4 ms·

Interesting that the profits of those bottom 490 companies of S&P 500 do not rise with the help of AI technology, which is supposedly sold to them at a reduced

Interesting that the profits of those bottom 490 companies of S&P 500 do not rise with the help of AI technology, which is supposedly sold to them at a reduced rate as AI vendors are bleeding money.

roncesvalles 1y ago
Other than NVIDIA, the profits of the S&P 10 haven't risen either. It's just that the market is pricing them very optimistically. IMO this is an extremely scary situation in the stock market. The AI bubble burst is going to be more painful than the Dotcom bubble burst. Note that an "AI bubble burst" doesn't necessitate a belief that AI is "useless" -- the Internet wasn't useless and the Dotcom burst still happened. The market can crash when it froths up too early even though the optimistic hypotheses driving the froth actually do come true eventually.
- Workaccount2 1y ago
  We are still in the "land grab" phase where companies are offering generous AI plans to capture users. Once users get hooked on AI and it becomes an indispensable companion for doing whatever, these companies will start charging the true cost of using these models. It would not be surprising if the $20 plans of today are actually just introductory rate $70 plans.
  - esafak 1y ago
    I'd be surprised because (free) open source are continually closing the gap, exerting downward pressure on the price.
    - Workaccount2 1y ago
      I don't think it will be much of an issue for large providers, anymore than open source software has ever been a concern for Microsoft. The AI market is the entirety of the population, not just the small sliver who knows what "VRAM" means and is willing to spend thousands on hardware.
      - esafak 1y ago
        You can get open source models hosted for cheap too; e.g., through OpenRouter, AWS Bedrock, etc. You do not have to run it yourself.
      - jayd16 1y ago
        > anymore than open source software has ever been a concern for Microsoft. So a big concern then? (Although not a death sentence)
        jononor 1y ago
        The modern Microsoft with Azure, Office360, etc is not much threatened by open source software. Especially with Azure, open source is a fantastic compliment which they would like the world to produce as much of as possible. The same with AI models. They would look at charge for AI hosting and services, at premium due to already being integrated in businesses. They are going to bundle it with all their existing moneymakers, and then just jack up the price. No sale needed, just a bump in the invoices that are flowing anyway.
        const_cast 1y ago
        They're definitely very threatened by open source - a lot of software infrastructure these days is built off of open source software. In the 2000s, it wasn't. It was Microsoft, MSS, COM, Windows server, etc all the way down. Microsoft has basically been earned alive by open source software, it's just hard to tell because they were so huge that, even taken down a few pegs, they're still big. Even today, Azure and AWS are not really cheaper or better - for most situations, they're more expensive, and less flexible than what can be done with OS infrastructure. For companies who are successful making software, Azure is more of a kneecap and a regret. Many switch away from cloud, despite that process being deliberately painful - a shocking mirror of how it was switching away from Microsoft infrastructure of the past.
        jayd16 1y ago
