, there is a lot of inertia in organizations.
  - benterix 2y ago
    In my niche, there is zero chance of automation by LLM as everything needs to be 100% deterministic so we just use plain ol' algorithms and they work perfectly.
    - dangvilify 2y ago
      [flagged]
    - dwaltrip 2y ago
      Fair enough, although I’d say it’s rare to need 100% determinism. The reliability of models on longer, more complex chains of reasoning is the biggest issue with the current gen AI wave, in my view. Very interested to see how and if this changes over the next few years. A huge amount of possibilities open up as this goes from 50% to 90% and higher. When you can break down tasks into manageable units and then chain dozens of them together with a decent chance of the model successfully completing the entire chain, this could enable a big jump in capability.
      - xracy 2y ago
        more than 100% determinism, most people need eventual consistency. AI isn't even like, 10% deterministic at this point. And that's kinda the point of the tools we're using.
beardyw 2y ago
As the production line trundles along a new batch of developers get their preserving coating of cynicism applied.
falloutx 2y ago
Yes Barclays, we need 12k chatbots, if not 120k chatbots. Now talk less invest more.
deleted 2y ago
[deleted]
organicparrot 2y ago
Stochastic parrots don't amount to much
josefritzishere 2y ago
Stochastic parrots dont generate infinitely increasing shareholder value? Shocking!
mpalmer 2y ago
As ever, the market found a very promising boat, and they had a huge party celebrating the launch of the boat into open water, confident of the wind. What does it matter that they have no idea where to sail it? They know they are bound for some port, and when they arrive it will be glorious.
- benterix 2y ago
  Practically speaking, if they reach somewhere or die on the way depends on the amount of funding. And we cannot be sure that the destination is worth it.
  - fuzzfactor 2y ago
    Different vessels cost different amounts, some are more luxurious than others. A yacht salesman will always encourage you to "Sink your life savings in a boat !" Some are just more seaworthy than others, size and conditions mean a lot but anything can go to the bottom where all is lost. Wherever you end up, you can get there in style if you can afford it.
    - ffsm8 2y ago
      The ship analogy is surprisingly good, so let's keep going: The Titanic wasn't sunk by running out of money. The most likely reason is going to be lacking funds in enterprise, but there are other ways to fail, too. Not every thing can be offset by a large purse And some ships spread so much pollution that the waters become toxic wastelands... Just like we can witness with the introduction of AI to the Internet
      - fuzzfactor 2y ago
        . . . and that's just the tip of the iceberg . . . Which could go without saying but I said it anyway ;)
  - Gud 2y ago
    Or maybe it will keep on sailing into the open sea?
mgdev 2y ago
Welcome to the trough of disillusionment.
- anotherhue 2y ago
  Gets ‘em every time.
kenmacd 2y ago
> "Capital continues to pour into the AI sector with very little attention being paid to company fundamentals," Maybe I'm just overly optimistic, but on a wider society scale I see a lot worse things they could be pouring money in to (eg Ads). Even if they never make money on it, at least we end up with a lot of open knowledge through all the papers that have been published and even some open-source models that can do some neat things.
- llamaimperative 2y ago
  There is a ton of money going into x with AI, including things like ads. Or customer support bots. Or shopping assistants… etc etc. The academic side of this whole industry is very small relative to overall funding amounts.
  - kenmacd 2y ago
    I'm sure you're right. I'm not sure how the 'the bad things with AI' shake out, but I'm trying to be optimistic. For example it's not like customer supports bots aren't already commonly used, and it's not like they can really get any worse. And even if the academic side is a small amount of the funding, it's at least something. Some of the rest is being spent training models I can download and run forever more. I guess mainly I'd rather focus on the interesting technical and scientific side of AI rather than worry about the investors.
KoolKat23 2y ago
Past revolutions on average took a generation to have any impact on productivity (the older generation had to retire basically, allowing companies to part with their old processes and procedures). AI should be a bit quicker, given its accessibility. Stubborn humans and their bureaucracy will hold that back a bit though. For instance my company is concerned about data privacy, needs to go through the legal departments approval then IT's approval, by the time it's in the actual hands of the user it's obsolete or limited in use case. Definitely a big opportunity for investors, the long payback period is the issue.
