9 ms·

Reading this makes me willing to bet that this capital intensive investment boom will be similar to other enormous capital investment booms in US history, such

• candiddevmike 2y ago
  What will be the advantage of having a bunch of obsolete hardware? All I see is more e-waste.
  • wslh 2y ago
    I don't think the parent was specifically referring to hardware alone. The 'rails' in this context are also the AI algorithms and the underlying software. New research and development could lead to breakthroughs that allow us to use significantly less hardware than we currently do. Just as the dot-com crash wasn’t solely about the physical infrastructure but also about protocols like HTTP, I believe the AI boom will involve advancements beyond just hardware. There may be short-term excess, but the long-term benefits, particularly on the software side, could be immense.
    • johnnyanmac 2y ago
      That's my big worry. The Internet was made with an idea of being a common. LLM's are very much built with mentalities of trade secrets, from their data aquisition to the algorithms. I don't think such techniques will proliferate for commercial use as easily when the bubble bursts.
  • iTokio 2y ago
    Well, at least they are paving the way to more efficient hardware, GPU are way, way more energy efficient than CPU and the parallel architectures are the only remaining way to scale compute. But yes, a lot of energy wasted in the growing phase.
    • dartos 2y ago
      GPUs are different than CPUs. They’re way more efficient at matmuls, but start throwing branching logic at them and they slow down a lot. Literally a percentage of their cores will noop while others are executing a branch, since all cores are lockstep.
    • aurareturn 2y ago
      >But yes, a lot of energy wasted in the growing phase. Why exactly is energy wasted during this phase? Are you expecting hardware to become obsolete much faster? But that only depends on TSMC's node cadence, which is still 2-3 years. Therefore, AI hardware will still be bound to TSMC's cadence.
  • goda90 2y ago
    Even if the hardware quickly becomes outdated, I'm not sure it'll become worthless so quickly. And there's also the infrastructure of the data center and new electricity generation to power them. Another thing that might survive a crash and carry on to help the future is all the code used to support valuable use cases.
  • almost_usual 2y ago
    In the case of dark fiber the hardware was fine, wavelength division multiplexing was created which increased capacity by 100x in some cases crashing demand for new fiber. I think OP is suggesting AI algorithms and training methods will be improve resulting in enormous performance gains with existing hardware causing a similar surplus of infrastructure and crash in demand.
    • llamaimperative 2y ago
      How much of current venture spending is going into reusable R&D that can be moved forward in time the way that physical infrastructure in their examples were able to be used in the future?
      • Eisenstein 2y ago
        Considering that models have been getting more powerful for the same number of parameters -- all of it.
        • llamaimperative 2y ago
          That... is not relevant. The question is what percentage of R&D spend gets "encoded" into something that can survive the dissolution of its holding company and how much does a transfer to a new owner depreciate it. I'd be shocked if more than like 20% of the VC money going into it would come out the other side during such an event.
  • CamperBob2 2y ago
    Do you expect better hardware to suddenly start appearing on the market, fully-formed from the brow of Zeus?
  • bee_rider 2y ago
    Maybe the bust will be so rough that TSMC will go out of business, and then these graphics cards will not go obsolete for quite a while. Like Intel and Samsung might make a handful of better chips or whatever, but neither of their business models really involve being TSMC. So if the bubble pop took out TSMC, there wouldn’t be a new TSMC for a while.
  • aurareturn 2y ago
    >What will be the advantage of having a bunch of obsolete hardware? All I see is more e-waste. The energy build out, data centers are not wasted. You can swap out A100 GPUs for BH200 GPUs in the same datacenter. A100s will be 5 years old when Blackwell is out - which is just about right for how long datacenter chips are expected to last. I do, however, think that the industry will move to newer hardware faster to try to squeeze as much efficiency as possible due to the energy bottleneck. Therefore, I expect TSMC's N2 nodes to have huge demand. In fact, TSMC themselves have said designs for N2 far outnumber N3 at the same stage of the node. This is most likely due to AI companies that want to increase efficiency due to the lack of electricity.
  • Mengkudulangsat 2y ago
    All those future spare GPUs will make video game streaming dirt cheap. Even poor people can enjoy 8k gaming on a phone soon.
    • shaklee3 2y ago
      Most data center GPUs do not have game rendering hardware in them.