        The phrasing was "has ever been" but even in the modern era, you're only looking at their winners. Shouldn't something like Kubernetes or Android's flavor of open source be on the radar? Seems like there are plenty of large players that might turn their 4th place closed source API into a first place open ecosystem.
    - cg5280 1y ago
      Hopefully we see enough efficiency gains over time that this is true. The models I can run on my (expensive) local hardware are pretty terrible compared to the free models provided by Big LLM. I would hate to be chained to hardware I can't afford forever.
      - aDyslecticCrow 1y ago
        The breakthrough of diffusion for tolken generation bumped down compute alot. But there are no local open sources versions yet. Distillation for specialisation can also raise the capacity of the local models if we need it for specific things. So its chugging along nicely.
    - pegasus 1y ago
      They're not really free, someone still has to pay for the compute cost.
    - bravesoul2 1y ago
      Meaning the real value is in infra. Running local is super expensive as you need to provision 100% and there are high table stakes. So people will tend to use a cloud offering. If the model doesnt differentiate then its how you mix the models, the capacity and uptime, the "GPT wrappers" etc.
- andsoitis 1y ago
  > Other than NVIDIA, the profits of the S&P 10 haven't risen either. That’s not correct. Did you mean something else?
- jayd16 1y ago
  I'm curious to see the bubble burst. I personally don't think it will be anything like the dotcom era. The benefits have just not been that wide ranging to the average person. Maybe I'm wrong but, I don't AI hype as a cornerstone of US jobs, so there's no jobs to suddenly dry up. The big companies are still flush with cash on hand, aren't they? If/when the fad dies I'd think it would die with a wimper.
  - aDyslecticCrow 1y ago
    I think AI has great potential to change as much as the internet. But i dont consider LLMs to be the right type to do that. Self driving cars and intelligent robotics is the real goldmine. But we still don't seem to have the right architecture or methods. I say that because self driving cars are entirely stagnant despite the boom AI interest and resources. Personally i think we need a major breakthrough in reinforcement learning, computer vision (which are still mostly stuck at feed forward CNNs) and few shot learning. The tranformer is a major leap, but its not enough on its own.
    - jayd16 1y ago
      I'm not saying things couldn't change. I'm only looking at the landscape as it is now and imagining what would happen if the funding stops because of lack of consumer interest. In general I do not agree that the economy is overleveraged on AI just like it is not overleveraged on cyrpto currency. If the money dries up, I don't expect economy wide layoffs.
      - aDyslecticCrow 1y ago
        If money dries up, a bunch of startups living on speculative assets will trip, and the s&p will fall in evaluation. But that doesn't actually affect the core economy much. I think we're in a massive AI bubble, but its a bubble that doesn't affect normal consumers much, so it's not too dangerous or concerning. As for my prediction of what is needed for truly useful AI automation... i suspect the current bubble will pop before we solve it.
onlyrealcuzzo 1y ago
We'll never know what would've happened without AI. 1. There profits could otherwise be down. 2. The plan might be to invest a bunch up front in severance and AI Integration that is supposed to pay off in the future. 3. In the future that may or may not happen, and it'll be hard to tell, because it may pay off at the same time an otherwise recession is hitting, which smoothes it out. It's almost as if it's not that simple.

