11 ms·

I think the amount of turmoil around these deals is giving more weight to the possibility that we’re in a massive bubble thats quite divorced from any kind of f

by pm90 1y ago

I think the amount of turmoil around these deals is giving more weight to the possibility that we’re in a massive bubble thats quite divorced from any kind of fundamentals. Sooner or later the bubbles gonna burst.

ch4s3 1y ago
Yeah, I wonder if there are parallels to server-less tools of a few years ago.
yomismoaqui 1y ago
Remember that the web also had a bubble that popped and look at where are we now with Google, Amazon, Meta... I think that there is a bubble but it's shaped more like the web bubble and less like the crypto bubble.
- theappsecguy 1y ago
  “Web” is such a broad category. Quite a leap from LLM wrappers.
  - joe_the_user 1y ago
    Well, LLMs are themselves very broad. They encompass everything from web search to everything that you could automate yourself but don't have the time. I don't LLM capacities have to reach human-equivalent for their uses to multiply for years to come. I don't LLM technology as it exists can reach AGI by the simple addition of more compute power and moreover, I don't think adding computer necessarily is going to provide proportionate benefit (indeed, someone pointed-out that the current talent race acknowledges that brute-force has likely had it's day and some other "magic" is needed. Unlike brute-force, technical advances can't be summoned at will).
    - Terr_ 1y ago
      > Well, LLMs are themselves very broad. I think overstating their broad-ness is core to the hype-cycle going on. Everyone wants to believe—or wants a buyer to believe—that a machine which can grow documents about X is just as good (and reliable) as actually creating X.
      - sebastiennight 1y ago
        Since APIs exist (including APIs that allow you to get a human to execute the task), a machine which can grow specs about X is able to create real-world X in many, many situations. A machine which can define a valid CAD document can get the actual product built (even if the building requires manual assembly).
    - ACCount36 1y ago
      "Brute force" is only held back by economics and hardware limitations. There are still massive gains to be had from scaling up - but frontier training runs have converged on "about the largest model that we can fit into our existing hardware for training and inference". Going bigger than that comes with non-linear cost increases. The next generations of AI hardware are expected to push that envelope. The reason why major AI companies prioritize things like reasoning modes and RLVR over scaling the base models up is that reasoning and RLVR give real world performance gains cheaper and faster. Once scaling up becomes cheaper, or once the gains you can squeeze out of RLVR deplete, they'll get back to scaling up once again.
    - mort96 1y ago
      LLMs don't seem very broad. You're literally just talking about predictive text engines.
- macNchz 1y ago
  As with any investing there's a risk appetite/timescale component to thinking about this stuff. Lots of companies went to zero in the dot-com bubble. Even Amazon was down over 90% between the end of 1999 and late 2001, and took until 2007 to recover to its high. NASDAQ overall took 15 years to return to its March 2000 high. Some incredible returns to be had if you waited it all out, to be sure, but it's hard to know what the interim looks like.
  - broast 1y ago
    It's taken Cisco 25 years to recover
    - pqtyw 1y ago
      Intel never recovered. Well they did if you count dividends but still..
- Yizahi 1y ago
  Yeah, only those evolved a lot from the initial products everyone hyped and products people hyped in 2000 are extinct or free. And I still don't understand where Facebook makes money. :) Regarding LLMs there are two concerns - current products don't have any killer feature to lock in customers, so people can easily jump ship. And diminishing returns, if there won't be a clear progress with models, then free/small, maybe even local models will fill most of people needs. People are speculating that even OAI is burning more money than they make, it's hard to say what will happen if customer churn will increase. Like for example me - I never paid for LLMs specifically, and didn't use them in any major way, but I used free Claude for testing how it works, maybe incorporating in the workflow. I may transitioned to the paid tier in the future. But recently someone noted that Google cloud storage includes "free" Gemini Pro and I've switched to it, because why not, I'm already paying for the storage part. And there was nothing keeping me with Anthropic. Actually that name alone is revolting imo. I wrote this as an example that when monsters like Google or Microsoft or Apple would start bundling their solutions (and advertise them properly, unlike Google), then specialized companies including OAI will feel very very bad, with their insane expenses and investments.
