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Are We in an A.I. Bubble? I Suspect So
- datadrivenangel 1y ago"So are we in an A.I. bubble? It sure looks like it to me. That doesn’t mean we won’t get large economic advances (and disruptions) out of A.I. " This is the most plausible looking path forward: LLMs + conventional ML + conventional software inverts how our economy operates over the next few decades, but over the next few years a lot of people are going to lose a lot of money when the singularity is actually a sigmoid curve.
- Lionga 1y agoIts not a sigmoid curve but rather the typical hype cycle curve. LLMs will surely not "invert" the economy (whatever that means). LLMs will just be tiny part of it like any other tool
- AlecSchueler 1y agoWhat is an inverted economy?
- walleeee 1y agoambiguous enough to work no matter who you're talking to
- malfist 1y agoPoor people pay rich people to work?
- arthurcolle 1y agoRenters paying mortgage holders to pay their mortgage in exchange for conceptual gains like "freedom" We've been there for a long fucking time
- Spivak 1y agoIf you're in a market where landlords can charge the full mortgage you desperately need more housing. Rent around here costs slightly more than the interest on the mortgage.
- arthurcolle 1y agoEvery city is like this
- dontlaugh 1y agoI don’t think there’s anywhere in the UK where a mortgage is more than the rent for the same property. Renters are generally the breadwinners in their landlord’s families.
- Spivak 1y agoWell in that case, yeah, I can't imagine any reason you would rent. But in my neck of the woods renting a place is a little more than half the cost of the equivalent mortgage on the same property.
- jrflowers 1y agoWhere on earth is this land of beneficent landlords? Do you live in Hobbiton or on the island from Lost
- dontlaugh 1y agoYou would rent because you’d lack the deposit and income a bank would require of you for the same property. Now that I have a mortgage, it’s much less than the rent I was paying for a similar property. This is the case in most developed cities on Earth.
- Spivak 1y ago> Now that I have a mortgage, it’s much less than the rent I was paying for a similar property. This is what my parents kept telling me would happen but no one in my late 20s social circle who've bought houses (including myself) has been able to make it happen. Even my friends who got locked in at the 2% interest rates still pay about $300 more than the equivalent rent. I live in a, by population, a top 30 city in the US and actually live in the city, not its "surrounding metro area."
- jrflowers 1y agoIt’s when tuna finally starts snatching man from the sea
- datadrivenangel 1y agoLonger term (10-30 years), I see LLMs allowing for far more automation within software, which means that an "AI native" company may only need 5-10% of the people that a conventional company does for the same level of delivery. As the technology improves past the point where humans are competitive, eventually it will be the rich people with jobs doing all the work and we need to figure out what happens when we end up with a centrally planned economy because most people don't really have money...
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- arbirk 1y agoI suspect there is a substantial first mover disadvantage right now. The extreme investments will not be profitable, leading to the bubble bursting at some point in the not so distant future. This will lead to short term price increases for inference and slower innovation in a period, the tech will emerge more mature and stable etc. As one who clearly see the huge potential of this tech this is an interesting outlook; make sure to make your products resilient to changing vendors and price hikes and it will probably be fine. Side note: Google seems to be playing the long game..
- airstrike 1y agoI think any comment about an AI bubble needs to start by defining who the players are and how it affects them differently. AI foundries, Nvidia, the hyperscalers, enterprise buyers of AI, consumers, the US, China, the rest of the world, startups, investors, FOSS, students, teachers, coders, lawyers, publishers, artists... each stand to win or lose in profoundly different ways. Otherwise we all end up talking past each other.
- zeroonetwothree 1y agoThe rare violation of Betteridge’s Law.
- rightbyte 1y agoThe headline does not end with a question mark though.
- airstrike 1y ago> Even my moderate view, though, is premised on the assumption that A.I. will continue to advance up the steep part of the sigmoid curve for a while before hitting one or another physical constraint that creates a new inflection point and slows advances further. I feel like we've pretty much already hit a fundamental barrier in compute that is unlikely to be overcome in the near future barring a profound, novel algorithmic approach or an entirely novel computing model.
- lucianbr 1y agoAre there any events in the last, maybe 6 months, that seem to be still on the steep part of the sigmoid curve? I'm probably not well informed, but I can't think of any. GPT5 launch sure does not feel like a steep advance. What else was there?