• bwanab 2y ago
  While I agree with your essential conclusions, I don't think the automobile companies really fit. Many of the early 1900s companies (e.g. Ford, GM, Mercedes, even Chrysler) are still among the largest auto companies in the world.
  • throwaway20222 2y ago
    There were hundreds of failed automotive companies and parts suppliers though. I think the argument is that many will die, some will survive and take all (most)
    • aurareturn 2y ago
      But that happens in every bubble. Over investment, consolidation, huge winners in the end, and maybe eventually a single monopoly.
      • danielmarkbruce 2y ago
        There isn't a rule as to how it plays out. No huge winners in cars, no huge winners in rail. Lots of huge winners in internet.
        • aurareturn 2y ago
          There were huge winners in cars. Ford and GM have historically been huge companies. Then oil companies became the biggest companies in the world mostly due to cars.
          • danielmarkbruce 2y ago
            GM went bankrupt. Ford would have without government intervention. Each have had periods of profitability but they weren't ever anything like microsoft/google etc. Ford has underperformed the stock market average since it went public like 70 odd years ago. GM got so big in the first place via acquisitions, not because the business of cars lent itself to a dominant player. Huge by itself isn't the same as huge winner.
• aurareturn 2y ago
  I'm sure you are right. At some point, the bubble will crash. The question remains is when the bubble will crash. We could be in the 1995 equivalent of the dotcom boom and not 1999. If so, we have 4 more years of high growth and even after the crash, the market will still be much bigger in 2029 than in 2024. Cisco was still 4x bigger in 2001 than in 1995. One thing that is slightly different from past bubbles is that the more compute you have, the smarter and more capable AI. One gauge I use to determine if we are still at the beginning of the boom is this: Does Slack sell an LLM chatbot solution that is able to give me reliable answers to business/technical decisions made over the last 2 years in chat? We don't have this yet - most likely because it's probably still too expensive to do this much inference with such high context window. We still need a lot more compute and better models. Because of the above, I'm in the camp that believe we are actually closer to the beginning of the bubble than at the end. Another thing I would watch closely to see when the bubble might pop is if LLM scaling laws are quickly breaking down and that more compute no longer yields more intelligence in an economical way. If so, I think the bubble would pop. All eyes are on GPT5-class models for signs.
  • vladgur 2y ago
    Re: Slack chat: Glean.com does it for the enterprise I work at: It consumes all of our knowledge sources including Slack, Google docs, wiki, source code and provides answers to complex specific questions in a way that’s downright magical. I was converted into a believer when I described an issue to it, pointers to a source file in online git repo and it pointed me to another repository that my team did not own that controlled DNS configs that we were not aware about. These configs were the reason our code did not behave as we expected.
    • aurareturn 2y ago
      Thanks. I didn't know that existed. But does it scale? Would it still work if large companies with many millions of Slack messages? I suppose one reason Slack doesn't have a solution yet is because they're having a hard time getting it to work for large companies.
      • deleted 2y ago
• HarHarVeryFunny 2y ago
  Similarly, I like to compare AI (more specifially LLM) "investment" to the cost of building the channel tunnel between UK and France. The original investors lost their shirt, but once built it is profitable to operate.
  • tim333 2y ago
    I was an original investor. I still have shirts and shares in it but they could have done better.
• ben_w 2y ago
  > but now that renewables are the cheapest form of energy, I believe this huge, well-funded demand will accelerate the growth of non-carbon energy sources I think the renewables would have been built at the same rate anyway precisely because they're so cheap; but nuclear power, being expensive, would not be built if this bubble had not happened, and somehow nuclear does seem to be getting some of this money.