  - jahewson 1y ago
    You don’t understand how the world’s 5th largest company by market cap makes money and this is evidence of… something?
    - Yizahi 1y ago
      That was a joke, mostly unrelated to the main point - about LLM corporations' finances.
  - andruby 1y ago
    > And I still don't understand where Facebook makes money. :) If that's a genuine question: Facebooks sells ads, information and influence (eg. to political parties). It's a very profitable enterprise. In 2024 Meta made $164B in revenue, and they're still growing at ~16% year-over-year. [0] https://investor.atmeta.com/investor-news/press-release-details/2025/Meta-Reports-First-Quarter-2025-Results/default.aspx https://investor.atmeta.com/investor-news/press-release-deta...
meta_ai_x 1y ago
The dot-com was a bubble because investors pulled money and belief at the first sign of trouble. The landscape has changed dramatically now. Investors and VCs have learnt if we stick with winners and growth companies, the payoffs are massive. We also have more automatic, retail and foreign money flowing into the market. Buy the dip is a phenomenon that didn't exist at the scale it is now. Pre-2015 if Big Money pulled out, the market was guaranteed to fail, but now retailers sometimes have longer views and belief (on people like Musk, Altman) than institutions and they continue to prop it. So, it's foolish to apply 2000 parallels to now. Yes, history repeats, but doesn't with the exact time or price points
- shortrounddev2 1y ago
  > Investors and VCs have learnt lol. Investors and VCs have no idea what they're doing
  - meta_ai_x 1y ago
    lol is a coping mechanism for the poor. If you really think top VCs / investors haven't learnt the long-term importance of staying the course, then you know nothing about the industry and mostly being influenced by popular social media posts shitting on the investor class. There is a reason Anthropic/OpenAI and many startups are given much much longer ropes to be profitable than in the 2000 era when VCs pulled the rug the first opportunity of trouble
    - shortrounddev2 1y ago
      If VCs knew what they were doing, they'd have real jobs
      - meta_ai_x 1y ago
        There are always shitty 20% operators in every industry. They won't make money and get weeded out. Delusional to apply this to top operators (and at the same breath complain about Rich getting Richer)
wmf 1y ago
How about that Anthropic revenue though.
burnte 1y ago
I've begun to think some bubbles are good for the economy overall. In the dotcom days anyone with an idea and a domain name could get funding. I myself worked for a company that nabbed 7x more funding than needed but still failed due to poor leadership. I had reservations about the founder but thought I could help drive things, but he was even more absent than I ever anticipated. A lot of VCs and PEs lost a lot of money during the crash. This means a lot of capital was spent in the economy, generating a lot of good activity, and the companies that failed then also put a lot more capital back into the economy through bankruptcies. Other businesses can pick up talent, IP, and assets for cheap, and everyone can learn from the failures. While losing that money isn't great for VCs, what they got was a very valuable education to be better stewards of their investments, and pick better companies. The next rounds of companies have to hit metrics, milestones, have to prove their value, etc. Never waste a perfectly good crisis: learn if nothing else.
- NewLogic 1y ago
  Good point, it transfers capital from the investor class to the working class.
nikcub 1y ago
> divorced from any kind of fundamentals Anthropic ARR went $1B -> $4B in the first half of this year. They're getting my $200 a month and it's easily the best money I spend. There's definitely something there.
- benjaminwootton 1y ago
  I’ve always dwelled over $5 a month subscriptions for iPhone apps due to subscription fatigue. I find myself signing up for $200 AI subscriptions without a moments hesitation.
  - smith7018 1y ago
    I hope both of you know that you're in the extreme minority, right?
    - jarredkenny 1y ago
      A very productive minority.
      - Forgeties79 1y ago
