12 ms·

How the AI Bubble Will Pop

• rimeice 1y ago
  > Some people think artificial intelligence will be the most important technology of the 21st century. I don’t, I think a workable fusion reactor will be the most important technology of the 21st century.
  • mattmaroon 1y ago
    Because it’ll power AI!
  • baq 1y ago
    if AI won't be a fad like everything else, we're going to need these, pronto ...and it does seem this time that we aren't even in the huge overcapacity part of the bubble yet, and won't be for a year or two.
  • gizajob 1y ago
    We’ll probably need to innovate one of those to power the immense requirements of AI chatbots.
    • geerlingguy 1y ago
      I think we'll need a few hundred, if spending continues like it has this year.
      • gizajob 1y ago
        My vision of fusion power comes from Sim City 2000 where one plant just powers absolutely everything forever.
    • deleted 1y ago
      [deleted]
  • _heimdall 1y ago
    What makes you think we'll have fusion reactors in the 21st century?
    • rimeice 1y ago
      I don’t think we’ll have the choice.
      • fundatus 1y ago
        > I like fusion, really. I’ve talked to some of luminaries that work in the field, they’re great people. I love the technology and the physics behind it. > But fusion as a power source is never going to happen. Not because it can’t, because it won’t. Because no matter how hard you try, it’s always going to cost more than the solutions we already have. https://matter2energy.wordpress.com/2012/10/26/why-fusion-will-never-happen/ https://matter2energy.wordpress.com/2012/10/26/why-fusion-wi...
        • rimeice 1y ago
          Yeh current tech is expensive and would likely be uncompetitive. At the very very end of that article is the key to this though: > I fully support a pure research program for radically different approaches to fusion.
      • tim333 1y ago
        We've got by without them so far and solar is cracking along.
      • _heimdall 1y ago
        That's not how invention works though. Something has to be technically possible and we have to discover how to do it in a viable way.
    • Quarrelsome 1y ago
      ITER apparently fires up in 2039.
  • tbrownaw 1y ago
    We'll finally have electricity that's too cheap to meter.
    • lopis 1y ago
      And we'll use it all to run more crypto/AI/next thing
    • fundatus 1y ago
      Why would it be too cheap to meter? You're still heating up water and putting it through a turbine. We've been doing that for ages (just different sources of energy for the heating up part) and we still meter energy because these things cost money and need lots of maintenance.
      • tbrownaw 1y ago
        But that's the whole reason fusion is so important. Just like it was the whole reason fission was so important. https://www.nrc.gov/reading-rm/basic-ref/students/history-101/too-cheap-to-meter https://www.nrc.gov/reading-rm/basic-ref/students/history-10...
    • Perz1val 1y ago
      As we have more and more solars, we see rises for being connected to the grid more and more while electricity stays relatively cheap. Fusion won't change that, somebody has to pay for the guy reconnecting cables after a storm
    • DengistKhan 1y ago
      Residential will still cost more somehow.
  • Bigsy 1y ago
    Deepmind are working on solving the plasma control issue at the moment, I suspect they're probably using a bit of AI.... and I wouldn't put it past them to crack it.
    • robinhoode 1y ago
      This is the thing with AI: We can always come up with a new architecture with different inputs & outputs to solve lots of problems that couldn't be solved before. People equating AI with other single-problem-solving technologies are clearly not seeing the bigger picture.
      • ForHackernews 1y ago
        Can we? Why haven't we, then? What are the big problems that were unsolvable before and now we can solve them with AI? Auto-tagging of photos, generating derivative images and winning at Go, I will give you. There's been some progress on protein folding, I heard? Where's the 21st century equivalent of the steam locomotive or the sewing machine?
    • fragmede 1y ago
      They did/are(?). > Accelerating fusion science through learned plasma control https://deepmind.google/discover/blog/accelerating-fusion-science-through-learned-plasma-control/ https://deepmind.google/discover/blog/accelerating-fusion-sc... (2022)
  • fundatus 1y ago
    I mean, we already have a giant working fusion reactor (the sun) and we can even harvest it's energy (solar, wind, etc)! That's pretty awesome.
    • NoGravitas 1y ago
      Using gravitational containment rather than magnetic containment is a pretty cool approach.
  • jacknews 1y ago
    How so? The maximum possible benefit of fusion (aside from the science gained in the attempt) is cheap energy. We'll get very cheap energy just by massively rolling out existing solar panels (maybe some at sea), and other renewables, HVDC and batteries/storage. Fusion is almost certain to be uneconomical in comparison if it's even feasible technically. AI, is already dramtically impacting some fields, including science (eg deepfold), and AGI would be a step-change.
    • rimeice 1y ago
      Cheap, _limitless_ energy from fusion could solve almost every geopolitical/environmental issue we face today. Europe is acutely aware of this at the moment and it's why China and America are investing mega bucks. We will eventually run out of finite energy sources. Even if we do capture the max capacity possible from renewables with 100% efficiency, our energy consumption rates increasing at current rates will eventually exceed this max capacity. Those rates are accelerating. We really have no choice.
      • myrmidon 1y ago
        There is zero reason to assume that fusion power will ever be the cheapest source of energy. At the very least, you have to deal with a sizeable vacuum chamber, big magnets to control the plasma and massive neutron flux (turning your fusion plant into radioactive waste over time), none of which is cheap. I'd say limitless energy from fusion plants is about as likely as e-scooters getting replaced by hoverboards. Maybe next millenium.