- dwaltrip 1y ago$400 billion is being spent on new data centers this year alone (per yesterday's hard fork episode), for better or worse.
- Lauris100 1y agoI do feel that AI has been overhyped a bit for now, but what happens when we scale our electricity and GPU production 10x, 100x, go nuclear etc and can 100x AI models - lets see. Its too early to tell really.
- dns_snek 1y ago> what happens when we scale our electricity and GPU production 10x, 100x Nothing interesting without some fundamental breakthrough IMO. Model/agent providers add another level of "thinking" that uses 10x the energy for 10% gain on benchmarks.
- richardw 1y agoThey also typically dilute human input with self-talk. You can steer them in a direction, but the internal conversation can convince itself otherwise. It’s not frequent but it’s very frustrating when it happens.
- Q6T46nT668w6i3m 1y agoEvidence suggests we’re data rather than compute scarce. Nowadays models are trained using other models and we’ve started to see domain collapse.
- skydhash 1y agoI don't think we can even do a "Handbook of LLM techniques" at this point and have something thick enough to raise a monitor. It's all in the Data. First they started with copyrighted material, then public sources (maybe private sources as well), and now they are hammering every server in existence to get moooorre..
- Balinares 1y agoThe amusing thing is that it takes several orders of magnitude less data to bring up a human to reasonably competent adulthood, which means that there is something fundamentally flawed in the brute-force approach to training LLMs, if the goal is to get to human-equivalent competency. Also the fact that 30B models, while less capable than 300B+ models, are not quite one whole order of magnitude less capable, suggests that all things being equal, capability scales sub-linearly to parameter count. It's even more flagrant with 4B models, honestly. The fact that those are serviceable at all is kind of amazing. Both factors add up to the hunch that a point of diminishing returns must soon be met, if it hasn't already. But as long as no one asks where all the money went I suppose we can keep going for a while still. Just a few more trillions bro, we're so close.
- WalterSear 1y agoIf other engineers are getting the productivity boost that I am from AI, then we are just scratching the surface of it's effect on the economy. And if they aren't, then they will be soon enough.
- dgfitz 1y agoSlinging code is not really the point. Making money off said code is the point. Making more money than you spend maintaining it is really the point. I don’t think over the last 5-8 years there has been a shortage of code-slingers, as evidenced by all the tech layoffs. Using LLMs to generate more code does not equal productivity. There’s that famous story about the -2000 LOC commit, etc.
- throwaway31131 1y agoAlso, the big challenges in software organizations I deal with are getting a group of a dozen or so “code-slingers” to work effectively as a team. That’s really hard and it’s been the fundamental management problem for the entire time I’ve been in the industry, which is decades. Not enough LOC has never really been a thing.
- skydhash 1y agoAlso the many communications roundtrips to know what to code-sling. That's just as difficult as doing code-slinging well as a group.
- delusional 1y agoI've only been in industry for 7 years. So far, the problem I've seen at my two employers have been stopping the "code-slingers" from making absolutely worthless systems that create a ton on noise in the organization, and redirecting their efforts towards long term valuable and productive ends. From observation and induction, it seems very easy to contribute net-negative value in a software development position, and delivering long-term net positive value really requires a lot of discipline from the developers, or a lot of wrangling from non-technical members. PS: Discipline here does not mean "being picky about what things to accept" it means being picky about what things you make up. From observation, a lot of the most valuable work is super fucking boring, and it takes discipline not to make up a more intellectually stimulating task.
- mkbelieve 1y agoOf course we are and I suspect there are also an absolutely absurd number of Ponzi schemes underway as well.
- lowsong 1y agoEffectively everyone, including Sam Altman [0], is saying we're in a bubble. The only questions left, the only ones that matter, are: - When is it going to pop? Tomorrow? Next year? 2030? - How hard is the crash going to be? Only a bunch of AI startups and one or two of the big "AI" companies (OpenAI, Anthropic) go down, or a global financial crash that wipes out hundreds of companies and hundreds of thousands of jobs. - What's left of "AI" tech in the wreckage. Once the hype is over, what real use-cases exist? [0] https://www.cnbc.com/2025/08/18/openai-sam-altman-warns-ai-market-is-in-a-bubble.html https://www.cnbc.com/2025/08/18/openai-sam-altman-warns-ai-m...