nottorp 2y ago
Well, I'm not paying a starbucks latte per month for something that has to be taken with two spoons of salt every time. Maybe one starbucks late per year... just maybe. Go do more carefully crafted demos to CEOs that don't try to use the product themselves and maybe you'll get some more sales.
deleted 2y ago
[deleted]
2OEH8eoCRo0 2y ago
I'm bullish on AI but I still think it's a bubble.
fsndz 2y ago
[flagged]
- cassianoleal 2y ago
  > The killer app of generative AI has not been built yet. That just sounds like what people have been saying about blockchain for as long as I remember.
puzzlingcaptcha 2y ago
The winter is coming.
red-iron-pine 2y ago
suddenly? bro it's been using the same amount of electricity as Bolovia, daily, for months now. this is only coming up now?
ChrisArchitect 2y ago
[dupe] Actual article among others: https://www.washingtonpost.com/technology/2024/07/24/ai-bubble-big-tech-stocks-goldman-sachs/ https://www.washingtonpost.com/technology/2024/07/24/ai-bubb... (Lots of discussion: https://news.ycombinator.com/item?id=41087719 https://news.ycombinator.com/item?id=41087719)
ginvok 2y ago
Well they did oversell LLMs just to make a quick buck... Crypto, "AI", I wonder what's the next bubble. I bet it's property in space or something.
EasyMark 2y ago
I think AI will be transformative for some industries, but it’s not the new “discovery of fire” that people are claiming. If we ever come up with a really conscious and hyper intelligent AI mechanism then that will be the new fire, but LLM ain’t it. So there are gonna be a lot of losers in the next couple of years
vessenes 2y ago
Early thinking was this might be an ‘extending innovation’ meaning it might favor incumbents. We have at least one new major firm out of the initial boom, with bright prospects, and huge cash burn, but a TON of customers. The tools are so general right now, there’s a lot to be written. It seems certain that we’ll get cost savings, automation, and almost certain that we’ll get new revenue streams out of this — whoever figures out how to get new revenue that’s not based on SAAS model delivery of cost savings is going to be very happy. To keep the long view, the last time we had such broad individual mass market adoption of a technical tool regardless of corporate bans and rules was the iPhone, before that, probably Linux in IT departments in the 1990s. People WANT and NEED these LLMs for a lot of daily work. Some folks are going to figure out the business models and make some venture funds very happy.
crabsand 2y ago
If you're working with text and you have some regularities in your workflow, you can gain some productivity points from current technology. In time most industries will have these regularities, similar to workflow improvements after the introduction of computer. But I also doubt if it will have that much effect. In general we have diminishing returns from these kind of technology, telegraph's effect on the world was larger than the computer, computers were more valuable than WWW and search engines have smaller effect than WWW. AI may be big, but could it be bigger than search or e-commerce? I doubt it.
- mike_hearn 2y ago
  Computers having little impact is true if you look at productivity graphs, but a lot of economists aren't sure that can really be true. https://en.wikipedia.org/wiki/Productivity_paradox https://en.wikipedia.org/wiki/Productivity_paradox If computers really had little impact on productivity then things like the Cloudstrike outage would be barely noticed, instead of causing instant mass disruption worldwide due to sudden productivity loss. It would also imply that everyone, everywhere, in every industry, is an idiot who adopted computers despite not getting much return. That isn't plausible, so it's more likely that there's a problem with data. In particular, note that productivity growth of 1% is compounding. Each year you need bigger and bigger upgrades to sustain that 1% growth.
  - Jensson 2y ago
    More likely the productivity growth was captured by the average poor in all the free programs we get today. Free google, free youtube, free porn, free wikipedia, free games, free... That is a massive amount of content and products you consume today that just aren't accurately valued by GDP, and thus not captured by productivity measurements. The companies providing those services makes money in other ways, sure, but that value isn't even close to the amount of money it would have costed to buy that much products for consumers in the old economy. Just take the amount of porn consumed by the average teenager today, that would have costed a fortune 30 years ago while today he got it for free.
tim333 2y ago
I think it's like the web in 1998. It was obvious the web was going to be huge but the companies at the time were overpriced and a lot of capital misallocated.