      • jacknews 1y ago
        I mean, the limit to renewables is to capture all the energy from the sun, and maybe the heat of the earth. But then you start to have some issues with global warming (the temperature at which energy input = energy radiated away) We probably don't want to release more energy than that.
    • hx8 1y ago
      Fusion at 100% grid scale might be better for the environment than solar at 100% grid scale. It might be nice if at the end of the 21st century that is something we care.
  • BrokenCogs 1y ago
    Time travel will be the most important invention of the 21st century ;)
    • nemo 1y ago
      Time travel was the most important invention of the 1800s too, but that goes to show how bad resolving the temporal paradox issue is, now that entire history is gone.
  • seydor 1y ago
    but people say that AI will spit out that fusion reactor, ergo AI investment is prior in the ordo investimendi or whatever it would be called (by an AI)
• throw0101d 1y ago
  Perhaps worth remembering that 'over-enthusiasm' for new technologies dates back to (at least) canal-mania: * https://en.wikipedia.org/wiki/Technological_Revolutions_and_Financial_Capital https://en.wikipedia.org/wiki/Technological_Revolutions_and_... * https://en.wikipedia.org/wiki/Canal_Mania https://en.wikipedia.org/wiki/Canal_Mania
  • leojfc 1y ago
    Absolutely. Years ago I found this book on the topic really eye-opening: - https://www.amazon.co.uk/Technological-Revolutions-Financial-Capital-Dynamics/dp/1843763311/ https://www.amazon.co.uk/Technological-Revolutions-Financial... The process of _actually_ benefitting from technological improvements is not a straight line, and often requires some external intervention. e.g. it’s interesting to note that the rising power of specific groups of workers as a result of industrialisation + unionisation then arguably led to things like the 5-day week and the 8-hour day. I think if (if!) there’s a positive version of what comes from all this, it’s that the same dynamic might emerge. There’s already lots more WFH of course, and some experiments with 4-day weeks. But a lot of resistance too.
    • _heimdall 1y ago
      My understanding is that the 40 hour work week (and similar) was talked about for centuries by workers groups but only became a thing once governments during WWI found that longer days didn't necessarily increase output proportionally. For a 4 day week to really happen st scale, I'd expect we similarly need the government to decide to roll it out rather than workers groups pushing it from the bottom up.
      • throw0101d 1y ago
        > My understanding is that the 40 hour work week (and similar) was talked about for […] See perhaps: * https://en.wikipedia.org/wiki/Eight-hour_day_movement https://en.wikipedia.org/wiki/Eight-hour_day_movement Generally it only really started being talked about when "workers" became a thing, specifically with the Industrial Revolution. Before that a good portion of work was either agricultural or domestic, so talk of 'shifts' didn't really make much sense.
• hemloc_io 1y ago
  The most frustrating thing to me about this most recent rash of biz guy doubting the future of AI articles is the required mention that AI, specifically an LLM based approach to AGI, is important even if the numbers don't make sense today. Why is that the case? There's plenty of people in the field who have made convincing arguments that it's a dead end and fundamentally we'll need to do something else to achieve AGI. Where's the business value? Right now it doesn't really exist, adoption is low to nonexistent outside of programming and even in programming it's inconclusive as to how much better/worse it makes programmers. I'm not a hater, it could be true, but it seems to be gospel and I'm not sure why. Mapping to 2001 feels silly to me, when we've had other bubbles in the past that led to nothing of real substance. LLMs are cool, but if they can't be relied on to do real work maybe they're not change the world cool? More like 30-40B market cool. EDIT: Just to be clear here. I'm mostly talking about "agents" It's nice to have something that can function as a good Google replacement especially since regular websites have gotten SEOified over the years. Even better if we have internal Search/Chat or whatever. I use Glean at work and it's great. There's some value in summarizing/brainstorming too etc. My point isn't that LLMs et al aren't useful. The existing value though doesn't justify the multi-trillion dollar buildout plans. What does is the attempt to replace all white collar labor with agents. That's the world changing part, not running a pretty successful biz, with a useful product. That's the part where I haven't seen meaningful adoption. This is currently pitched as something that will have nonzero chance of destroying all human life, we can't settle for "Eh it's a bit better than Google and it makes our programmers like 10% more efficient at writing code."
  • aurareturn 1y ago
    Where's the business value? Right now it doesn't really exist, adoption is low to nonexistent outside of programming and even in programming it's inconclusive as to how much better/worse it makes programmers. I have a friend who works at PwC doing M&A. This friend told me she can't work without ChatGPT anymore. PwC has an internal AI chat implementation. Where does this notion that LLMs have no value outside of programming come from? ChatGPT released data showing that programming is just a tiny fraction of queries people do.
    • 1y ago
• rossant 1y ago
  Paywall.
• pryelluw 1y ago
  Article is behind paywall and is simply saying the same things that people have been saying about the post tech crash. Now, what this sort of article tends to miss (and I will never know because it’s paywalled like a jackass) is that these models services are used by everyday people for every day tasks. Doesn’t matter if they’re good or not. It enables them to do less work for the same pay. Don’t focus on the money the models are bringing in today, focus on the dependency they’re building on people’s minds.