        Have we seen any examples of any of these companies turning a profit yet even at $200+/mo? My understanding is that most, if not all, are still deeply in the red. Please feel free to correct me (not sarcastic - being genuine). If that is the case at some point the music is going to stop and they will either perish or they will have to crank up their subscription costs.
        jarredkenny 1y ago
        I am absolutely benefitting from them subsidizing my usage to give me Claude Code at $200/month. However, even if they 10x the price its still going to be worth it for me personally.
        1y ago
lvl155 1y ago
Not in a bubble yet. Wait till your aunt takes out a second mortgage to chase NVDA stock to the moon. My guess is this will continue until later this decade with some bumps in between. That said, it’s absurd these guys are paying people so much money for what I think amounts to being context management off of some markdowns.
dustingetz 1y ago
it’s not bubble so much as urgency, the trillion dollar club are pricing in the risk of losing their position
massimosgrelli 1y ago
Yes and no. Are AI companies overvalued? Yes. Will most of them crash and burn? Yes, they will. Are the words "intelligence" or "reasoning" misused? Absolutely. Nonetheless, nobody can deny that some of these tools are useful and have demonstrated they can generate revenue like no other tool, app, or device before. There is something different from the dot-com bubble; many barriers have come down since 2000. Everyone can be connected 24/7 for a few tens of dollars a month. People trust the internet as a medium to perform transactions and access data. The real bubble is in the private market valuations, especially in the pre-seed stage. Many young entrepreneurs don't understand that raising their first round at $30M, $50M, or even $100M post-money will put a heavy weight on their shoulders approaching the Series A. Raising a funding round is a promise you make to the market. Increasingly high expectations will burn many wanna be entrepreneurs whose contribution to make things better for everyone will be lost forever. I'm deeply convinced that the reality check for all those companies is the public market, and in today's world, you can't go public after 3-5 years if your initial valuation has been built on a 20-year-long promise. All the trillion-dollar companies we know today went public a few years after their creation: Apple, Google, Microsoft, NVIDIA, etc. OpenAI, Anthropic, and Cursor are black swans, not evidence of the power law.
- cma 1y ago
  No, MS went public in 1986, so more than a decade there.
lowsong 1y ago
> the possibility that we’re in a massive bubble thats quite divorced from any kind of fundamentals I'm astounded that anyone still genuinely believes we're not in a massive bubble. Of course AI company CEOs are going to say we're not and that AGI is just around the corner, it's deeply in their financial interest to keep inflating the bubble as long as possible.
mark_l_watson 1y ago
Of course we are in a massive bubble. At least in the US where I live, everything is about driving short term profits, with less than a little thought to what is good for the non-special interests/insider class. I have lived and worked through two previous ‘AI winters’ and I expect the current bubble to eventually pop in a dramatic way. There will be good things produced by AI, but I am skeptical of the panic FOMO rush to AGI or super intelligence. Look at the process of shifting manufacturing out of the USA: that was all about driving extreme wealth for special interest insiders. Sadly, most people look to their particular little political party for some form of relief - how is that working out?
crowcroft 1y ago
Bubble or not these kinds of deals could put a chill on the tech startup sector as well. Things move fast in tech because there isn't nearly as much red tape and litigation as there are in other mature industries. This is because there's an agreed 'way of doing things'. Take funding, grow like crazy, sell/merge or IPO. Everyone wins or loses together (even if things are stacked in favour for some over others). Once trust in this process is broken and founders or VCs start stacking the deck in their favour the game becomes rigged to the point where other people don't want to play anymore. Once that trust is gone red tape and litigation appears.
bilater 1y ago
The problem you don't know which innings we are on and it may very well be the 4th/5th. More often than not you lose more by not participating in the run up and waiting for the collapse. I'd rather ride the wave (as intelligently as I can) than be on the sidelines just so I can say I told ya so.