57 points by gusgus01 2y ago

dhj9817 2y ago

AI made a huge debut. Now it needs to flourish over the 10-15 years just like how .com did

onetokeoverthe 2y ago
[dead]
borggambit 2y ago
exactly, dotcom is fueling this bubble. The huge difference is we didnt have a previous bubble to compare dotcom to at the time. Dotcom is one justification for the current bubble because everything worked out. All that needed to happen for dotcom to workout though was high speed internet that business had come to people's homes. For this bubble to workout we need to come up with artificial beings on the level of humans from limited use case LLMs. It is completely delusional.
- ben_w 2y ago
  > For this bubble to workout we need to come up with artificial beings on the level of humans from limited use case LLMs. Robots? We've got loads of those already. Ones with super-human speed, super-human dexterity, super-human senses. Even got some cute tech demos where they get controlled by the OpenAI API. I'm not sure why you think that's delusional. But I'm also not sure why you think that's necessary, given that not only "all things which can be expressed in written form" can be used by an LLM, but also that the same architecture is fine with anything that can be tokenised which includes visual and audio tasks — i.e. most office jobs. No, what's necessary for this to not be a bubble is for someone to figure out how to turn what exists into an actual business model. "Business" is much less flashy, less cool, less exciting than tech demos filled with androids doing housework, parkour, or acting as a tour guide.

cratermoon 2y ago

When the AI bubble pops it will leave behind a grimy residue. https://buttondown.email/maiht3k/archive/the-grimy-residue-of-the-ai-bubble/ https://buttondown.email/maiht3k/archive/the-grimy-residue-o...

zitrussaft 2y ago
I never thought about how in some areas AI has removed creative expression. Kinda bleak, but on the other hand it allowed some fucking great generations
kenmacd 2y ago
Bit of a strange article. It seems to be trying to claim AI is 'hype' while at the same time claiming it "has the potential to ruin what were stable [hand weaver] careers".

ggm 2y ago

Waking up to the bubble predicted by many, observed by many, ongoing as we speak.

malux85 2y ago
Yep, so profit off it then? (The following is a general comment not directed at you OP) The human trait of disconnected intellect always fascinates me. People will predict something very publicly, never shut up about it, and then loudly proclaim “I told you so” when it happens, and then I say “well, how did you act on this knowledge to benefit yourself” and I always get crickets. It’s like people are too afraid to actually commit because if they are wrong it would imply their world view is wrong (and the intellectual gap between them and their couch is narrowing) but if they are right they can ignore that little inconvenient thing about their predictions having survivable bias and walk around with a smug sense of satisfaction. I have always thought it extremely odd how someone can proudly exclaim their predictions and then have nothing to show for them, humans confuse me a lot.
- esperent 2y ago
  I assume you're talking about investing? In which case, you need a sizeable amount of surplus capital, which most people don't have, and an interest in investing, which most people don't have. Only a small fraction of people have both of those. But supposing that you are one of the lucky few, how would you propose to go about profiting from a bubble like this?
  - piaste 2y ago
    > But supposing that you are one of the lucky few, how would you propose to go about profiting from a bubble like this? Buying put options on NVidia & co.
    - deleted 2y ago
      [deleted]
    - ryandrake 2y ago

