6 ms·

An AI bubble threatens Silicon Valley, and all of us

143 points by semiquaver 2y ago

cratermoon 2y ago
Confirming Ed Zitron's careful analysis of the situation with SoftBank, Microsoft, and OpenAI: https://www.wheresyoured.at/optimistic-cowardice/ https://www.wheresyoured.at/optimistic-cowardice/. "Outside of NVIDIA, nobody is making any profit off of generative AI, and once that narrative fully takes hold, I fear a cascade of events that gores a hole in the side of the stock market and leads to tens of thousands of people losing their jobs." You'll note that the prospect story mentions Zitron multiple times.
- bfrog 2y ago
  A clear eyed take, Nvidia is reaping the benefits of this new rush for now.
- hotpepperishot 2y ago
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- alephnerd 2y ago
  There is a move towards software again, as ime a lot of the "AI" oriented investment was around hardware [0]. In my opinion, it was a side effect of how hardware became sexy again as an investment story, though in action, the fabless players like Nvidia and the diversified players like Broadcom that could take full advantage of that "AI" and "Hardware" story because of better margins. I've also been very open about my opinions that companies that sell a foundational model cannot build a strong long term moat, as an overtrained or specialized models will outcompete foundational models in PoCs and domain specific applications, and the actual hardware needed isn't that exhorbitant as DeepSeek has shown (that said I don't think they spent $6m - it was probably in the $20-50m range, but even then fairly reasonable for most organizations). [0] - https://www.reuters.com/technology/artificial-intelligence/us-chip-darlings-struggle-some-bet-software-next-big-ai-play-2025-03-06/ https://www.reuters.com/technology/artificial-intelligence/u...
bhouston 2y ago
I do worry about the viability of OpenAI in particular. So much of its talent went to other firms which then built up amazing capaibilities like Anthropic with Claude. And then they also have the threat of OpenSource models like DeepSeek v3.1 and soon DeepSeek R2 while at the same time OpenAI is raising its prices to absurd levels. I guess they are trying to be the Apple of the AI world... maybe... That said, I expect protectionist policies will be enabled by the US government to protect them and also X.AI/Grok from foreign competition, in particular Chinese.
- JesseTG 2y ago
  Are there specific policies that come to mind?
  - danans 2y ago
    The most obvious one being proposed is banning Chinese models from the US (like China bans Google, etc). At the extreme end, some members of the administration has already floated ideas like prosecuting users who download Chinese models.
    - JesseTG 2y ago
      How would that even be enforced?
- diggan 2y ago
  > worry about the viability of OpenAI in particular [...] they also have the threat of OpenSource models It's a real shame OpenAI didn't succeed with their core and most fundamental mission of being open and improving humanity as a whole, where new FOSS models would have been seen as a success, not as a competitor or threat. We're all worse off because of it.
  - aiono 2y ago
    > It's a real shame OpenAI didn't succeed with their core and most fundamental mission of being open and improving humanity as a whole You frame it like they sincerely had this mission at all. Which I doubt seriously. Why would anyone who funded them have such aim?
elorant 2y ago
One of the reasons I'd like this bubble to burst is to see Nvidia's stock collapse. I'm sick and tired of their exuberant prices.
bionhoward 2y ago
Epictetus would hate this trend to outsource mental work
- apples_oranges 2y ago
  Knowledge work. Part of it is the ability to reason and part of it is just knowing many things and certain fundamental principles.
- nntwozz 2y ago
  Just an anecdote, my father when he was younger used to be a great driver. He would drive all around Europe on our vacations, in capital cities (e.g. Paris) with nothing but a tourist map (mother holding the map) and his eyes and ears. Places I wouldn't really like to drive myself today because of the difficulty (Italy etc.). For many years he's been using GPS to assist him, first TomTom then iPhone and now his new car has CarPlay. He's a much worse driver today, constantly distracted, constantly looking at the screen instead of his surroundings and actually learning, using his brain. I myself like to ride MTB in the woods, I know all the trails and small features in the back of my head. I'm aware of my surroundings and it just sticks without any effort over the years. I have friends I ride with who use a trail map on their phone or bike computer, many years later they still don't know the trails because they're always looking at their devices. Sometimes we stop to "have a look" where the fork in the trail goes, drives me mad when it interrupts the flow of the ride. This is what AI feels to me in many ways. It's a double-edged sword.
  - aoeusnth1 2y ago
    I agree, but GPS for knowledge work does sound like something that will pan out to be a big industry, right?
- dest 2y ago
  Do you have more details on which aspects of Epictetus' philosophy are related to hating to outsource mental work? I'm not familiar enough with stoicism. Thanks (I could ask chatgpt, I ask you instead =p) PS: Claude 3.5 Haiku take on it: "For Epictetus, the process of thinking is more important than the result. By outsourcing mental work, people surrender their most valuable tool for self-improvement - their own mind."
MaxPock 2y ago
We appreciate China for its strong push toward open-source AI. Without models like DeepSeek and Qwen, the U.S. was set to dominate AI with closed-source systems, charging tens of billions in rent every month while deciding who gets access based on politics. "Hey, Eritrea, you're authoritarian—you can't use our democratic AI until you democratize." "Hey, Saudi Arabia and Qatar, you're not authoritarian—you can have our AI." Once again, thank you, Chairman Xi, for saving us from this nonsense.
- steve76 2y ago
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strict9 2y ago