  • huvarda 1y ago
    A handful of the largest companies cyclically investing and buying from each other is propping up the entire economy. Also stuff like Deepseek and other open source models exist. Unless AGI comes from LLMs (it absolutely won't) then its foolish to think there wont be a bubble
    • viking123 1y ago
      AGI might require a nobel price level invention, I am not even sure it will come in my lifetime and I am in my 30s.. Although I would hope we would get something that could solve difficult diseases that have more or less no treatment or cure today, at least Demis Hassabis seems interested in that.
    • tim333 1y ago
      I was thinking it's a bit like developing powered flight and saying steam engines won't work. It's true they didn't but the internal combustion engine was developed which did. It was still an engine machined from metal but with a different design. I think LLM -> AGI will go like that - some design evolved from LLMs but different in important ways.
  • hattmall 1y ago
    The issue though being that most people aren't paying and even those paying if they use it moderately aren't profitable. Nvidia "investing" 100B in one of its largest customers is a cataclysmically bright red flag.
• CuriouslyC 1y ago
  I don't think it'll contract. The people dumping their money into AI think we are at end of days, new order for humanity type point, and they're willing to risk a large part of their fortune to ensure that they remain part of the empowered elite in this new era. It's an all hands on deck thing and only hard diminishing returns that make the AI takeoff story look implausible are going to cause a retrenchment.
  • admissionsguy 1y ago
    So just the “it’s different this time” mentality shared by all bubbles. Some things never change.
    • viking123 1y ago
      Yeah it wouldn't be a bubble if it didn't have that mentality. Every bubble has had that thought and it's the same now. Kind of hard to notice it though when you are in the eye of the storm. There were people telling me during the NFT craze that I just don't get it and I am dumb. Not that I am comparing AI to it directly because AI has actual business value but it is funny to think back. I felt I was going mad when everyone tried to gaslight me
    • CuriouslyC 1y ago
      The final AI push that doesn't lead to a winter will look like a bubble until it hits. We're realistically ~3 years away from fully autonomous software engineering (let's say 99.9% for a concrete target) if we can shift some research and engineering resources towards control, systems and processes. The economic value of that is hard to overstate.
      • piva00 1y ago
        You are basically saying "it's different this time" with a lot of words.
      • reliabilityguy 1y ago
        > We're realistically ~3 years away from fully autonomous software engineering We had Waymo cars about 18 years ago, and only recently they started to roll out commercially. Just saying.
• ttoinou 1y ago
  Every financial bubble has moments where, looking back, one thinks: How did any sentient person miss the signs? Well maybe a lot of people agree already with what the author is saying : the economics might crash, but the technology is here to stay. So we don't care about the bubble
  • rwmj 1y ago
    The technology is there til the GPUs become obsolete, so about 3 years.
    • ttoinou 1y ago
      Our current GPUs can last a decade or more, no ?
      • rwmj 1y ago
        They (probably) won't physically fail, but they'll be obsolete compared to newer GPUs which will have more raw compute and lower power requirements.
  • _heimdall 1y ago
    I don't think the question would be whether the technology literally disappears entirely, only how important it is going forward. The metaverse is still technically here, but that doesn't mean it is impactful or worth near the investment. For LLMs, the architecture will be here and we know how to run them. If the tech hits a wall, though, and the usefulness doesn't balance well with the true cost of development and operation when VC money dries up, how many companies will still be building and running massive server farms for LLMs?
  • ____mr____ 1y ago
    If the tech is here to stay, my question is: how and why? The how: The projects for the new data centers and servers housing this tech are incredibly expensive to build and maintain. These also jack up the price of electricity in the neighborhoods and afaik the US electrical grid is extremely fragile and is already being pushed to its limit with the existing compute being used on AI. All of this for AI companies to not make a profit. The only case you could make would be to nationalize the companies and have them subsidized by taxes. But why?: This would require you to make a case that AI tools are useful enough to be sustained despite their massive costs and hard to quantify contribution to productivity. Is this really the case? I haven't really seen a productivity increase worth justifying the cost, and as soon as Anthropic tried to even remotely make a profit (or break even) power users instantly realized that the productivity is not really worth paying the actual compute required to do their tasks
• scooletz 1y ago
  > Some people think artificial intelligence will be the most important technology of the 21st century We're just at 25% of it. Raising such a claim is foolish at least. People will be tinkering as usual and it's hard to predict the next big thing. You can bet on something, you can postdict (which is much easier), but being certain about it? Nope.
• aiisnotjustah 1y ago
  I'm not following the arguments in the blog at all tbh. The small huge companies investing in AI are tech companies who already make a lot of money. They did not invest in 'manufacturing' or other things on the side as relevant as the blog makes it. The offshoring of manufacturing to China was a result of cost and shareholder value. But while USA got rich in 60-90 for manufacturing, now this moved over to China. The investment is not just going into LLM, its going into ML and Robotics. The progress of ML and Robotics in the last x years is tremendous. And the offshoring of Datacenters? DCs have very little personel they need, they are critical infrastructure you want to control. There is very little motivation to just 'offshore' critical infrastructure espescially from companies who are so rich, that they don't need to move them in some weird shitty location which only makes sense because energy is cheap but everything else is bad. The 'AI Bubble' i'm experiencing, is adding real value left and right. And no i'm not talking about only LLMs. I'm talking about LLMs and ML in general. This 'Bubble' is disrupting every single market out there. Everyone is searching for the niche not optimized yet and only accessable now tx to LLMs and ML. And if you think this is just some hype and will go away, have you even tried Chat GPTs voice mode? This was literaly NOT possible 5 years ago. And i have real gains like 20% and more in plenty of things i'm now leveraging ML and LLms which was also NOT possible 5 years ago.