  • atomic128 2y ago
    I want to point out to anyone who's interested in the nuclear angle that even before the AI data center demand story arrived, the uranium market was facing a persistent undersupply for the first time in its many decades of history. As a result, the (long-term contract) price of uranium has been steadily rising for years: https://www.cameco.com/invest/markets/uranium-price https://www.cameco.com/invest/markets/uranium-price After Fukushima (https://news.ycombinator.com/item?id=41768726 https://news.ycombinator.com/item?id=41768726), Japanese reactors were shut down and there was a glut of uranium available in the spot market. Simultaneously, Kazatomprom flooded the market with cheap ISR uranium. The price of uranium fell far below the cost of production and the mining companies were obliterated. The few miners that survived via their long-term contracts (primarily Cameco) put their less efficient mines into care and maintenance. Now we're seeing the uranium mining business wake up. But after a decade of bear-market conditions the miners cannot serve the demand: they've underinvested, they've lost skilled labor, they've shrunk. The rebound in uranium supply will be slow, much slower than the rebound in demand. This is because uranium mining is an extremely difficult process. Look at how long NexGen Energy's Rook 1 Arrow mine has taken to develop, and that's prime ore (https://s28.q4cdn.com/891672792/files/doc_downloads/2022/03/0000-BA00-RPT-0002_2-compressed.pdf https://s28.q4cdn.com/891672792/files/doc_downloads/2022/03/...). Look at Kazatomprom's slowing growth rate (https://world-nuclear-news.org/Articles/Kazatomprom-lowers-2025-uranium-production-expecta https://world-nuclear-news.org/Articles/Kazatomprom-lowers-2...), look at the incredible complexity of Cameco's mining operations: https://www.petersenproducts.com/articles/an-inflatable-tunnel-seal-stops-flooding-of-the-worlds-largest-undeveloped-uranium-mine.html https://www.petersenproducts.com/articles/an-inflatable-tunn... Here is a discussion of the uranium mining situtation: https://news.ycombinator.com/item?id=41661768 https://news.ycombinator.com/item?id=41661768 (including a very risky method of profiting from the undersupply of uranium, stock ticker SRUUF, not recommended). Note that Numerco's uranium spot price was put behind a paywall last week. You can still get the intra-day spot uranium price for free here: https://www.yellowcakeplc.com/ https://www.yellowcakeplc.com/
• from-nibly 2y ago
  The problem is that all that mal investment will get bailed about by us regular shmucks. Get ready for the hamster wheel to start spinning faster.
• kjkjadksj 2y ago
  Not all of that infrastructure gets soaked up, plenty is abandoned. Look at the state of american passenger rail for example and how quickly the bottom of that industry dropped out. Many old rail right of ways sit abandoned today. Likewise with telecoms, e.g. the microwave network that also sits abandoned today.
  • yowayb 2y ago
    That may be true now, but Europe has had a resurgence in rail usage growth recently, so I'm not sure it's true forever.
• jacobgorm 2y ago
  Railroads and computer networks create network effects, I am not sure the same is true for data centers full of hardware that becomes outdated very quickly.
  • CSMastermind 2y ago
    If they're building new power plants to support all those data centers than that power generation capacity might be put to good use doing something else.
    • johnnyanmac 2y ago
      Lots of ifs going on here. I haven't been so optimistic of tech this decade compared to the early '10's.
    • gloflo 2y ago
      As global society we must strive to reduce energy consumption, not to find new use cases for burning more energy. Our planet has limited resources.
  • SJC_Hacker 2y ago
    The data centers themselves with all the supporting infrastructure (telecom/power), as well as all the chip fabs needed to build the hardware, even if the hardware itself becomes obsolete / breaks down on a 4-5 year time scale. In the same way the rights of way obtained with all the railroads were, even if the rails / engines themselves had to be replaced every decade or so But some hardware does last quite a long while. Fiber laid from 25 years ago is still pretty useful.
    • deleted 2y ago
      [deleted]
• jiggawatts 2y ago
  Something people forget is that a training cluster with tens of thousands of GPUs is a general purpose supercomputer also! They can be used for all sorts of numerical modelling codes, not just AI. Protein folding, topology optimisation, route planning, satellite image processing, etc… We bought a lot of shovels. Even if we don’t find more gold, we can dig holes for industry elsewhere.
  • fhdsgbbcaA 2y ago
    I think there is an LLM bubble for sure, but I’m very bullish on the ease with which one can generate new specialized models for various tasks that are not LLM. For example, there’s a ton of room for developing all kinds of low latency, highly reliable, embedded classifiers in a number of domains. It’s not as gee-whiz/sci-fi as an LLM demo, but I think potentially much bigger impact over time.
    • datavirtue 2y ago
      Spot on.
    • jiggawatts 2y ago
      Agreed! One thing I noticed is that the LLM craze seems to have triggered some other developments in only vaguely related fields. My favourite example is the astonishing pace with which reverse-rendering technology has progressed. It started with a paper by NVIDIA showing projections of 2D photos being "fitted" into a 3D volume of differentiable hashtables, and then the whole thing exploded when Guassian Splats were invented. I full expect this niche all by itself to generate a huge variety of practical applications. Computer games and movie special effects, obviously, but also AR/VR, industrial uses, mapping, drone navigation, etc...