I'm usually skeptical of doomer articles about new technology like this one, but reluctantly find myself agreeing with a lot of it. While AI is a great tool with many possibilities, I don't see the alignment of what many of these new AI startups are selling. It makes my work more productive, yes. But it often slows me down too. Knowing when to push back on the response you get is often difficult to get right. This quote in particular: >Surveys confirm that for many workers, AI tools like ChatGPT reduce their productivity by increasing the volume of content and steps needed to complete a given task, and by frequently introducing errors that have to be checked and corrected. This sort of mirrors my work as a SWE. It does increase productivity and can reduce lead times for task completion. But requires a lot of checking and pushback. There's a large gap between increased productivity in the right field in the right hands vs copying and pasting a solution everywhere so companies don't need workers. And that's really what most of these AI firms are selling. A solution to automate most workers out of existence.
- zero_shift 2y ago
  I'm sure I've read somewhere - and it annoys me immensely that I can't recall the source - that SWEs perceive they are more productive with AI, but the measurements say they aren't.
  - tartoran 2y ago
    More productive with AI or more productive in general?
  - bwestergard 2y ago
    This seems right, intuitively, but I'd love to see a source. I've noticed that when I detect chatbot-style code in a coworker's PR, I often find subtle problems. But it's harder for me to spot the problems in code I got out of a chatbot because I am primed by the very activity of writing the prompt to see what I desire in the output.
  - bluefirebrand 2y ago
    This is my observation. Not a scientific measurement by any means but from what I can see it isn't speeding anyone up If I had to guess, people feel more productive because they are doing less of the work they are used to and more review / testing, but to reach the same level of confidence the review takes much longer And the people who are not doing thorough review are producing absolute garbage, and are basically clueless
greatpostman 2y ago
Calling everything a bubble is low iq. People that cannot understand society, or accept change, run with the bubble narrative at every turn
- deleted 2y ago
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- axcnfh 2y ago
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- lompad 2y ago
  Trying to reduce complex desicions to "iq" is by itself a marker for a lack of knowledge and a desperate attempt to make yourself feel superior to others. IQ != intelligence Anyway, aside from that - if it's not a bubble, there should be a sustainable business model, meaning, one which doesn't lose you ten times the money you make. So, where is it? Which company, besides nvidia, has actually created a sustainable business model based on AI? Where is its moat? DeepSeek showed us that right now, OpenAI doesn't have any moat to speak of and can be essentially copied. Not exactly great for future profits.
  - bluefirebrand 2y ago
    > Which company, besides nvidia, has actually created a sustainable business model based on AI NVidia's business model is not based on AI, is it? They are selling hardware. Their business success is "during a gold rush, sell shovels", isn't it?
  - gruez 2y ago
    >Trying to reduce complex desicions to "iq" is by itself a marker for a lack of knowledge and a desperate attempt to make yourself feel superior to others. >IQ != intelligence Pot, meet kettle. IQ might not be actually measuring intelligence, whatever that might mean, but it's highly correlated with various things that are generally agreed to be indicators of intelligence, eg. educational attainment or performance on standardized tests. For something as woolly as "intelligence", IQ is pretty much as close as we can get, without trying to claim "it can't be measured exactly so we're not going to even trying to quantify it". Moreover it's pretty obvious that the parent commenter is using "iq" as a shorthand for intelligence, not referring to the results of a test that has to be administered by a trained professional and almost nobody knows the actual value of. The commenter you replied to made a bad take, but you're basically doing the very thing you're trying to decry, by trying to viciously attack him with accusations of "a lack of knowledge and a desperate attempt to make yourself feel superior to others".
ausbah 2y ago
still loads of money to be made in being the company hosting models on your fleet of GPUs. open source models and training paradigms definitely have undercut the proprietary model moat, but you need a good chunk of compute to run these models and not everyone has or wants that compute themselves
zero_shift 2y ago
This journalist, Ed Zitron, is very skeptical of AI and his arguments border on polemic. But I find his perspective interesting - essentially, that very few players in the AI space are able to figure out a profitable business model: https://www.wheresyoured.at/core-incompetency/ https://www.wheresyoured.at/core-incompetency/
- alephnerd 2y ago
  What does Zitron define as "AI" companies though? (Actually curious). A lot of "AI" investments in public markets were basically a bundle of fabless players (Nvidia), data center adjacent players (Broadcom), and some applications, whereas private/VC investment was bifurcated between foundational model players (OpenAI, Anthropic), application or AIOps oriented players (ScaleAI, Harness, etc), and rebranded hardware vendors (Cerebras, CoreWeave, Groq, Lambda). If by AI he means foundational model companies, then I absolutely agree that there is a need to be bearish about their valuations, because they can constantly be outcompeted by domain specific or specialized models. Furthermore, a lot of the recent "AI" IPO hype are functionally fabless hardware companies like CoreWeave or Cerebras who were previously riding high because of the previous boom in semiconductor and chip investments. I've been fairly open about this opinion at my day job.
  - zero_shift 2y ago
    I think he sees the weakness more in the model/product/IP holding companies than the infra/hardware/commodity compute side
    - alephnerd 2y ago
      Interesting. I personally think there is more risk on the commodity compute side because the projected multiples for a Cerebras or CoreWeave are imo unrealistic in such a margins driven market, and there was a DC funding boom that has started lagging over the past couple months, as there appears to be a bit of an overcapacity issue in compute - imo very similar to that in the mid-2000s with servers and networking players like Dell, EMC, Cisco, etc. That said, I have a similar opinion about foundational model companies as well.
fullshark 2y ago
The end result of this wave looks increasingly like will get us an open web blogspam apocalypse, better search / information retrieval, better autocomplete for coders. All useful (well useful to bloggers/spammers at least), not trillions of dollars in value generated though. Until a new architecture / approach takes root at least.