• louwrentius 1y ago
  Will Ed Zitron indeed be vindicated[0]? [0]: https://www.wheresyoured.at/the-haters-gui/ https://www.wheresyoured.at/the-haters-gui/
• rwmj 1y ago
  Also no one is talking about how exposed we are to Taiwan. Nvidia, AMD, Apple, any company building out GPUs (so Google, Microsoft, Meta etc), even Intel a bit, are all manufacturing everything with one company, and it's largely happening in Taiwan. If China invades Taiwan, why wouldn't TSMC, Nvidia and AMD stock prices go to zero?
  • _heimdall 1y ago
    We must run in different circles as it were, I hear this raised frequently on a number of podcasts I listen to.
    • jennyholzer 1y ago
      name the podcasts
      • _heimdall 1y ago
        This is an odd anecdote to ask "show your work." I don't catalog shows and episodes where any particular topic comes up, and I follow over 100 podcasts so I don't have a specific list you can fact check me on. Personally I could care less if that means you choose not to believe that I hear the Taiwan risk come up often enough.
        • zparky 1y ago
          Charitably, perhaps they're simply asking for podcasts that they would be interested in listening to that cover these topics. Personally, I would like to listen to a podcast that talks about semiconductor development, but I've done approximately zero research to find them so I'm not pressed for an answer :)
          • fragmede 1y ago
            https://youtube.com/playlist?list=PLKtxx9TnH76SRC7ZbOu2Nsg5mC72fy-GZ https://youtube.com/playlist?list=PLKtxx9TnH76SRC7ZbOu2Nsg5m... Asianometry playlist on TSMC
• therealmarv 1y ago
  It reminds me what I said to somebody recently: All my friends and family are using the free version of ChatGPT or something similar. They will never pay (although they have enough money to do so). Even in my very narrow subjective circles it does not add up. Who pays for AI and how? And when in the future?
  • delichon 1y ago
    Someone is paying. OpenAI revenue was $4.3 billion in the first half of this year.
    • lm28469 1y ago
      You forgot that part: > The artificial intelligence firm reported a net loss of US$13.5 billion during the same period If you sell gold at $10 a gram you'll also make billions in revenues.
      • boxed 1y ago
        Reminds me of the Icelandic investment banks during the height of the financial bubble. They basically did this.
      • dist-epoch 1y ago
        That loss includes the costs to train the future models. Like Dario/Anthropic said, every model is highly profitable on it's own, but the company keeps losing money because they always train the next model (which will be highly profitable on it's own).
        • emp17344 1y ago
          But even if you remove R&D costs, they’re still billions of dollars short of profitability. That’s not a small hurdle to overcome. And OpenAI has to continue to develop new models to remain relevant.
    • sseagull 1y ago
• einrealist 1y ago
  So much in this AI bubble is just fueled by a mixture of wishful thinking (by people who know better), Science Fiction (by people who don't know enough) and nihilism (by people who don't care about anything other than making money and gaining influence).
• DebtDeflation 1y ago
  >data-center related spending...probably accounted for half of GDP growth in the first half of the year. Which is absolutely bananas. What? If that figure is true then "absolutely bananas" is the understatement of the century and "batshit insane" would be a better descriptor (though still an understatement).
  • roxolotl 1y ago
    This has been reported many places over the past year the percent seems to be all over the place though. Yesterday “As much as 1/3rd”: https://www.reuters.com/markets/europe/if-ai-is-bubble-economy-will-pop-with-it-2025-10-01/#:~:text=Some%20reckon%20as%20much%20as%20one%2Dthird%20of%20the%20economy's%20near%204%25%20annualised%20expansion%20over%20the%20past%20two%20quarters%20may%20be%20accounted%20for%20by%20this%20digital%20gold%20rush https://www.reuters.com/markets/europe/if-ai-is-bubble-econo... A week ago “More than consumer spending(but the reality is complex)”:https://fortune.com/2025/09/17/how-much-gdp-artificial-intelligence-goldman-sachs-160-billion/#:~:text=noted%20a%20striking%20surge%20in%20AI%20infrastructure%20spending%2C%20arguing%20it%20was%20adding%20more%20to%20GDP%20growth%20than%20consumer%20spending https://fortune.com/2025/09/17/how-much-gdp-artificial-intel... August “1.3% of 3% however it might be tariff stockpiling”: https://www.barrons.com/articles/ai-spending-economy-microsoft-amazon-meta-alphabet-3e2e5fda#:~:text=As%20a%20result%2C%20Kedrosky%20estimates%20the%20contribution%20of%20AI%20capex%20to%20second%2Dquarter%20GDP%20was%20around%201.3%20percentage%20points%20of%20the%203%25%20advance%20estimate. https://www.barrons.com/articles/ai-spending-economy-microso...