• fsndz 2y ago
  Building robust LLM-based applications is token-intensive. You often have to plan for the parsing and digestion of a lot of tokens for summarization or even retrieval augmented generation. Even the mere generation of marketing blogposts consumes a lot of output tokens in most cases. Not to mention that all robust cognitive architectures often rely on the generation of several samples for each prompt, custom retry logics, feedback loops, and reasoning tokens to achieve state of the art performance, all solutions powerfully token-intensive. Luckily, the cost of intelligence is quickly dropping. GPT-4, one of OpenAI’s most capable models, is now priced at $2.5 per million input tokens and $10 per million output tokens. At its initial release in March 2023, the cost was respectively $10/1M input tokens and $30/1M for output tokens. That’s a huge $7.5/1M input tokens and $20/1M output tokens reduction in price. https://www.lycee.ai/blog/drop-o1-preview-try-this-alternative https://www.lycee.ai/blog/drop-o1-preview-try-this-alternati...
• datavirtue 2y ago
  I'm investing in undervalued businesses who are selling the shovels.
  • 0xDEAFBEAD 2y ago
    That's the funny thing about the AI boom. There's way more hype about shovel sellers than shovel buyers. No one is getting excited about "AI slop", just the models that generate it. Funny situation.
    • tim333 2y ago
      The hypothesis is the AI slop will improve. A bit like 1990s internet where there was a lot of futzing with dial up modems to eventually get a fairly crappy web page. But you could tell it would get better.
    • shadowmanifold 2y ago
      It is rather comical. Everyone knows that panning for gold is a fools game so we have a gold pan/shovel bubble. It is like having a massive lumber bubble and calling it a real estate bubble because someday we might actually build those houses.
• lelanthran 2y ago
  > Reading this makes me willing to bet that this capital intensive investment boom will be similar to other enormous capital investment booms in US history, such as the laying of the railroads in the 1800s, the proliferation of car companies in the early 1900s, and the telecom fiber boom in the late 1900s. In all of these cases there was an enormous infrastructure (over) build out, followed by a crash where nearly all the companies in the industry ended up in bankruptcy, but then that original infrastructure build out had huge benefits for the economy and society as that infrastructure was "soaked up" in the subsequent years. > I think that will happen here. Why? The rail network, road network and fiber network that was laid could be used for decades after their original investors went bust. The current datacenters full of AI compute can't really be used for anything else if AI companies go bust. That's the problem with investing in compute infrastructure - you need to have a plan to use it all up in the next 5 years, because after that you wouldn't even be able to give it away.
  • margalabargala 2y ago
    The renewable power infrastructure for those datacenters will still exist. People will be able to buy those used GPUs cheap and run small local LLMs perhaps. A 10 year old computer today won't do state of the art games or run models, but is entirely acceptable for moderate computing use.
    • flakeoil 2y ago
      But in terms of compute/watt those 10 year old data centers are going to suck and that is what counts for a data center.
    • lelanthran 2y ago
      > People will be able to buy those used GPUs cheap and run small local LLMs perhaps. Maybe; I find it unlikely though, because unlike CPUs, there's a large difference in compute/watt in subsequent generations of GPUs.[1] I would imagine that, from an economics PoV, the payback for using a newer generation GPU over a previous generation GPU in terms of energy usage is going to be on the order of months, not years, so anyone needing compute for more than a month or two would save money by buying a new one at knockdown prices (because the market collapsed) than by getting old ones for free (because the market collapsed). [1] Or maybe I am wrong about this - maybe each new generation is only slightly better than the previous one
• James_K 2y ago
  My thoughts exactly. One of the best ways to develop countries is to just invest in a bunch of infrastructure. It probably won't be optimal, but it's better than not investing. It's interesting that the private bubbles in this case form a simulacrum of public investment. Instead of the government raising money to invest through taxes, capitalists just throw it away on fads. Perhaps it even helps to address inequality in the long run. That said, I'm not sure the effect of digital infrastructure will be the same as physical infrastructure. A road has a clear material impact on all businesses in the area and their capacity to produce physical goods. But do data centres have the same effect? An extra lane on the road means you can get a greater volume of goods in and out to broaden operations to a larger area, but I don't see what positive effect two data centres could have on the average business. For as great as the internet is, I don't know how much value is created here. The question of what to do with a railroad is quite easily answered, but I'm not really sure what you can do with a datacentre. I guess whoever works it out will be decently rich. But I feel we already have enough computing power, and the bottleneck in the whole process is making software that efficiently uses it (or knowledge of how to operate such software), rather than the power of devices themselves. Though perhaps as the bubble bursts, the price of programmers will also decrease significantly and the software issue will be resolved.