- mountainriver 2y ago
  The software industry as a whole generates trillions of dollars every year. The current state of AI makes coders significantly more efficient and it’s only getting better. It’s easily worth trillions with just normal speculation.
  - jjulius 2y ago
    >The current state of AI makes coders significantly more efficient and it's only getting better. Do you have any data that supports this assertion and the associated upward trend?
    - mountainriver 2y ago
      There is a lot of data to support this, most of it showing 20-50% efficiency gains. For a multi-trillion dollar industry that equates to potentially over a trillion dollars in efficiency in a single year. https://github.blog/news-insights/research/research-quantifying-github-copilots-impact-on-developer-productivity-and-happiness/#:~:text=,89 https://github.blog/news-insights/research/research-quantify... https://www.infoq.com/news/2024/09/copilot-developer-productivity/#:~:text=University%20of%20Pennsylvania%20www,increase%20in%20productivity https://www.infoq.com/news/2024/09/copilot-developer-product... https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/unleashing-developer-productivity-with-generative-ai https://www.mckinsey.com/capabilities/mckinsey-digital/our-i... https://intuitive.cloud/blog/delve-into-the-depths-of-amazon-codewhisperer https://intuitive.cloud/blog/delve-into-the-depths-of-amazon... https://www.hbs.edu/ris/Publication%20Files/24-013_d9b45b68-9e74-42d6-a1c6-c72fb70c7282.pdf https://www.hbs.edu/ris/Publication%20Files/24-013_d9b45b68-... https://arxiv.org/pdf/2303.17125 https://arxiv.org/pdf/2303.17125 This isn't slowing down either, if anything its accelerating with reasoning models. Which means it likely under-valued actually. Lets not forget those numbers are just for software!
lukev 2y ago
It's really hard to accurately assess the possibilities granted by LLMs, because they just feel like they have so much potential. But ultimately I think Satya Nadella is right. We can speculate about the potential of these technologies all we want, but they are now here. If they are of value, then they'll start to significantly move the needle on GDP, beyond just the companies focused on creating them. If they don't, then it's hype.
- mjr00 2y ago
  > It's really hard to accurately assess the possibilities granted by LLMs, because they just feel like they have so much potential. I agree, but this feeling isn't anything new! This was the verbatim argument people used when insisting that blockchain was going to be a transformative technology. Bitcoin increased in value so dramatically and so quickly that it just felt like there had to be something valuable in the underlying technology, and corporations collectively through billions at it because they wanted to be the ones to exploit it first. It's very easy to look back and say "well of course it's different this time," but the exuberance for blockchain at the time really was very close to current AI hype levels. It's quite possible that AI becomes a useful tool in some relatively niche scenarios like software development while never delivering on the promise of replacing large swathes of skilled labor.
  - hatefulmoron 2y ago
    >> It's really hard to accurately assess the possibilities granted by LLMs, because they just feel like they have so much potential. > I agree, but this feeling isn't anything new! This was the verbatim argument people used when insisting that blockchain was going to be a transformative technology. Not saying you're doing this, just a random thought: it's funny seeing how much effort is spent trying to predict the trajectory of LLMs by comparing them to the trajectories of other technologies. Someone will say that AI is like VR or blockchain, and then someone else will chime in that we're actually in the early days of something like the internet, etc, etc.. It's like, imagine I wanted to know if my idea was any good. Thinking about the idea itself is hard, instead I'll explain it to you and look at your reaction. Oh no, that's the face of someone who just had NFTs explained to them, I should halt immediately.
softwaredoug 2y ago
I worry about the cultural shift in Tech to "what have you done for me lately" over patient innovation. Due to no more ZIRP, due to a shift to very top-down management, narcissistic CEO bros, and the new focus to please investors over all else... There's little appetite for actual innovation, which would require IMO a different culture and much more trust between management and employees. So instead, there's top-down AI death marches to "innovate" because that's the current trend. But who is DEFINING the trend? Who is actually trying to stand out and do something different? There's glimmers of hope in tiny bootstrapped startups now. That seems to be the sweet spot of not needing to obsess about investor sentiment, and instead focus on being lean and having a small team with the trust to actually try new things. Though this time with a focus early profitability where they can dictate terms to investors, not the other way around.
Ologn 2y ago
If I look at Nvidia stock from mid-June of last year, or the IYW index (Apple, Microsoft, Facebook, Google) - NVDA is down 10%, IYW is down maybe 2-3%. It doesn't feel like I'm in the middle of a huge bubble like, say, the beginning of 2000.
danans 2y ago
> But the reaction to Stargate was muted as Silicon Valley had turned its attention west. A new generative AI model called DeepSeek R1, released by the Chinese hedge fund High-Flyer, sent a threatening tremor through the balance sheets and investment portfolios You gotta love how this paragraph reads like an unfolding battle scene from a Tolkien novel.
keiferski 2y ago
I can't say for all possible implementations, but IMO (from industry experience) the content and consumer-focused benefits of AI/LLMs have been very much over-hyped. No one really wants to watch an AI-generated video of their favorite YouTuber, or pay for an AI-written newsletter. There is a ceiling to the direct usefulness of AI in the media industry, and the successful content creators will continue to be personality-driven and not anonymously generic. Whether that also applies to B2B is a different question.
- whiplash451 2y ago
  That might be true, but GenAI for banner optimization is getting huge investments in BigTech. The company that's not doing it will likely bite the dust seriously. You may say it's a sad state of affair, but this will pull hard on the tech you're talking about (albeit, with much less romantic outcomes).
  - keiferski 2y ago