by pm90 1y ago

ch4s3 1y ago

Yeah, I wonder if there are parallels to server-less tools of a few years ago.

yomismoaqui 1y ago

Remember that the web also had a bubble that popped and look at where are we now with Google, Amazon, Meta... I think that there is a bubble but it's shaped more like the web bubble and less like the crypto bubble.

theappsecguy 1y ago
“Web” is such a broad category. Quite a leap from LLM wrappers.
- joe_the_user 1y ago
  Well, LLMs are themselves very broad. They encompass everything from web search to everything that you could automate yourself but don't have the time. I don't LLM capacities have to reach human-equivalent for their uses to multiply for years to come. I don't LLM technology as it exists can reach AGI by the simple addition of more compute power and moreover, I don't think adding computer necessarily is going to provide proportionate benefit (indeed, someone pointed-out that the current talent race acknowledges that brute-force has likely had it's day and some other "magic" is needed. Unlike brute-force, technical advances can't be summoned at will).
  - Terr_ 1y ago
    > Well, LLMs are themselves very broad. I think overstating their broad-ness is core to the hype-cycle going on. Everyone wants to believe—or wants a buyer to believe—that a machine which can grow documents about X is just as good (and reliable) as actually creating X.
    - sebastiennight 1y ago
      Since APIs exist (including APIs that allow you to get a human to execute the task), a machine which can grow specs about X is able to create real-world X in many, many situations. A machine which can define a valid CAD document can get the actual product built (even if the building requires manual assembly).
  - ACCount36 1y ago
    "Brute force" is only held back by economics and hardware limitations. There are still massive gains to be had from scaling up - but frontier training runs have converged on "about the largest model that we can fit into our existing hardware for training and inference". Going bigger than that comes with non-linear cost increases. The next generations of AI hardware are expected to push that envelope. The reason why major AI companies prioritize things like reasoning modes and RLVR over scaling the base models up is that reasoning and RLVR give real world performance gains cheaper and faster. Once scaling up becomes cheaper, or once the gains you can squeeze out of RLVR deplete, they'll get back to scaling up once again.
  - mort96 1y ago
    LLMs don't seem very broad. You're literally just talking about predictive text engines.
macNchz 1y ago
As with any investing there's a risk appetite/timescale component to thinking about this stuff. Lots of companies went to zero in the dot-com bubble. Even Amazon was down over 90% between the end of 1999 and late 2001, and took until 2007 to recover to its high. NASDAQ overall took 15 years to return to its March 2000 high. Some incredible returns to be had if you waited it all out, to be sure, but it's hard to know what the interim looks like.
- broast 1y ago
  It's taken Cisco 25 years to recover
  - pqtyw 1y ago
    Intel never recovered. Well they did if you count dividends but still..
Yizahi 1y ago
Yeah, only those evolved a lot from the initial products everyone hyped and products people hyped in 2000 are extinct or free. And I still don't understand where Facebook makes money. :) Regarding LLMs there are two concerns - current products don't have any killer feature to lock in customers, so people can easily jump ship. And diminishing returns, if there won't be a clear progress with models, then free/small, maybe even local models will fill most of people needs. People are speculating that even OAI is burning more money than they make, it's hard to say what will happen if customer churn will increase. Like for example me - I never paid for LLMs specifically, and didn't use them in any major way, but I used free Claude for testing how it works, maybe incorporating in the workflow. I may transitioned to the paid tier in the future. But recently someone noted that Google cloud storage includes "free" Gemini Pro and I've switched to it, because why not, I'm already paying for the storage part. And there was nothing keeping me with Anthropic. Actually that name alone is revolting imo. I wrote this as an example that when monsters like Google or Microsoft or Apple would start bundling their solutions (and advertise them properly, unlike Google), then specialized companies including OAI will feel very very bad, with their insane expenses and investments.
- jahewson 1y ago
  You don’t understand how the world’s 5th largest company by market cap makes money and this is evidence of… something?
  - Yizahi 1y ago
    That was a joke, mostly unrelated to the main point - about LLM corporations' finances.
- andruby 1y ago
  > And I still don't understand where Facebook makes money. :) If that's a genuine question: Facebooks sells ads, information and influence (eg. to political parties). It's a very profitable enterprise. In 2024 Meta made $164B in revenue, and they're still growing at ~16% year-over-year. [0] https://investor.atmeta.com/investor-news/press-release-details/2025/Meta-Reports-First-Quarter-2025-Results/default.aspx https://investor.atmeta.com/investor-news/press-release-deta...

meta_ai_x 1y ago

The dot-com was a bubble because investors pulled money and belief at the first sign of trouble. The landscape has changed dramatically now. Investors and VCs have learnt if we stick with winners and growth companies, the payoffs are massive. We also have more automatic, retail and foreign money flowing into the market. Buy the dip is a phenomenon that didn't exist at the scale it is now. Pre-2015 if Big Money pulled out, the market was guaranteed to fail, but now retailers sometimes have longer views and belief (on people like Musk, Altman) than institutions and they continue to prop it. So, it's foolish to apply 2000 parallels to now. Yes, history repeats, but doesn't with the exact time or price points

shortrounddev2 1y ago
> Investors and VCs have learnt lol. Investors and VCs have no idea what they're doing
- meta_ai_x 1y ago
  lol is a coping mechanism for the poor. If you really think top VCs / investors haven't learnt the long-term importance of staying the course, then you know nothing about the industry and mostly being influenced by popular social media posts shitting on the investor class. There is a reason Anthropic/OpenAI and many startups are given much much longer ropes to be profitable than in the 2000 era when VCs pulled the rug the first opportunity of trouble
  - shortrounddev2 1y ago
    If VCs knew what they were doing, they'd have real jobs
    - meta_ai_x 1y ago
      There are always shitty 20% operators in every industry. They won't make money and get weeded out. Delusional to apply this to top operators (and at the same breath complain about Rich getting Richer)

wmf 1y ago

How about that Anthropic revenue though.

burnte 1y ago

I've begun to think some bubbles are good for the economy overall. In the dotcom days anyone with an idea and a domain name could get funding. I myself worked for a company that nabbed 7x more funding than needed but still failed due to poor leadership. I had reservations about the founder but thought I could help drive things, but he was even more absent than I ever anticipated. A lot of VCs and PEs lost a lot of money during the crash. This means a lot of capital was spent in the economy, generating a lot of good activity, and the companies that failed then also put a lot more capital back into the economy through bankruptcies. Other businesses can pick up talent, IP, and assets for cheap, and everyone can learn from the failures. While losing that money isn't great for VCs, what they got was a very valuable education to be better stewards of their investments, and pick better companies. The next rounds of companies have to hit metrics, milestones, have to prove their value, etc. Never waste a perfectly good crisis: learn if nothing else.