Interesting that the profits of those bottom 490 companies of S&P 500 do not rise with the help of AI technology, which is supposedly sold to them at a reduced rate as AI vendors are bleeding money.

roncesvalles 1y ago

Other than NVIDIA, the profits of the S&P 10 haven't risen either. It's just that the market is pricing them very optimistically. IMO this is an extremely scary situation in the stock market. The AI bubble burst is going to be more painful than the Dotcom bubble burst. Note that an "AI bubble burst" doesn't necessitate a belief that AI is "useless" -- the Internet wasn't useless and the Dotcom burst still happened. The market can crash when it froths up too early even though the optimistic hypotheses driving the froth actually do come true eventually.

Workaccount2 1y ago
We are still in the "land grab" phase where companies are offering generous AI plans to capture users. Once users get hooked on AI and it becomes an indispensable companion for doing whatever, these companies will start charging the true cost of using these models. It would not be surprising if the $20 plans of today are actually just introductory rate $70 plans.
- esafak 1y ago
  I'd be surprised because (free) open source are continually closing the gap, exerting downward pressure on the price.
  - Workaccount2 1y ago
    I don't think it will be much of an issue for large providers, anymore than open source software has ever been a concern for Microsoft. The AI market is the entirety of the population, not just the small sliver who knows what "VRAM" means and is willing to spend thousands on hardware.
    - esafak 1y ago
      You can get open source models hosted for cheap too; e.g., through OpenRouter, AWS Bedrock, etc. You do not have to run it yourself.
    - jayd16 1y ago
      > anymore than open source software has ever been a concern for Microsoft. So a big concern then? (Although not a death sentence)
      - jononor 1y ago
        The modern Microsoft with Azure, Office360, etc is not much threatened by open source software. Especially with Azure, open source is a fantastic compliment which they would like the world to produce as much of as possible. The same with AI models. They would look at charge for AI hosting and services, at premium due to already being integrated in businesses. They are going to bundle it with all their existing moneymakers, and then just jack up the price. No sale needed, just a bump in the invoices that are flowing anyway.
        const_cast 1y ago
        They're definitely very threatened by open source - a lot of software infrastructure these days is built off of open source software. In the 2000s, it wasn't. It was Microsoft, MSS, COM, Windows server, etc all the way down. Microsoft has basically been earned alive by open source software, it's just hard to tell because they were so huge that, even taken down a few pegs, they're still big. Even today, Azure and AWS are not really cheaper or better - for most situations, they're more expensive, and less flexible than what can be done with OS infrastructure. For companies who are successful making software, Azure is more of a kneecap and a regret. Many switch away from cloud, despite that process being deliberately painful - a shocking mirror of how it was switching away from Microsoft infrastructure of the past.
        jayd16 1y ago
        The phrasing was "has ever been" but even in the modern era, you're only looking at their winners. Shouldn't something like Kubernetes or Android's flavor of open source be on the radar? Seems like there are plenty of large players that might turn their 4th place closed source API into a first place open ecosystem.
  - cg5280 1y ago
    Hopefully we see enough efficiency gains over time that this is true. The models I can run on my (expensive) local hardware are pretty terrible compared to the free models provided by Big LLM. I would hate to be chained to hardware I can't afford forever.
    - aDyslecticCrow 1y ago
      The breakthrough of diffusion for tolken generation bumped down compute alot. But there are no local open sources versions yet. Distillation for specialisation can also raise the capacity of the local models if we need it for specific things. So its chugging along nicely.
  - pegasus 1y ago
    They're not really free, someone still has to pay for the compute cost.
  - bravesoul2 1y ago
    Meaning the real value is in infra. Running local is super expensive as you need to provision 100% and there are high table stakes. So people will tend to use a cloud offering. If the model doesnt differentiate then its how you mix the models, the capacity and uptime, the "GPT wrappers" etc.
andsoitis 1y ago
> Other than NVIDIA, the profits of the S&P 10 haven't risen either. That’s not correct. Did you mean something else?
jayd16 1y ago
I'm curious to see the bubble burst. I personally don't think it will be anything like the dotcom era. The benefits have just not been that wide ranging to the average person. Maybe I'm wrong but, I don't AI hype as a cornerstone of US jobs, so there's no jobs to suddenly dry up. The big companies are still flush with cash on hand, aren't they? If/when the fad dies I'd think it would die with a wimper.
- aDyslecticCrow 1y ago
  I think AI has great potential to change as much as the internet. But i dont consider LLMs to be the right type to do that. Self driving cars and intelligent robotics is the real goldmine. But we still don't seem to have the right architecture or methods. I say that because self driving cars are entirely stagnant despite the boom AI interest and resources. Personally i think we need a major breakthrough in reinforcement learning, computer vision (which are still mostly stuck at feed forward CNNs) and few shot learning. The tranformer is a major leap, but its not enough on its own.
  - jayd16 1y ago
    I'm not saying things couldn't change. I'm only looking at the landscape as it is now and imagining what would happen if the funding stops because of lack of consumer interest. In general I do not agree that the economy is overleveraged on AI just like it is not overleveraged on cyrpto currency. If the money dries up, I don't expect economy wide layoffs.
    - aDyslecticCrow 1y ago
      If money dries up, a bunch of startups living on speculative assets will trip, and the s&p will fall in evaluation. But that doesn't actually affect the core economy much. I think we're in a massive AI bubble, but its a bubble that doesn't affect normal consumers much, so it's not too dangerous or concerning. As for my prediction of what is needed for truly useful AI automation... i suspect the current bubble will pop before we solve it.

onlyrealcuzzo 1y ago

We'll never know what would've happened without AI. 1. There profits could otherwise be down. 2. The plan might be to invest a bunch up front in severance and AI Integration that is supposed to pay off in the future. 3. In the future that may or may not happen, and it'll be hard to tell, because it may pay off at the same time an otherwise recession is hitting, which smoothes it out. It's almost as if it's not that simple.