• gandalfian 1y ago
  "The “pop” won’t be a single day like a stock market crash. It’ll be a gradual cooling as unrealistic promises fail, capital tightens, and only profitable or genuinely innovative players remain." (This comment was written by ChatGPT)
• jstummbillig 1y ago
  > It’s not clear that firms are prepared to earn back the investment I am confused by a statement like this. Does Derek know why they are not? If hes does, I would love to hear the case (and no, comparisons to a random countries GDP are not an explanation). If he does not, I am not sure why we would not assume that we are simply missing something, when there are so many knowledgable players charting a similar course, that have access to all the numbers and probably thought really long and hard about spending this much money. By no means do I mean that they are right for that. It's very easy to see the potential bubble. But I would love to see some stronger reasoning for that. What I know (as someone running a smallish non-tech business) is that there is plenty of very clearly unrealized potential, that will probably take ~years to fully build into the business, but that the AI technology of today already supports capability wise and that will definitely happen in the future. I have no reason to believe that we would be special in that.
  • alpineman 1y ago
    It’s in the article. AI globally made 12bn USD of revenues in 2025, yet Capex next year is expected to be almost 50X that at 500bn USD
    • jstummbillig 1y ago
      It's not convincing. If those simply numbers (that everyone who is deciding these things has certainly considered) were a compelling argument, then everyone would act accordingly on them. It's not the first time they — all of them — are spending/investing money. So what do I have to assume? Are they all simultaneously high on drugs and incapable of doing the maths? If that's the argument we want to go with, that's cool (and what do I know, it might turn out to be right) but it's a tall ask.
  • ____mr____ 1y ago
    Most AI firms have not shown a path toward profitability
• Devasta 1y ago
  When there was a speculative mania in railways, afterward there were railroads everywhere that could still be used. A bubble in housing has a bunch of houses everywhere, or at the very least the skeleton of a house that could be finished later. These tech bubbles are leaving nothing, absolutely nothing but destruction of the commons.
  • kzalesak 1y ago
    That's not entirely true - they are leaving the data centers themselves, and also all the trained models. These are already used
• jongjong 1y ago
  I've been talking about the limited bandwidth of investors as a major problem with capital allocation for some time so it's good to see this idea acknowledged in this context. This problem will only get bigger and more obvious with increasing inequality. It is massive scale capital misallocation whereby the misallocation yields more nominal ROI than optimal allocation (if you were to consider real economic value and not numbers in dollars). Facilitated by the design of the monetary system as the value of dollars is kept decoupled from real economic value due to filter bubbles and dollar centralization.
• jacknews 1y ago
  I think these articles slightly miss the point. Sure, AI as a tool, as it currently is, will take a very long time to earn back the $B being invested. But what if someone reaches autonomous AGI with this push? Everything changes. So I think there's a massive, massive upside risk being priced into these investments.
  • bakugo 1y ago
    > But what if someone reaches autonomous AGI with this push? What is "autonomous AGI"? How do we know when we've reached it?
    • jacknews 1y ago
      When you can use AI as though it's an employee, instead of repeatedly 'prompting' it with small problems and tasks. It will have agency, it will perform the role. A part of that is that it will have to maintain a running context, and learn as it goes, which seem to be the missing pieces in current llms. I suppose we'll know, when we start rating AI by 'performance review', like employees, instead of the current 'solve problem' scorecards.
  • Seb-C 1y ago
    Except that the bubble's money is not being invested into cutting-edge ML research, but only into LLMs. And it has been obvious from the start to anyone half-competent about the topic that LLMs are not the path to AGI (if such a thing ever happens anyway).
    • jacknews 1y ago
      I don't think it's that obvious, in fact the 'bitter lesson' teaches us that simple scale leads to qualitative, not just quantitative improvement. It does look like this is now topping out, but it's still not sure. It seems to me a couple of simple innovations, like the transformer, could quite possibly lead to AGI, and the infrastructure would 'light up' like all that overinvested dark fiber in the 90s.
  • 1y ago
• incomingpain 1y ago
  >Others insist that it is an obvious economic bubble. The definition is that the assets are valuated above an intrinsic value. The first graph is Amazon, Meta, Google, Microsoft, and Oracle. Lets check their PE ratio. Amazon (AMZN) ~ 33.6 Meta (META) ~ 27.5 Google (GOOGL) ~ 25.7 Microsoft (MSFT) ~ 37.9 Oracle (ORCL) ~ 65 These are highish pe ratios, but certainly very far from bubble numbers. OpenAI and others are all private. Objectively there is no bubble. Economic bubble territory is 100-200+ PE ratios. Not to mention, who are you to think the top tech companies arent fully aware of the risks they are taking with AI?
  • randomtoast 1y ago
    The thing is, if you say that "AI is a bubble that will pop" and repeat this every year for the next 15 years, then you have a good probability of being right in 1 out of 15 cases if there actually is a market recession within the next 15 years that is attributed to AI overspeculation.
  • Atomic_Torrfisk 1y ago
    > Not to mention, who are you to think the top tech companies arent fully aware of the risks they are taking with AI? Well 2008 happened too and people weren't too concerned with risk either.
  • ajross 1y ago
    > Objectively there is no bubble. Economic bubble territory is 100-200+ PE ratios. Not sure I buy that analysis. That was certainly true in 2001. The dot com boom produced huge valuations in brand new companies (like the first three ones in your list!) that were still finding their revenue models. They really weren't making much money yet, but the market expected them to. And... the market was actually correct, for the most part. Those three companies made it big, indeed. The analysis was not true in 2008, where the bubble was held in real estate and not corporate stock. The companies holding the bag were established banks, presumptively regulated (in practice not, obviously) with P/E numbers in very conventional ranges. And they imploded anyway. Now seems sort of in the middle. The nature of AI CapEx is that you just can't do it if you aren't already huge. The bubble is concentrated in this handful of existing giants, who can dilute the price effect via their already extremely large and diversified revenue sources. But a $4T bubble (or whatever) is still a huge, economy-breaking bubble even if you spread it around $12T of market cap.