NewLogic 1y ago
Good point, it transfers capital from the investor class to the working class.

nikcub 1y ago

> divorced from any kind of fundamentals Anthropic ARR went $1B -> $4B in the first half of this year. They're getting my $200 a month and it's easily the best money I spend. There's definitely something there.

benjaminwootton 1y ago
I’ve always dwelled over $5 a month subscriptions for iPhone apps due to subscription fatigue. I find myself signing up for $200 AI subscriptions without a moments hesitation.
- smith7018 1y ago
  I hope both of you know that you're in the extreme minority, right?
  - jarredkenny 1y ago
    A very productive minority.
    - Forgeties79 1y ago
      Have we seen any examples of any of these companies turning a profit yet even at $200+/mo? My understanding is that most, if not all, are still deeply in the red. Please feel free to correct me (not sarcastic - being genuine). If that is the case at some point the music is going to stop and they will either perish or they will have to crank up their subscription costs.
      - jarredkenny 1y ago
        I am absolutely benefitting from them subsidizing my usage to give me Claude Code at $200/month. However, even if they 10x the price its still going to be worth it for me personally.
        1y ago

lvl155 1y ago

Not in a bubble yet. Wait till your aunt takes out a second mortgage to chase NVDA stock to the moon. My guess is this will continue until later this decade with some bumps in between. That said, it’s absurd these guys are paying people so much money for what I think amounts to being context management off of some markdowns.

dustingetz 1y ago

it’s not bubble so much as urgency, the trillion dollar club are pricing in the risk of losing their position

massimosgrelli 1y ago

Yes and no. Are AI companies overvalued? Yes. Will most of them crash and burn? Yes, they will. Are the words "intelligence" or "reasoning" misused? Absolutely. Nonetheless, nobody can deny that some of these tools are useful and have demonstrated they can generate revenue like no other tool, app, or device before. There is something different from the dot-com bubble; many barriers have come down since 2000. Everyone can be connected 24/7 for a few tens of dollars a month. People trust the internet as a medium to perform transactions and access data. The real bubble is in the private market valuations, especially in the pre-seed stage. Many young entrepreneurs don't understand that raising their first round at $30M, $50M, or even $100M post-money will put a heavy weight on their shoulders approaching the Series A. Raising a funding round is a promise you make to the market. Increasingly high expectations will burn many wanna be entrepreneurs whose contribution to make things better for everyone will be lost forever. I'm deeply convinced that the reality check for all those companies is the public market, and in today's world, you can't go public after 3-5 years if your initial valuation has been built on a 20-year-long promise. All the trillion-dollar companies we know today went public a few years after their creation: Apple, Google, Microsoft, NVIDIA, etc. OpenAI, Anthropic, and Cursor are black swans, not evidence of the power law.

cma 1y ago
No, MS went public in 1986, so more than a decade there.

lowsong 1y ago

> the possibility that we’re in a massive bubble thats quite divorced from any kind of fundamentals I'm astounded that anyone still genuinely believes we're not in a massive bubble. Of course AI company CEOs are going to say we're not and that AGI is just around the corner, it's deeply in their financial interest to keep inflating the bubble as long as possible.

mark_l_watson 1y ago

Of course we are in a massive bubble. At least in the US where I live, everything is about driving short term profits, with less than a little thought to what is good for the non-special interests/insider class. I have lived and worked through two previous ‘AI winters’ and I expect the current bubble to eventually pop in a dramatic way. There will be good things produced by AI, but I am skeptical of the panic FOMO rush to AGI or super intelligence. Look at the process of shifting manufacturing out of the USA: that was all about driving extreme wealth for special interest insiders. Sadly, most people look to their particular little political party for some form of relief - how is that working out?

crowcroft 1y ago

Bubble or not these kinds of deals could put a chill on the tech startup sector as well. Things move fast in tech because there isn't nearly as much red tape and litigation as there are in other mature industries. This is because there's an agreed 'way of doing things'. Take funding, grow like crazy, sell/merge or IPO. Everyone wins or loses together (even if things are stacked in favour for some over others). Once trust in this process is broken and founders or VCs start stacking the deck in their favour the game becomes rigged to the point where other people don't want to play anymore. Once that trust is gone red tape and litigation appears.

bilater 1y ago

The problem you don't know which innings we are on and it may very well be the 4th/5th. More often than not you lose more by not participating in the run up and waiting for the collapse. I'd rather ride the wave (as intelligently as I can) than be on the sidelines just so I can say I told ya so.