JSDevOps 2y ago

Who would have thought no one needs 1000 AI tools which are just really at best automation tools

martindbp 2y ago
? Why wouldn't you want to automate tasks? Current level AI will be able to automate quite a bit, it just takes time to proliferate, there is a lot of inertia in organizations.
- benterix 2y ago
  In my niche, there is zero chance of automation by LLM as everything needs to be 100% deterministic so we just use plain ol' algorithms and they work perfectly.
  - dangvilify 2y ago
    [flagged]
  - dwaltrip 2y ago
    Fair enough, although I’d say it’s rare to need 100% determinism. The reliability of models on longer, more complex chains of reasoning is the biggest issue with the current gen AI wave, in my view. Very interested to see how and if this changes over the next few years. A huge amount of possibilities open up as this goes from 50% to 90% and higher. When you can break down tasks into manageable units and then chain dozens of them together with a decent chance of the model successfully completing the entire chain, this could enable a big jump in capability.
    - xracy 2y ago
      more than 100% determinism, most people need eventual consistency. AI isn't even like, 10% deterministic at this point. And that's kinda the point of the tools we're using.

beardyw 2y ago

As the production line trundles along a new batch of developers get their preserving coating of cynicism applied.

falloutx 2y ago

Yes Barclays, we need 12k chatbots, if not 120k chatbots. Now talk less invest more.

deleted 2y ago

[deleted]

organicparrot 2y ago

Stochastic parrots don't amount to much

josefritzishere 2y ago

Stochastic parrots dont generate infinitely increasing shareholder value? Shocking!

mpalmer 2y ago

As ever, the market found a very promising boat, and they had a huge party celebrating the launch of the boat into open water, confident of the wind. What does it matter that they have no idea where to sail it? They know they are bound for some port, and when they arrive it will be glorious.

benterix 2y ago
Practically speaking, if they reach somewhere or die on the way depends on the amount of funding. And we cannot be sure that the destination is worth it.
- fuzzfactor 2y ago
  Different vessels cost different amounts, some are more luxurious than others. A yacht salesman will always encourage you to "Sink your life savings in a boat !" Some are just more seaworthy than others, size and conditions mean a lot but anything can go to the bottom where all is lost. Wherever you end up, you can get there in style if you can afford it.
  - ffsm8 2y ago
    The ship analogy is surprisingly good, so let's keep going: The Titanic wasn't sunk by running out of money. The most likely reason is going to be lacking funds in enterprise, but there are other ways to fail, too. Not every thing can be offset by a large purse And some ships spread so much pollution that the waters become toxic wastelands... Just like we can witness with the introduction of AI to the Internet
    - fuzzfactor 2y ago
      . . . and that's just the tip of the iceberg . . . Which could go without saying but I said it anyway ;)
- Gud 2y ago
  Or maybe it will keep on sailing into the open sea?

mgdev 2y ago

Welcome to the trough of disillusionment.

anotherhue 2y ago
Gets ‘em every time.

kenmacd 2y ago

> "Capital continues to pour into the AI sector with very little attention being paid to company fundamentals," Maybe I'm just overly optimistic, but on a wider society scale I see a lot worse things they could be pouring money in to (eg Ads). Even if they never make money on it, at least we end up with a lot of open knowledge through all the papers that have been published and even some open-source models that can do some neat things.

llamaimperative 2y ago
There is a ton of money going into x with AI, including things like ads. Or customer support bots. Or shopping assistants… etc etc. The academic side of this whole industry is very small relative to overall funding amounts.
- kenmacd 2y ago
  I'm sure you're right. I'm not sure how the 'the bad things with AI' shake out, but I'm trying to be optimistic. For example it's not like customer supports bots aren't already commonly used, and it's not like they can really get any worse. And even if the academic side is a small amount of the funding, it's at least something. Some of the rest is being spent training models I can download and run forever more. I guess mainly I'd rather focus on the interesting technical and scientific side of AI rather than worry about the investors.