• mixedbit 1y ago
  Back of the envelope calculation: Nvidia market cap is 4.5T$, their profit margin is 52%. This means Nvidia would need to sell 1067$ worth of equipment per human being on Earth for investors that buy Nvidia stock today to break even on the investment. Nvidia, unlike Apple, doesn't sell to end users (almost), but to AI companies that provide services to end users. The scale of required spending on Nvidia hardware is comparable to tech companies collectively buying IPhones for every human on Earth, because the value that IPhone users deliver to tech companies is large enough that giving away IPhones is justified.
  • lotsofpulp 1y ago
    > This means Nvidia would need to sell 1067$ worth of equipment per human being on Earth for investors that buy Nvidia stock at current prices to break even on the investment In what period of time?
    • mixedbit 1y ago
      You break even, when you break even, the faster it happens the better for your investment. With the current earnings it will take 53 years for investors to break even.
• donatj 1y ago
  I feel kind of like a Luddite sometimes but I don't understand why EVERYONE is rushing to use AI? I use a couple different agents to help me code, and ChatGPT has largely replaced Google in my everyday use, but I genuinely don't understand the value proposition of every other companies offerings. I really feel like we're in the same "Get it out first, figure out what it is good for later" bubble we had like 7 years ago with non-AI ChatBots. No users actually wanted to do anything important by talking to a chatbot then, but every company still pushed them out. I don't think an LLM improves that much. Every time some tool I've used for years sends an email "Hey, we've got AI now!" my thought is just "well, that's unfortunate"... I don't want AI taking any actions I can't inspect with a difftool, especially not anything important. It's like letting a small child drive a car.
  • amelius 1y ago
    > It's like letting a small child drive a car. Bad example, because FSD cars are here.
    • donatj 1y ago
      Find me an FSD that can drive in non-Californian real world situations. A foot of snow, black ice, a sand drift.
      • gamerDude 1y ago
        Well Waymo is coming to Denver, so it's about to get tested in some more difficult conditions.
      • skybrian 1y ago
        Not sure it matters. There’s plenty of economic value in selling rides in places with good weather.
      • tbrownaw 1y ago
        I am not in California, and those are not standard road conditions here.
      • 1y ago
• rco8786 1y ago
  AI, if nothing else, is already completely up-ending the Search industry. You probably already find yourself going to ChatGPT for lots of things you would have previously gone to Google for. That's not going to stop. And the ads marketplaces are coming. We're also finding incredibly valuable use for it in processing unstructured documents into structured data. Even if it only gets it 80-90% there, it's so much faster for a human to check the work and complete the process than it is for them to open a blank spreadsheet and start copy/pasting things over. There's obviously loads of hype around AI, and loads of skepticism. In that way this is similar to 2001. And the bubble will likely pop at some point, but the long tail value of the technology is very, very real. Just like the internet in 2001.
• hamburgererror 1y ago
  Until recently everyone was bragging about predicting bitcoin's bubble. To the best of my knowledge there was no huge crash, crypto just got out of fashion in mainstream media. I guess that's what's going to happen with AI.
  • JohnKemeny 1y ago
    Almost everyone who has interacted with a blockchain ended up losing money.
    • tail_exchange 1y ago
      It's very ironic that the way they could have made money was the simple, but boring one: buying and holding bitcoin. Being a shitcoin day-trader is much more exciting though, and that's how they lost all their money. Maybe that's also what will happen with AI investors when the bubble pops or deflates.
  • Quarrelsome 1y ago
    the argument of the OP doesn't discount this idea, the suggestion is there's a crash but then following that crash it _does_ pay off. Its a question of a lack of patience.
• uladzislau 1y ago
  Calling this an “AI bubble” reads like pure sour grapes from folks who missed the adoption curve. Real teams are already banking gains - code velocity up, ticket resolution times down, and marketing lift from AI-assisted creative while capex always precedes revenue in platform shifts (see cloud 2010, smartphones 2007). The “costs don’t match cash flow” trope ignores lagging enterprise procurement cycles and the rapid glide path of unit economics as models, inference, and hardware efficiency improve. Habit formation is the moat: once workers rely on AI copilots, those workflows harden into paid seats and platform lock-in. We’re not watching a bubble pop; we’re watching infrastructure being laid for the next decade of products.
  • postexitus 1y ago
    All the same arguments could be used for dot-com bubble. It was a boom and a bubble at the same time. When it popped, only the real stuff remained. Same will happen to AI. What you are describing are good use cases - there are 99 other companies doing 99 other useless things with no cost / cash flow match.
  • softwaredoug 1y ago
    Things can be a bubble AND actual economic growth long term. Happens all the time with new tech. Dotcom boom made all kinds of predictions about Web usage. That decade plus later turned out to be true. But at the time the companies got way ahead of consumer adoption. Specific to AI copilots. We currently are building hundreds that nobody will use for every one success.
