> [...] and likely charging nowhere near enough to cover their costs. As I wrote in the Subprime AI Crisis in September, in the event that these companies start

> [...] and likely charging nowhere near enough to cover their costs. As I wrote in the Subprime AI Crisis in September, in the event that these companies start charging what they actually need to, I hypothesize it will multiply the costs of their customers to the point that they can't afford to run their businesses [...] Free offerings are loss-leaders and will likely be enshittified within the next few years, but businesses relying on the models will instead be using a cloud GPU host or API, the price of which (based on the models we know the details of) appears to cover inference plus a profit margin. Plausible that releases of better models will slow down due to training/R&D expenses if investment decreases, but I think if you're paying for GPT-4 currently then from this point on there'll always be at least some equivalent model available. > [...] diminishing returns [...]. The entire generative AI movement lives and dies by the idea that more compute power and more training data makes these things better, and if that's no longer the case [...] what's the point? Diminishing returns means going from 100 GPUs to 101 GPUs does not give the same improvement as going from 1 GPU to 2 GPUs - not that it gives no improvement. The scaling laws predict this, and I believe it's likely true of any approach to intelligence rather than a limitation specific to deep learning. Computer graphics also has diminishing returns from compute, for instance. > The constant refrain I hear from VCs and AI fantasists is that "chips will bring down the cost of inference," yet I don't see any proof of that happening Surely it already has? Try running some recent LLM on 2010-2012 hardware from around when modern AI was taking off. > It cost $100 million to train GPT-4o [...] Beyonce's home cost $200 million, and advertising for the Monopoly Go mobile game cost $500 million. It's undoubtedly a lot of money, but also relatively high-impact and I wouldn't necessarily bet against it eventually going a couple of order of magnitudes higher.