    What do you mean by banner optimization specifically? Ad images and video thumbnails, etc? In that case, I don't disagree – genAI is still useful for this "side" work like thumbnails, idea generation, and so on. But I don't think it will be used much for content directly, as has been suggested by a ton of big tech companies.
    - whiplash451 2y ago
      Yes, I mean images/thumbnails/background optimization inside banners/youtube videos. "Our" ads are about to get a lot nicer.
      - fer 2y ago
        And eventually everyone's ads.
Imustaskforhelp 2y ago
I think AI is a bubble in the same sense that airline industry are. Airline industry are notoriously hard to be profitable. (I heard it from the intelligent investor book) So just because something is useful doesn't necessarily means that its profitable yet the VC's are funding it expecting such profitability without any signs of true profitability till now. I mean, yes AI is a profitable, but most of the profitability doesn't come from real use case, but rather the majority of the profitability comes from the (just slap AI sticker to increase your company valuation), and that's satisfying the VC right now. But they want returns as well. And by definition if their returns is that a bigger fool / bigger VC is going to fund the AI company at a higher evaluation without too much profitability / very little profitability. Then THAT IS BUBBLE. But being a bubble doesn't mean it doesn't have its use cases. AI is going to be useful, its just not going to be THAAT profitable, and the current profits are a bubble / show the characteristics of it.
h4ny 2y ago
That's a great article and a lot of the comments seem to resonate with the article. But somehow this is disappearing from the front page faster than anything else, it's hard not to think that "this is bad for business, so it must go"...
cubefox 2y ago
In the last few years we have seen unprecedented progress in AI. Relatively recently, LLMs like ChatGPT were regarded as pure science fiction. Current text-to-image models? Unthinkable. And then people still try to argue that it is just a bubble. People have the concerning tendency not to learn from evidence they previously judged as being extremely unlikely. The evidence is now clearly indicating that humanity is on the cusp of developing superhuman general intelligence. The remaining time is probably measured in years rather than decades or centuries.
Nazzareno 2y ago
"It's evident that while AI presents transformative potential, the surrounding financial speculation warrants caution. The challenge lies in distinguishing between genuine technological advancements and market hype. As the industry evolves, a balanced approach that values innovation while remaining vigilant about speculative investments will be crucial to navigate the AI landscape effectively." {comment by ChatGPT after reading the article and all the comments here}
kjkjadksj 2y ago
I think the biggest evidence of the bubble can be seen in job postings. When there is little diversity in skills being asked for that is a very dangerous position for a sector. Imagine a town where every job posting was related to the horseshoe industry with Henry Ford approaching in the horizon. Not only would there be little available for new work after a disruption, there is little available for you at the moment to get experience in some different framework. To say nothing at all about what the white house is doing which makes everything more precarious as companies get flighty due to economic instability.
abalashov 2y ago
Common sense about AI in The American Prospect doesn't necessarily ensure its difussion into the wider economy, but here's to hoping.
biophysboy 2y ago
I tend to agree with the article, but I do wonder if the operating costs of AI companies will decrease if they incorporate the more efficient methods of R1 and stop building so many fucking data centers. I also expect AI to incorporate ads at some point, once they exit the dreamy phase that early tech products always go through. I know Sam says he doesn't want to, but they only have so much runway. Eventually they will rationalize their ads as fundamentally different - a consumer assistant, if you will.
Havoc 2y ago
I still don’t buy that it is a bubble. Unlike other bubbles like crypto I see real life impact an utility. I do think OpenAI is in deep trouble. They’re ahead but not nearly enough to justify their lofty position.
- deleted 2y ago
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- Spartan-S63 2y ago
  I generally agree. I think we're in a hype cycle and there will be a correction. I'm hopeful that people will be more realistic about it being a tool and not a panacea. For OpenAI, though, they have to talk up AGI and Universal Basic Compute because of the capital they've raised and their unrealistic valuation. Curious to see how open weight international models eat into OpenAI's first-mover moat. Until hardware is cheaper and more commodity—which requires crossing the CUDA moat—open weight will be a fun toy, but not a serious production commodity.
- lizknope 2y ago
  The dot com bubble from around 1995 to 2000 was huge. I started working in 1997 and we thought it would just keep going but then the bubble popped. Thousands of people lost jobs. Stock market dropped way down. But that doesn't mean that the Internet was useless. I see AI like that. In my view there is absolutely an AI bubble and it does have real world uses but it is way over hyped right now. I say that as someone working on AI chips.
- enraged_camel 2y ago
  >> I still don’t buy that it is a bubble. Unlike other bubbles like crypto I see real life impact an utility. Tulips also had real life impact and utility: they looked and smelled good!
rafaelero 2y ago
It requires only a little bit of imagination to figure which industries are most likely to be disrupted by AI. If you calculate the size of those industries, the upside is huge. Let's pick transportation and healthcare: we already have Waymo and probably in the future Tesla offering competitive autonomous drivers, and our current LLMs already surpass doctors in diagnosis accuracy. So why, I ask, why would you possibly think those industries won't be disrupted? Do you really think people will stick with mediocre doctors if they can use AI? Or that they will pay a premium for a human driver? Come on.
tim333 2y ago
>Marcus ... bet Anthropic CEO Dario Amodei $100,000 that AGI would not be achieved by the end of 2027. Has anyone seen any mention of this? I couldn't find it googling.
pwndByDeath 2y ago
Billions to develop something less clever than an intern. Nobody could see that imploding.
deleted 2y ago
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143 points by semiquaver 2y ago