- estearum 1y agoIMO there seems to be more consensus among even the biggest hypemen that this is a bubble. But to protect their bag (and their LP money) they have to find some way that the silly investments they made weren't totally irresponsible. So here's the line of thinking we'll see more of: "Yes it's a bubble, but so were the railroads, and yet plenty of people made out big time! The railroads themselves were left over and hugely valuable!" Then the slightly more astute observer would say, well hold on, that's not quite analogous because the depreciation on AI buildout is way faster than in railroads. Then the even more astute observer would say, even that downplays the stupidity: the actual value creation from railroads was in the land itself. There is no analogous dynamic in AI-land, and so will probably be far more broadly catastrophic to the bubble blowers.
- skydhash 1y agoAlso railroads were deprecated because of the advantages of other transports, like the flexibility of cars and trucks, and the speed of planes. So not a bubble that pops up, just something that got replaced, like CRTs by led panels or fax by email.
- estearum 1y agoRailroads are not deprecated. Huge amounts of freight moves by rail in the US still. There definitely was a speculative bubble, but it left behind a lot of real value, but that real value was not in the railroad business nor in the railroads themselves but the gigantic amount of land grants and development that supported the bubble.
- skydhash 1y agoDepreciation is the wrong word (not a native speaker). I meant moved into the background and not that much in the general public eyes (like oil drills and weather stations).
- deleted 1y ago[deleted]
- indigodaddy 1y agoPretty decent analysis by Google AI mode: https://share.google/aimode/49jtBuQy9X3wSKy5R https://share.google/aimode/49jtBuQy9X3wSKy5R
- measurablefunc 1y agoThe definition I use for a financial bubble in case of AI is the following: financial debt obligations/investments that can not be repaid/serviced w/ future growth. Unlike pure software, the growth in AI is coupled w/ huge investments in real infrastructure (data centers, power plants, network interconnect, etc). This means that regardless of what happens the infrastructure is not going away & given how software can be so easily reprogrammed these days there is no way that all of it will suddenly go up in a puff of smoke. OpenAI & others will figure out how to redeploy the infrastructure for different use cases & keep the money flowing. This is unlike office buildings & general real estate b/c it's not like an office building or a family home can be quickly repurposed for something else to keep the money flowing to whoever owns the underlying infrastructure. I don't think it's a bubble. The numbers seem large but that's b/c the underlying infrastructure costs a lot of money & unlike other forms of infrastructure computers can be used for all sorts of different things by simply redeploying different software to it that consumers will find compelling (even if it's no longer 6 second clips of cats doing backflips from diving boards).
- FergusArgyll 1y agoI have a simple rule. It's too cute by half but its track record has been good since I've deployed it. Markets can not be forecasted, therefore if everyone is predicting a downturn, the downturn will not come. There needs to be some ambiguity, a kind of FergusArgyll uncertainty principle
- OptionOfT 1y agoI think in the future we'll see the productivity boosts negated by more burnouts. Sometimes meaningless work is OK to recharge the brain. That is if the work produced is actually useful, and more and more do we see that unless we're hyper-specific, we don't get what we want. We have to painfully iterate with non-deterministic stuff hoping that it gets it right.
- kristianp 1y agoMy concern is that the "Magnificent 7" stocks are heavily into AI (except Apple) and because of their huge market caps, the most popular etfs have a large component of Mag 7. Even the "global" Vanguard fund is about 20% Mag 7 (1), for example (and the next one on their list is TSMC). The Vanguard S&P 500 etf is 36% Mag 7 (2). If there's an AI pop, a most people and most huge funds will lose money, driving liquidity out of the global financial system. I've started investing into a mix of Europe etf and global etf, instead of just the global etf, because the global ETF is so exposed to US computer companies. (1) https://investor.vanguard.com/investment-products/etfs/profile/vt#portfolio-composition https://investor.vanguard.com/investment-products/etfs/profi... (2) https://investor.vanguard.com/investment-products/etfs/profile/voo#portfolio-composition https://investor.vanguard.com/investment-products/etfs/profi...
- binary132 1y agoalmost as though extreme market consolidation is a bad thing