• btbuildem 2y ago
  Of course it's similar: they're all instances of a capitalist "boom -> boost -> quit" cycle. At least this frontier is mostly digital in terms of resources being destroyed. Maybe we will get a nuclear energy renaissance out of this, who knows.
• wkat4242 2y ago
  Yeah this is the thing. Investors are only looking for the next bitcoin these days. Something that will pay back 10.000-fold in 2 years. They're cheering each other on and working themselves up drooling over the imagined profits. They no longer have any long-term vision. If it doesn't meet those sky-high expectations it's a flop. The same happened with metaverse, blockchain etc. Those technologies are kinda shitcanned now which is unfair too because they have excellent usecases where they add value. It was never going to be for everyone, and no we weren't all going to run around with an oculus quest 24/7. I think these investors break it more than they do good.
• bamboozled 2y ago
  I was thinking about it today, it's absolutely wild we're building nuclear to fuel this boom alone. If it doesn't pan out as we expect, what is to happen to all this nuclear investment ? Sounds positive to me.
• irunmyownemail 2y ago
  A few thoughts, Netflix works fine over an old, slow DSL connection. Fossil fuels aren't going away this century, especially not with power hungry AI (setting aside discussion on whether AI is truly worth it).
  • baby_souffle 2y ago
    > A few thoughts, Netflix works fine over an old, slow DSL connection. debatable depending on what "fine" means. In any case, DSL really doesn't go far. The old version from the early 2000's could work out to a few miles / km but only with absolutely perfect condition copper. The newer DSL versions are limited to much less distance even with good quality cable. Each neighborhood has a head-end that does the copper <-> fiber transition. Unless you lived _really_ close to the Central Office, your DSL service was probably copper only for a few blocks before it transitioned to fiber going from TelCo central office to all the individual DSLAMs scattered about.
• 7thaccount 2y ago
  The amount of power needed for data centers over the next decade is estimated at like 80+ GW of growth by 2030 which is insane. It'll either prompt serious investment in small modular reactors and rescuing older nuke plants about to retire, or we'll see a massive build out in gas. These companies want the power to be carbon free, so they're trying to do the former, but we'll see how practical that is. Small modular reactors are still pretty new and nobody knows how successful that will be. At the end of the day, I feel like this will all crash and burn, but we may end up with some kind of nuclear renaissance. We're also expanding the transmission grid and building more wind, solar, and storage. However, I don't think that alone is going to satisfy the needs of these data centers that want to run nearly 24/7.
  • Kon-Peki 2y ago
    Many data center tax breaks have carbon-free energy requirements (to varying degrees). If the pace of building data centers exceeds the ability to provide carbon-free energy, you may see a shift in the location of data centers, away from locations with good incentives and toward locations with the availability of energy regardless of its source.
• SoftTalker 2y ago
  Except railroads, manufacturing plants, telecom fiber and those prior build-outs were for infrastructures that have useful lifetimes measured in decades. Computing infrastrucuture that's even one decade old is essentially obsolete. Even desktop PCs are often life-cycled in 5 years, servers often the same. If it takes AI a decade to find its way, most of today's investment won't be useful at that point.
  • fizx 2y ago
    Don't think of an H100. Think of the factories, the tooling, the datacenters and the power supply needed to light one up.
• jbs789 2y ago
  I think this is the reasoned answer. It’s interesting to observe who is making the counterpoint - it’s often very vocal fundraisers. Of course you can argue they are raising because they believe, and I don’t (necessarily) doubt that in all cases.
• jordanb 2y ago
  The only asset from the telcom bubble that was still valuable was fiber in the ground. All the endpoints were obsolete and had to be replaced within a few years. The fiber could be reused and installing it was expensive, so that was the main asset. What asset from the AI bubble will still be valuable 5 years later? Probably not any warehouses full of 5 year old GPUs. Maybe nuclear power plants?
  • RF_Savage 2y ago
    I doubt they will manage to do a significant nuclear buildout in mere five years. But future renevables will potentially benefit from the stronger grid.