Confirming Ed Zitron's careful analysis of the situation with SoftBank, Microsoft, and OpenAI: https://www.wheresyoured.at/optimistic-cowardice/ https://www.wheresyoured.at/optimistic-cowardice/. "Outside of NVIDIA, nobody is making any profit off of generative AI, and once that narrative fully takes hold, I fear a cascade of events that gores a hole in the side of the stock market and leads to tens of thousands of people losing their jobs." You'll note that the prospect story mentions Zitron multiple times.

bfrog 2y ago
A clear eyed take, Nvidia is reaping the benefits of this new rush for now.
hotpepperishot 2y ago
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alephnerd 2y ago
There is a move towards software again, as ime a lot of the "AI" oriented investment was around hardware [0]. In my opinion, it was a side effect of how hardware became sexy again as an investment story, though in action, the fabless players like Nvidia and the diversified players like Broadcom that could take full advantage of that "AI" and "Hardware" story because of better margins. I've also been very open about my opinions that companies that sell a foundational model cannot build a strong long term moat, as an overtrained or specialized models will outcompete foundational models in PoCs and domain specific applications, and the actual hardware needed isn't that exhorbitant as DeepSeek has shown (that said I don't think they spent $6m - it was probably in the $20-50m range, but even then fairly reasonable for most organizations). [0] - https://www.reuters.com/technology/artificial-intelligence/us-chip-darlings-struggle-some-bet-software-next-big-ai-play-2025-03-06/ https://www.reuters.com/technology/artificial-intelligence/u...

bhouston 2y ago

I do worry about the viability of OpenAI in particular. So much of its talent went to other firms which then built up amazing capaibilities like Anthropic with Claude. And then they also have the threat of OpenSource models like DeepSeek v3.1 and soon DeepSeek R2 while at the same time OpenAI is raising its prices to absurd levels. I guess they are trying to be the Apple of the AI world... maybe... That said, I expect protectionist policies will be enabled by the US government to protect them and also X.AI/Grok from foreign competition, in particular Chinese.

JesseTG 2y ago
Are there specific policies that come to mind?
- danans 2y ago
  The most obvious one being proposed is banning Chinese models from the US (like China bans Google, etc). At the extreme end, some members of the administration has already floated ideas like prosecuting users who download Chinese models.
  - JesseTG 2y ago
    How would that even be enforced?
diggan 2y ago
> worry about the viability of OpenAI in particular [...] they also have the threat of OpenSource models It's a real shame OpenAI didn't succeed with their core and most fundamental mission of being open and improving humanity as a whole, where new FOSS models would have been seen as a success, not as a competitor or threat. We're all worse off because of it.
- aiono 2y ago
  > It's a real shame OpenAI didn't succeed with their core and most fundamental mission of being open and improving humanity as a whole You frame it like they sincerely had this mission at all. Which I doubt seriously. Why would anyone who funded them have such aim?

elorant 2y ago

One of the reasons I'd like this bubble to burst is to see Nvidia's stock collapse. I'm sick and tired of their exuberant prices.

bionhoward 2y ago

Epictetus would hate this trend to outsource mental work

apples_oranges 2y ago
Knowledge work. Part of it is the ability to reason and part of it is just knowing many things and certain fundamental principles.
nntwozz 2y ago
Just an anecdote, my father when he was younger used to be a great driver. He would drive all around Europe on our vacations, in capital cities (e.g. Paris) with nothing but a tourist map (mother holding the map) and his eyes and ears. Places I wouldn't really like to drive myself today because of the difficulty (Italy etc.). For many years he's been using GPS to assist him, first TomTom then iPhone and now his new car has CarPlay. He's a much worse driver today, constantly distracted, constantly looking at the screen instead of his surroundings and actually learning, using his brain. I myself like to ride MTB in the woods, I know all the trails and small features in the back of my head. I'm aware of my surroundings and it just sticks without any effort over the years. I have friends I ride with who use a trail map on their phone or bike computer, many years later they still don't know the trails because they're always looking at their devices. Sometimes we stop to "have a look" where the fork in the trail goes, drives me mad when it interrupts the flow of the ride. This is what AI feels to me in many ways. It's a double-edged sword.
- aoeusnth1 2y ago
  I agree, but GPS for knowledge work does sound like something that will pan out to be a big industry, right?
dest 2y ago
Do you have more details on which aspects of Epictetus' philosophy are related to hating to outsource mental work? I'm not familiar enough with stoicism. Thanks (I could ask chatgpt, I ask you instead =p) PS: Claude 3.5 Haiku take on it: "For Epictetus, the process of thinking is more important than the result. By outsourcing mental work, people surrender their most valuable tool for self-improvement - their own mind."