  • Atomic_Torrfisk 1y ago
    > Calling this an “AI bubble” reads like pure sour grapes from folks who missed the adoption curve. Ad hominem. > ignores lagging enterprise procurement cycles Time is long gone for that, even for most bureaucratic orgs. > rapid glide path of unit economics as models, inference, and hardware efficiency improve Conjecture. We don't know if we can scale up effectively. We are hitting limits of technology and energy already > Habit formation is the moat Yes and no. GenAI tools are useful if done right, but they have not been what they were made out to be, and they do not seem to be getting better as quickly as I like. The most useful tool so far is copilot auto-complete, but its value is limited for experienced devs. If its price increased 10x tomorow, I would cancel our subscription. > We’re not watching a bubble pop; we’re watching infrastructure being laid for the next decade of products. How much money are you risking right now? Or is it different this time?
• gorgoiler 1y ago
  What’s the theoretical total addressable market for, say, consumer facing software services? Or discretionary spending? That puts one limit on the value of your business. Another limit would be to think about stock purchases. How much money is available to buy stocks overall, and what slice of that pie do you expect your business to extract? It’s all very well spending eleventy squillion dollars on training and saying you’ll make it back through revenue, but not if the total amount of revenue in the world is only seventy squillion. Or maybe you just spend your $$$ on GPUs, then sell AI cat videos back to the GPU vendors?
• seydor 1y ago
  I don't think the Apollo project factories invested in each other circularly. The AI boom is nominally huge but very little money gets in or out of silicon valley. MS invests in OpenAI because it will get it back via Azure or whatever. ditto for nvidia. What's the real investment in or out of silicon valley ?
• ForHackernews 1y ago
  They're all gambling that they can build the Machine God first and they will control it. The OpenAI guy is blathering that we don't even know what role money will have After the Singularity (aka The Rapture for tech geeks)
• driverdan 1y ago
  I keep seeing articles like this but does anyone actually think we're not in a bubble? From what I've seen these companies acknowledge it's a bubble and that they're overspending without a way to make the money back. They're doing it because they have the money and feel it's worth the risk in case it pays off. If they don't spend, another company does, and it hits big they will be left behind. This is at least insurance against other companies beating them.
  • ninetyninenine 1y ago
    HN isn't always right. There was massive pushback against self driving and practically everyone was saying it would fail and is a bubble. The level of confidence people had about this opinion was through the roof. Like people who didn't know anything would say it with such utter confidence it would piss me off a bit. Like how do you know? Well they didn't and they were utterly wrong. Waymo showed it's not a bubble. AI is an unknown. It has definitely already changed the game. Changed the way we interview and changed the way we code and it's changed a lot more outside of that and I see massive velocity towards more change. Is it a bubble? Possibly. But the possibly not angle is also just as likely. Either way I guarantee you that 99% of people on HN KNOW for a fact that it's a bubble because they KNOW that all of AI is a stochastic parrot. I think the realistic answer is we don't actually know if it's a bubble. We don't fully know the limits of LLMs. Maybe it will be a bubble in the sense that AI will become so powerful that a generic AI app can basically kill all these startups surrounding specialized use cases of LLMs. Who knows?
    • hx8 1y ago
      > Waymo showed it's not a bubble. Waymo is showing it might not be a bubble. They are selling rides in five cities. Let's see how they do in 100 cities.
      • ninetyninenine 1y ago
        You aren't living it. I live in SF, I ride waymos every freaking day. SF has some of the tightest roads and hardest driving. Just living in SF I already know they can scale to the entire country.
• msukhareva 1y ago
  [dead]
• bilsbie 1y ago
  I was just asking AI how to profit from an AI bubble pop but then I realized “look who I’m asking” and then I wasn’t so sure about it being a bubble.
• adam_patarino 1y ago
  There’s two different markets. The research market is made up of firms like OpenAI and Anthropic that are investing billions in research. These investments are just that. Their returns won’t be realized immediately, so it’s hard to predict if it’s truly a bubble. The product market is made up of all the secondary companies trying to use the results of current research. In my mind these businesses should be the ones held to basic economics of ROI. The amount of VC dollars flooding into these products feels unsustainable.
• yomismoaqui 1y ago
  I'm always commenting the same on these posts. The web bubble also popped and look how it went for Google, Amazon, Meta and many others. Remember pets.com that sold pet products on the internet, dumb idea right? Now think where you buy these products in 2025.
  • baggachipz 1y ago
    There was a ton of pain in between. Legions of people lost their livelihoods. This bubble pop will be way worse. Yes, this tech will eventually be viable and useful, but holy hell will it suck in the meantime.
• reilly3000 1y ago
  I don’t like that he cited $12B in consumer spending as the benchmark for demand. Clearly enterprise spending has and will continue to dwarf consumer outlays, to the tune of $100b+ in 2025 on inference alone, and another $150b on AI related services. I see almost no scenario where the value of this hardware will go away. Even if the demand for inference somehow declines, the applications that can benefit from hardware acceleration are innumerable. Anecdotally my 2022 RTX 4090 is worth ~30% more used then what I paid for it new, but the trend continues into bigger metal. As “Greater China” has become the supply bottleneck, it is only rational for western companies to horde capacity while they can.
  • torginus 1y ago
    Also, as others have pointed out, if the next Pixel phone or iPhone has 'AI' as a bullet point feature, then people buying and iPhone will count as 'consumer AI spend', that's why they're forcing AI into everything, so they can show that people are using AI, while most people are ambivalent or hostile towards AI features.
    • scoofy 1y ago
      I mean, that makes little sense. The desirability of the feature has a price. Putting a GPU in a phone is expensive and unnecessary. The point of something being a gimmick is that it’s a gimmick. I just got an iPhone with a GPU but I would absolutely have purchased one without if it were possible.