KoolKat23 2y ago

Past revolutions on average took a generation to have any impact on productivity (the older generation had to retire basically, allowing companies to part with their old processes and procedures). AI should be a bit quicker, given its accessibility. Stubborn humans and their bureaucracy will hold that back a bit though. For instance my company is concerned about data privacy, needs to go through the legal departments approval then IT's approval, by the time it's in the actual hands of the user it's obsolete or limited in use case. Definitely a big opportunity for investors, the long payback period is the issue.

nottorp 2y ago

Well, I'm not paying a starbucks latte per month for something that has to be taken with two spoons of salt every time. Maybe one starbucks late per year... just maybe. Go do more carefully crafted demos to CEOs that don't try to use the product themselves and maybe you'll get some more sales.

deleted 2y ago

[deleted]

2OEH8eoCRo0 2y ago

I'm bullish on AI but I still think it's a bubble.

fsndz 2y ago

[flagged]

cassianoleal 2y ago
> The killer app of generative AI has not been built yet. That just sounds like what people have been saying about blockchain for as long as I remember.

puzzlingcaptcha 2y ago

The winter is coming.

red-iron-pine 2y ago

suddenly? bro it's been using the same amount of electricity as Bolovia, daily, for months now. this is only coming up now?

ChrisArchitect 2y ago

[dupe] Actual article among others: https://www.washingtonpost.com/technology/2024/07/24/ai-bubble-big-tech-stocks-goldman-sachs/ https://www.washingtonpost.com/technology/2024/07/24/ai-bubb... (Lots of discussion: https://news.ycombinator.com/item?id=41087719 https://news.ycombinator.com/item?id=41087719)

ginvok 2y ago

Well they did oversell LLMs just to make a quick buck... Crypto, "AI", I wonder what's the next bubble. I bet it's property in space or something.

EasyMark 2y ago

I think AI will be transformative for some industries, but it’s not the new “discovery of fire” that people are claiming. If we ever come up with a really conscious and hyper intelligent AI mechanism then that will be the new fire, but LLM ain’t it. So there are gonna be a lot of losers in the next couple of years

vessenes 2y ago

Early thinking was this might be an ‘extending innovation’ meaning it might favor incumbents. We have at least one new major firm out of the initial boom, with bright prospects, and huge cash burn, but a TON of customers. The tools are so general right now, there’s a lot to be written. It seems certain that we’ll get cost savings, automation, and almost certain that we’ll get new revenue streams out of this — whoever figures out how to get new revenue that’s not based on SAAS model delivery of cost savings is going to be very happy. To keep the long view, the last time we had such broad individual mass market adoption of a technical tool regardless of corporate bans and rules was the iPhone, before that, probably Linux in IT departments in the 1990s. People WANT and NEED these LLMs for a lot of daily work. Some folks are going to figure out the business models and make some venture funds very happy.

crabsand 2y ago

If you're working with text and you have some regularities in your workflow, you can gain some productivity points from current technology. In time most industries will have these regularities, similar to workflow improvements after the introduction of computer. But I also doubt if it will have that much effect. In general we have diminishing returns from these kind of technology, telegraph's effect on the world was larger than the computer, computers were more valuable than WWW and search engines have smaller effect than WWW. AI may be big, but could it be bigger than search or e-commerce? I doubt it.

mike_hearn 2y ago
Computers having little impact is true if you look at productivity graphs, but a lot of economists aren't sure that can really be true. https://en.wikipedia.org/wiki/Productivity_paradox https://en.wikipedia.org/wiki/Productivity_paradox If computers really had little impact on productivity then things like the Cloudstrike outage would be barely noticed, instead of causing instant mass disruption worldwide due to sudden productivity loss. It would also imply that everyone, everywhere, in every industry, is an idiot who adopted computers despite not getting much return. That isn't plausible, so it's more likely that there's a problem with data. In particular, note that productivity growth of 1% is compounding. Each year you need bigger and bigger upgrades to sustain that 1% growth.
- Jensson 2y ago
  More likely the productivity growth was captured by the average poor in all the free programs we get today. Free google, free youtube, free porn, free wikipedia, free games, free... That is a massive amount of content and products you consume today that just aren't accurately valued by GDP, and thus not captured by productivity measurements. The companies providing those services makes money in other ways, sure, but that value isn't even close to the amount of money it would have costed to buy that much products for consumers in the old economy. Just take the amount of porn consumed by the average teenager today, that would have costed a fortune 30 years ago while today he got it for free.

tim333 2y ago

I think it's like the web in 1998. It was obvious the web was going to be huge but the companies at the time were overpriced and a lot of capital misallocated.