MaxPock 2y ago

We appreciate China for its strong push toward open-source AI. Without models like DeepSeek and Qwen, the U.S. was set to dominate AI with closed-source systems, charging tens of billions in rent every month while deciding who gets access based on politics. "Hey, Eritrea, you're authoritarian—you can't use our democratic AI until you democratize." "Hey, Saudi Arabia and Qatar, you're not authoritarian—you can have our AI." Once again, thank you, Chairman Xi, for saving us from this nonsense.

steve76 2y ago
[dead]

strict9 2y ago

I'm usually skeptical of doomer articles about new technology like this one, but reluctantly find myself agreeing with a lot of it. While AI is a great tool with many possibilities, I don't see the alignment of what many of these new AI startups are selling. It makes my work more productive, yes. But it often slows me down too. Knowing when to push back on the response you get is often difficult to get right. This quote in particular: >Surveys confirm that for many workers, AI tools like ChatGPT reduce their productivity by increasing the volume of content and steps needed to complete a given task, and by frequently introducing errors that have to be checked and corrected. This sort of mirrors my work as a SWE. It does increase productivity and can reduce lead times for task completion. But requires a lot of checking and pushback. There's a large gap between increased productivity in the right field in the right hands vs copying and pasting a solution everywhere so companies don't need workers. And that's really what most of these AI firms are selling. A solution to automate most workers out of existence.

zero_shift 2y ago
I'm sure I've read somewhere - and it annoys me immensely that I can't recall the source - that SWEs perceive they are more productive with AI, but the measurements say they aren't.
- tartoran 2y ago
  More productive with AI or more productive in general?
- bwestergard 2y ago
  This seems right, intuitively, but I'd love to see a source. I've noticed that when I detect chatbot-style code in a coworker's PR, I often find subtle problems. But it's harder for me to spot the problems in code I got out of a chatbot because I am primed by the very activity of writing the prompt to see what I desire in the output.
- bluefirebrand 2y ago
  This is my observation. Not a scientific measurement by any means but from what I can see it isn't speeding anyone up If I had to guess, people feel more productive because they are doing less of the work they are used to and more review / testing, but to reach the same level of confidence the review takes much longer And the people who are not doing thorough review are producing absolute garbage, and are basically clueless

greatpostman 2y ago

Calling everything a bubble is low iq. People that cannot understand society, or accept change, run with the bubble narrative at every turn

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lompad 2y ago
Trying to reduce complex desicions to "iq" is by itself a marker for a lack of knowledge and a desperate attempt to make yourself feel superior to others. IQ != intelligence Anyway, aside from that - if it's not a bubble, there should be a sustainable business model, meaning, one which doesn't lose you ten times the money you make. So, where is it? Which company, besides nvidia, has actually created a sustainable business model based on AI? Where is its moat? DeepSeek showed us that right now, OpenAI doesn't have any moat to speak of and can be essentially copied. Not exactly great for future profits.
- bluefirebrand 2y ago
  > Which company, besides nvidia, has actually created a sustainable business model based on AI NVidia's business model is not based on AI, is it? They are selling hardware. Their business success is "during a gold rush, sell shovels", isn't it?
- gruez 2y ago
  >Trying to reduce complex desicions to "iq" is by itself a marker for a lack of knowledge and a desperate attempt to make yourself feel superior to others. >IQ != intelligence Pot, meet kettle. IQ might not be actually measuring intelligence, whatever that might mean, but it's highly correlated with various things that are generally agreed to be indicators of intelligence, eg. educational attainment or performance on standardized tests. For something as woolly as "intelligence", IQ is pretty much as close as we can get, without trying to claim "it can't be measured exactly so we're not going to even trying to quantify it". Moreover it's pretty obvious that the parent commenter is using "iq" as a shorthand for intelligence, not referring to the results of a test that has to be administered by a trained professional and almost nobody knows the actual value of. The commenter you replied to made a bad take, but you're basically doing the very thing you're trying to decry, by trying to viciously attack him with accusations of "a lack of knowledge and a desperate attempt to make yourself feel superior to others".

ausbah 2y ago

still loads of money to be made in being the company hosting models on your fleet of GPUs. open source models and training paradigms definitely have undercut the proprietary model moat, but you need a good chunk of compute to run these models and not everyone has or wants that compute themselves

zero_shift 2y ago

This journalist, Ed Zitron, is very skeptical of AI and his arguments border on polemic. But I find his perspective interesting - essentially, that very few players in the AI space are able to figure out a profitable business model: https://www.wheresyoured.at/core-incompetency/ https://www.wheresyoured.at/core-incompetency/

alephnerd 2y ago
What does Zitron define as "AI" companies though? (Actually curious). A lot of "AI" investments in public markets were basically a bundle of fabless players (Nvidia), data center adjacent players (Broadcom), and some applications, whereas private/VC investment was bifurcated between foundational model players (OpenAI, Anthropic), application or AIOps oriented players (ScaleAI, Harness, etc), and rebranded hardware vendors (Cerebras, CoreWeave, Groq, Lambda). If by AI he means foundational model companies, then I absolutely agree that there is a need to be bearish about their valuations, because they can constantly be outcompeted by domain specific or specialized models. Furthermore, a lot of the recent "AI" IPO hype are functionally fabless hardware companies like CoreWeave or Cerebras who were previously riding high because of the previous boom in semiconductor and chip investments. I've been fairly open about this opinion at my day job.
- zero_shift 2y ago
  I think he sees the weakness more in the model/product/IP holding companies than the infra/hardware/commodity compute side
  - alephnerd 2y ago
    Interesting. I personally think there is more risk on the commodity compute side because the projected multiples for a Cerebras or CoreWeave are imo unrealistic in such a margins driven market, and there was a DC funding boom that has started lagging over the past couple months, as there appears to be a bit of an overcapacity issue in compute - imo very similar to that in the mid-2000s with servers and networking players like Dell, EMC, Cisco, etc. That said, I have a similar opinion about foundational model companies as well.

fullshark 2y ago

The end result of this wave looks increasingly like will get us an open web blogspam apocalypse, better search / information retrieval, better autocomplete for coders. All useful (well useful to bloggers/spammers at least), not trillions of dollars in value generated though. Until a new architecture / approach takes root at least.