• paulsutter 1y ago
  > The AI infrastructure boom is the most important economic story in the world. Energy spending is about $10T per year, even telecom is $2T a year The AI infrastructure boom at $400B a year is big but far from the most important economic story in the world.
• reilly3000 1y ago
  I do want to know who the Outpost.com is of this era. I will never forget their TV campaign where they released a pack of wolves on a marching band. TIL: it’s for sale!
• tamimio 1y ago
  If you look at all the tech “breakthroughs” in the past decades, you will know AI is just another one: dot com, automation, social media, smartphones, cloud, cybersecurity, blockchain, crypto, renewable energy and electric X, IoT, and now AI. It will have an impact after the initial boom, and I personally think they are always negative impacts. Companies will always try to milk investors' money during the boom as much as possible, and the best way to do that is to keep the hype, either with false promises (AGI omgg singularity!!) or even fears, and the latter one is stronger because it taps into public emotions. Just pay a few scientists to create "AI 2027!!" research saying it will literally take over the world in two years, or it will take your jobs meanwhile you use the excuse to hire cheaper labor to maximize profits and blame it on AI. I remember I said that to a few friends back in early 2024, and it seems we are heading to that pop sooner than I expected.
• baggachipz 1y ago
  I'm trying to pinpoint the canary in the financial coal mine here. There will be a time to pull out of the market and I really want to have an idea of when. I know, timing the market, but this isn't some small market correction we're talking about here.
  • rsync 1y ago
    TQQQ exists. There is a liquid market of TQQQ puts.
    • baggachipz 1y ago
      I'm trying to get out ahead of that and find an indicator that says it's about to collapse.
      • scoofy 1y ago
        Market reflexivity makes an obvious indicator highly improbable.
      • tim333 1y ago
        I don't think there's a good indicator for predicting it ahead of time. If you are worried you could switch from tech stocks to something more conservative. You can sometimes tell when the collapse has started from the headlines though - stuff like top stocks down 30%, layoffs announced. Which may sound too late but with the dotcoms things kept going down for another couple of years after that.
  • exolymph 1y ago
    this is a bit hackneyed but it's true: time in the market > timing the market now obviously, if you do time the market perfectly, that's the best. but it is far far more likely to shoot yourself in the foot by trying
• kalap_ur 1y ago
  I just heard a thesis that there is no bubble unless there is debt in it. Currently mostly internal funds were used for increasing capex. More recently started we seeing circularity (NVDA -> OpenAI -> MSFT -> NVDA), thus this is less relevant so far yet. Especially as around ~70% of data center is viewed to be GPU, so NVDA putting down $100B, that essentially funds "only" $140B of data center capex. META is spending 45% of their _sales_ of capex. So I wonder when are they going to up their game with a little debt sprinkled on.
• benterix 1y ago
  > ...$2 billion in funding at a $10 billion valuation. The company has not released a product and has refused to tell investors what they’re even trying to build. “It was the most absurd pitch meeting,” one investor who met with Murati said. “She was like, ‘So we’re doing an AI company with the best AI people, but we can’t answer any questions.” I observed how he played the sama drama and I realized she will outplay them all.
• torginus 1y ago
  This might be just a crappy conspiracy theory, but as I started watching financial news in recent times, I feel like there's a concerted effort on the part of media to manipulate retail investors into investing/divesting into stuff, like 'the NASDAQ is overvalued, buy gold now!' being the most recent example. I feel like the fact that AI was constantly shilled while it didn't work, now everybody talking about being bearish on A(G)I, while the AI we as consumers do have, becoming actually pretty useful and with the crazy amounts of compute already onlined to run it, I think we might be in for a real surprise jump, and might even start to feel the AI's 'bite' Or maybe I'm overthinking stuff and stuff is as it seems, or maybe nobody knows and the AI people are just throwing more compute at training and inference and hoping for the best. On the previous points, I can't tell if I'm being gaslit accidentally by algorithms (Google and Reddit showing me stuff that support my preconcieved notions), intentionally (which would be quite sinister if algorithms decided to target me), or everyone else is being shown the same thing.
• alasdair_ 1y ago
  Personal hot take: China is forbidding its companies from buying Nvidia chips and instead wants to have its industries use China-made chips. I think a big part of the reason for this is that they want to take over Taiwan and they know that any takeover could likely destroy TSMC and instead of this being a bad thing for them it could actually give them a competitive advantage vs everyone else. The fact that the US has destroyed relationships with so many allies implies it may not stop a Taiwan invasion when it happens.
  • NoGravitas 1y ago
    I'd say the main reason is probably that they want to insulate themselves from US sanctions, which could come at any time given how unpredictable the US government is lately.
• eboynyc32 1y ago
  I disagree, it’s just getting started and I love it.
• cadamsdotcom 1y ago
  > Let’s say ... you control $500 billion. You do not want to allocate that money one $5 million check at a time to a bunch of manufacturers. All I see is a nightmare of having to keep track of all of these little companies doing who knows what. If only there was like, some sort of intelligence, to help with that..
• mizzao 1y ago
  At the end of the article he basically says the bubble will pop in about two and a half years. That's an insanely long time — is that how anyone else read it?
• noname_15 1y ago
  [dead]
• noname_15 1y ago
  [dead]