mountainriver 2y ago
The software industry as a whole generates trillions of dollars every year. The current state of AI makes coders significantly more efficient and it’s only getting better. It’s easily worth trillions with just normal speculation.
- jjulius 2y ago
  >The current state of AI makes coders significantly more efficient and it's only getting better. Do you have any data that supports this assertion and the associated upward trend?
  - mountainriver 2y ago
    There is a lot of data to support this, most of it showing 20-50% efficiency gains. For a multi-trillion dollar industry that equates to potentially over a trillion dollars in efficiency in a single year. https://github.blog/news-insights/research/research-quantifying-github-copilots-impact-on-developer-productivity-and-happiness/#:~:text=,89 https://github.blog/news-insights/research/research-quantify... https://www.infoq.com/news/2024/09/copilot-developer-productivity/#:~:text=University%20of%20Pennsylvania%20www,increase%20in%20productivity https://www.infoq.com/news/2024/09/copilot-developer-product... https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/unleashing-developer-productivity-with-generative-ai https://www.mckinsey.com/capabilities/mckinsey-digital/our-i... https://intuitive.cloud/blog/delve-into-the-depths-of-amazon-codewhisperer https://intuitive.cloud/blog/delve-into-the-depths-of-amazon... https://www.hbs.edu/ris/Publication%20Files/24-013_d9b45b68-9e74-42d6-a1c6-c72fb70c7282.pdf https://www.hbs.edu/ris/Publication%20Files/24-013_d9b45b68-... https://arxiv.org/pdf/2303.17125 https://arxiv.org/pdf/2303.17125 This isn't slowing down either, if anything its accelerating with reasoning models. Which means it likely under-valued actually. Lets not forget those numbers are just for software!

lukev 2y ago

It's really hard to accurately assess the possibilities granted by LLMs, because they just feel like they have so much potential. But ultimately I think Satya Nadella is right. We can speculate about the potential of these technologies all we want, but they are now here. If they are of value, then they'll start to significantly move the needle on GDP, beyond just the companies focused on creating them. If they don't, then it's hype.

mjr00 2y ago
> It's really hard to accurately assess the possibilities granted by LLMs, because they just feel like they have so much potential. I agree, but this feeling isn't anything new! This was the verbatim argument people used when insisting that blockchain was going to be a transformative technology. Bitcoin increased in value so dramatically and so quickly that it just felt like there had to be something valuable in the underlying technology, and corporations collectively through billions at it because they wanted to be the ones to exploit it first. It's very easy to look back and say "well of course it's different this time," but the exuberance for blockchain at the time really was very close to current AI hype levels. It's quite possible that AI becomes a useful tool in some relatively niche scenarios like software development while never delivering on the promise of replacing large swathes of skilled labor.
- hatefulmoron 2y ago
  >> It's really hard to accurately assess the possibilities granted by LLMs, because they just feel like they have so much potential. > I agree, but this feeling isn't anything new! This was the verbatim argument people used when insisting that blockchain was going to be a transformative technology. Not saying you're doing this, just a random thought: it's funny seeing how much effort is spent trying to predict the trajectory of LLMs by comparing them to the trajectories of other technologies. Someone will say that AI is like VR or blockchain, and then someone else will chime in that we're actually in the early days of something like the internet, etc, etc.. It's like, imagine I wanted to know if my idea was any good. Thinking about the idea itself is hard, instead I'll explain it to you and look at your reaction. Oh no, that's the face of someone who just had NFTs explained to them, I should halt immediately.

softwaredoug 2y ago

I worry about the cultural shift in Tech to "what have you done for me lately" over patient innovation. Due to no more ZIRP, due to a shift to very top-down management, narcissistic CEO bros, and the new focus to please investors over all else... There's little appetite for actual innovation, which would require IMO a different culture and much more trust between management and employees. So instead, there's top-down AI death marches to "innovate" because that's the current trend. But who is DEFINING the trend? Who is actually trying to stand out and do something different? There's glimmers of hope in tiny bootstrapped startups now. That seems to be the sweet spot of not needing to obsess about investor sentiment, and instead focus on being lean and having a small team with the trust to actually try new things. Though this time with a focus early profitability where they can dictate terms to investors, not the other way around.

Ologn 2y ago

If I look at Nvidia stock from mid-June of last year, or the IYW index (Apple, Microsoft, Facebook, Google) - NVDA is down 10%, IYW is down maybe 2-3%. It doesn't feel like I'm in the middle of a huge bubble like, say, the beginning of 2000.

danans 2y ago

> But the reaction to Stargate was muted as Silicon Valley had turned its attention west. A new generative AI model called DeepSeek R1, released by the Chinese hedge fund High-Flyer, sent a threatening tremor through the balance sheets and investment portfolios You gotta love how this paragraph reads like an unfolding battle scene from a Tolkien novel.

keiferski 2y ago

I can't say for all possible implementations, but IMO (from industry experience) the content and consumer-focused benefits of AI/LLMs have been very much over-hyped. No one really wants to watch an AI-generated video of their favorite YouTuber, or pay for an AI-written newsletter. There is a ceiling to the direct usefulness of AI in the media industry, and the successful content creators will continue to be personality-driven and not anonymously generic. Whether that also applies to B2B is a different question.

whiplash451 2y ago
That might be true, but GenAI for banner optimization is getting huge investments in BigTech. The company that's not doing it will likely bite the dust seriously. You may say it's a sad state of affair, but this will pull hard on the tech you're talking about (albeit, with much less romantic outcomes).
- keiferski 2y ago
  What do you mean by banner optimization specifically? Ad images and video thumbnails, etc? In that case, I don't disagree – genAI is still useful for this "side" work like thumbnails, idea generation, and so on. But I don't think it will be used much for content directly, as has been suggested by a ton of big tech companies.
  - whiplash451 2y ago
    Yes, I mean images/thumbnails/background optimization inside banners/youtube videos. "Our" ads are about to get a lot nicer.
    - fer 2y ago
      And eventually everyone's ads.

Imustaskforhelp 2y ago

I think AI is a bubble in the same sense that airline industry are. Airline industry are notoriously hard to be profitable. (I heard it from the intelligent investor book) So just because something is useful doesn't necessarily means that its profitable yet the VC's are funding it expecting such profitability without any signs of true profitability till now. I mean, yes AI is a profitable, but most of the profitability doesn't come from real use case, but rather the majority of the profitability comes from the (just slap AI sticker to increase your company valuation), and that's satisfying the VC right now. But they want returns as well. And by definition if their returns is that a bigger fool / bigger VC is going to fund the AI company at a higher evaluation without too much profitability / very little profitability. Then THAT IS BUBBLE. But being a bubble doesn't mean it doesn't have its use cases. AI is going to be useful, its just not going to be THAAT profitable, and the current profits are a bubble / show the characteristics of it.

h4ny 2y ago

That's a great article and a lot of the comments seem to resonate with the article. But somehow this is disappearing from the front page faster than anything else, it's hard not to think that "this is bad for business, so it must go"...

cubefox 2y ago

In the last few years we have seen unprecedented progress in AI. Relatively recently, LLMs like ChatGPT were regarded as pure science fiction. Current text-to-image models? Unthinkable. And then people still try to argue that it is just a bubble. People have the concerning tendency not to learn from evidence they previously judged as being extremely unlikely. The evidence is now clearly indicating that humanity is on the cusp of developing superhuman general intelligence. The remaining time is probably measured in years rather than decades or centuries.

Nazzareno 2y ago

"It's evident that while AI presents transformative potential, the surrounding financial speculation warrants caution. The challenge lies in distinguishing between genuine technological advancements and market hype. As the industry evolves, a balanced approach that values innovation while remaining vigilant about speculative investments will be crucial to navigate the AI landscape effectively." {comment by ChatGPT after reading the article and all the comments here}

kjkjadksj 2y ago

I think the biggest evidence of the bubble can be seen in job postings. When there is little diversity in skills being asked for that is a very dangerous position for a sector. Imagine a town where every job posting was related to the horseshoe industry with Henry Ford approaching in the horizon. Not only would there be little available for new work after a disruption, there is little available for you at the moment to get experience in some different framework. To say nothing at all about what the white house is doing which makes everything more precarious as companies get flighty due to economic instability.

abalashov 2y ago

Common sense about AI in The American Prospect doesn't necessarily ensure its difussion into the wider economy, but here's to hoping.

biophysboy 2y ago

I tend to agree with the article, but I do wonder if the operating costs of AI companies will decrease if they incorporate the more efficient methods of R1 and stop building so many fucking data centers. I also expect AI to incorporate ads at some point, once they exit the dreamy phase that early tech products always go through. I know Sam says he doesn't want to, but they only have so much runway. Eventually they will rationalize their ads as fundamentally different - a consumer assistant, if you will.

Havoc 2y ago

I still don’t buy that it is a bubble. Unlike other bubbles like crypto I see real life impact an utility. I do think OpenAI is in deep trouble. They’re ahead but not nearly enough to justify their lofty position.

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Spartan-S63 2y ago
I generally agree. I think we're in a hype cycle and there will be a correction. I'm hopeful that people will be more realistic about it being a tool and not a panacea. For OpenAI, though, they have to talk up AGI and Universal Basic Compute because of the capital they've raised and their unrealistic valuation. Curious to see how open weight international models eat into OpenAI's first-mover moat. Until hardware is cheaper and more commodity—which requires crossing the CUDA moat—open weight will be a fun toy, but not a serious production commodity.
lizknope 2y ago
The dot com bubble from around 1995 to 2000 was huge. I started working in 1997 and we thought it would just keep going but then the bubble popped. Thousands of people lost jobs. Stock market dropped way down. But that doesn't mean that the Internet was useless. I see AI like that. In my view there is absolutely an AI bubble and it does have real world uses but it is way over hyped right now. I say that as someone working on AI chips.
enraged_camel 2y ago
>> I still don’t buy that it is a bubble. Unlike other bubbles like crypto I see real life impact an utility. Tulips also had real life impact and utility: they looked and smelled good!

rafaelero 2y ago

It requires only a little bit of imagination to figure which industries are most likely to be disrupted by AI. If you calculate the size of those industries, the upside is huge. Let's pick transportation and healthcare: we already have Waymo and probably in the future Tesla offering competitive autonomous drivers, and our current LLMs already surpass doctors in diagnosis accuracy. So why, I ask, why would you possibly think those industries won't be disrupted? Do you really think people will stick with mediocre doctors if they can use AI? Or that they will pay a premium for a human driver? Come on.

tim333 2y ago

>Marcus ... bet Anthropic CEO Dario Amodei $100,000 that AGI would not be achieved by the end of 2027. Has anyone seen any mention of this? I couldn't find it googling.

pwndByDeath 2y ago

Billions to develop something less clever than an intern. Nobody could see that imploding.

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